Sears Profits Fall 79%; Restructuring Blamed
Sears, Roebuck & Co., the nation’s largest retailer, said today that its fourth-quarter profits fell 79% to $117.4 million because of expenses from a massive restructuring launched in October.
Chicago-based Sears, which regrouped after reporting sluggish third-quarter profits, earned 32 cents a share last quarter after a $500-million charge for the restructuring. The company earned $554.4 million, $1.46 a share, a year earlier.
Despite the poor appearance of the results, Sears said it is pleased with its performance. Without the restructuring costs, net income rose 11% to $618 million, or $1.65 a share. Revenues rose to a record $14.56 billion from $13.36 billion.
“Although 1988 presented a difficult environment for some of our businesses, we are encouraged by the fourth-quarter performance,” Chairman/Chief Executive Edward Brennan said in a statement. “This has been a year of major transition at Sears,” he added.
Sears’ revenues rose 9.5% to a record $50.25 billion last year from $45.90 billion in 1987. The company’s full-year earnings dipped to $1.45 billion, $3.84 a share, from $1.63 billion, $4.30 a share in 1987.
Sears, which also owns Allstate Insurance, Dean Witter Financial Services and Coldwell Banker real estate, announced sweeping changes last fall after its third-quarter earnings fell 16% to $344.2 million.
The restructuring, which Sears launched to avoid a potential takeover, included the sale of the 110-story Sears Tower in Chicago and plans to raise the company’s stock price by buying back 10% of its shares.
In addition, Sears said it would change its retail strategy of frequent sales and promotions to one of “everyday low pricing” to reduce inventories and boost sales. The company also sold Allstate’s group life-health insurance business.
Sears Merchandise Group, which owns more than 800 stores nationwide, lost $113.5 million last quarter because of a $442 million restructuring charge. Without the charge, merchandise earned $328.5 million on revenues of $9.52 billion.
