Kmart Sales Surge Benefits Sears Holdings

By Don Hogsett -- Home Textiles Today, 3/20/2006 12:00:00 AM

Hoffman Estates, Ill. —

Fourth-quarter profit at Sears Holdings Corp. more than doubled, soaring by 109.7%, to $648 million from $309 million last year. The rise was aided by improving margins as markdowns were cut and promotional events were reduced. Stronger same-store sales at Kmart added a further lift.

As sales of Sears, Roebuck were layered onto Kmart returns, overall sales of what is now the nation's third largest retailer almost tripled, rising to $16.1 billion from $6.0 billion during the year-before fourth quarter.

In something of a milestone for Kmart, same-store sales rose during the closing quarter of 2005 by 0.9%, the first gain in same-store sales since the second quarter of 2001. Same-store sales, the retailer said, were boosted by stronger sales of apparel and home products.

At Sears, same-store sales plunged by 12.2%, hobbled by weak apparel sales, the failure of new fashion offerings and fewer sales events.

While the drop in promotional events may have hurt same-store sales at Sears' full-line stores, it resulted in wider margins and bolstered the bottom line of its parent. As the retailer took fewer markdowns, average gross margin widened by 340 basis points, or 3.4 percentage points, to 28.5% from 25.1% a year ago.

Sears Holdings Corp.