Sears Net Off 16%; 3rd Straight Quarterly Drop

Sears, Roebuck & Co. said Tuesday that its third-quarter net income fell 16%, marking the third consecutive quarter of declining profits for the nation’s largest retailer.

Sears blamed the drop on flat merchandise sales and intense competition from other retailers.

The company said its net income totaled $344.2 million for the three months ending Sept. 30, compared to $409 million for the same period a year ago.

Revenue for the 1988 third quarter rose 9.5% to $13.35 billion from $12.19 billion last year.

Sears’ second-quarter net income was 5% below the year-earlier results, and its first-quarter profit was off by 37%.

For the first three quarters combined, Sears’ net income was 18% below its net for the first nine months of 1987.

Sears has been struggling to improve its performance, which has been poor in comparison to other large retailers, and the company has been rumored to be considering selling some of its assets.

The Sears Merchandise Group, with responsibility for the company’s store operations, reported third-quarter income of $135.4 million, compared to $170.4 million a year ago.

Sears said the group’s results were adversely affected by flat sales, intense competition, pressure on gross margins and inventory adjustments. The merchandise group’s results included a $26-million tax benefit resulting from a bookkeeping change.

The Dean Witter Financial Services Group reported third-quarter income of $20.6 million, contrasted with a loss of $4.2 million last year. The group includes Discover Card, Sears’ all-purpose credit card, which showed a profit for the third consecutive quarter after two years of losses.

Discover Card reported income of $13.6 million, contrasted with a loss of $29.4 million last year.

The Allstate Insurance Group had third-quarter income of $217 million, down from $240.5 million last year. Sears said the decline was due to lower underwriting results, reduced tax benefits and lower capital gains.

The Coldwell Banker Real Estate Group reported third-quarter income of $25.8 million, compared to $47.8 million a year ago. Income in both quarters included the sale of shopping centers, Sears said, with the timing of the 1987 sales accounting for the larger income last year.

For the nine months ending Sept. 30, Sears had net income of $893.1 million on revenue of $38.49 billion, compared to net income of $1.09 billion on revenue of $34.39 billion in the first nine months of 1987.