Sears Profit Up 15% in Quarter

Sears, Roebuck & Co. said Tuesday that its second-quarter earnings rose 15.5% despite a lackluster showing by its struggling retail business.

The giant retailing and financial services company reported income of $345.8 million, or 90 cents a share, up from $299.4 million, or 87 cents a share, in the same period last year.

Revenue rose 1.3% to $14.27 billion from $14.09 billion.

Second-quarter income for the Sears Merchandise Group fell 50% to $78.5 million from $156.9 million for the same period last year. Revenue rose 1.1% to $7.7 billion from $7.65 billion a year ago.

“The slower pace of the economic recovery and continued intense retail competition resulted in lower gross margins,” Chairman Edward A. Brennan said in a statement.

The company said its results were affected also by planned revenue decreases in its Sears catalogue division and by lower revenue and increased advertising expenses in its automotive business.

Sears’ auto repair operations have been hurt by accusations that customers were charged for work their cars did not need. The company has admitted that mistakes were made by some of its employees and said it had cut back on the use of commissions as compensation in its auto centers.

The retail segment’s results were also affected by a $20.2-million pretax charge partly taken to cover the costs of closing catalogue pickup desks in its retail stores.

Sears’ Allstate Insurance Group reported earnings of $235.3 million, up 68.3% from $139.8 million a year earlier. The company said it had improvements in underwriting performance and in investment income and capital gains.

Earnings at the Dean Witter Financial Services Group, which includes the Dean Witter Reynolds brokerage and Discover credit card operations, rose 8.1% to $97.9 million from $90.6 million.

And Sears’ Coldwell Banker Real Estate Group reported earnings of $10.3 million, a significant improvement over a $3.1-million year-earlier loss. The company cited stronger results in its mortgage banking operations for the gain.

Wall Street did not appear perturbed by Sears’ results. The company’s stock closed down 25 cents at $39 in New York Stock Exchange trading Tuesday.

For the first half, Sears reported its earnings rose 24.4% to $667.6 million, or $1.79 a share, from $536.6 million, or $1.56 a share, in the first six months of last year.

Revenue rose 3% to $27.78 billion from $26.97 billion.