Sears Has 37% Decline in First-Quarter Income
Sears Roebuck & Co., the nation’s largest retailer, said Monday that its first-quarter earnings fell 37.6% due to lower profits reported by its merchandise division, Allstate Insurance and Coldwell Banker Real Estate groups.
Chicago-based Sears said earnings fell to $179.5 million from $287.9 million. Sales rose to $12.16 billion from $10.48 billion.
In the 1987 period, earnings had risen 47% to a record high. Results were boosted last year by the sale of a suburban Dallas shopping center and improved merchandise group results.
Edward Brennan, chairman and chief executive, said in a statement that 1988 first-quarter income was “below last year as anticipated, but this should not be regarded as an indicator of results for the year.”
Sears Merchandise Group, its biggest unit, reported that income dropped to $18.7 million from $31.3 million in the year-ago period.
However, a merchandise decline in the first quarter is not unusual, because this is the period when winter goods are cleared out.
Brennan said traditional business patterns produce the lowest sales of the year in the first quarter. This resulted in a relatively high ratio of fixed costs to sales and low ratio of income to sales.
Allstate Insurance Group, which usually turns in a strong performance, reported that its income dropped to $183.2 million from $246.9 million a year ago. Underwriting results were adversely affected by the return of more normal winter weather patterns contrasted with mild conditions a year ago.
The Tax Reform Act of 1986 accounted for $35.5 million of the decrease in income.
Dean Witter Financial Services Group reported first-quarter income of $15.5 million, compared to $6.1 million in the year-ago period. Income from securities-related business totaled $16.2 million, compared to $32.4 million in 1987.
The Discover Card recorded its first quarterly profit with net income of $6.4 million, contrasted with a loss of $25.8 million in the year-ago period.
Coldwell Banker Real Estate Group reported first-quarter income of $7.5 million, compared to $39.3 million a year ago.
