Sears Posts First Loss Since 1933--$833.7 Million
Sears, Roebuck & Co. reported its first loss in nearly 60 years Thursday, racking up $833.7 million in red ink during the third quarter after a huge rise in claims for hurricane damage and a costly auto-repair scandal.
The company’s performance was also hurt by a $20.5-million write-off of its minority investment in the Phar-Mor Inc. drugstore chain, which filed for Chapter 11 bankruptcy protection in August.
The overall loss, which investors had largely anticipated, masked a strong performance by the Dean Witter Financial Services Group.
The company said it has not recorded a loss since the depths of the Great Depression in 1933, when it was $2.5 million in the red for the year. At the time, it only reported on an annual basis.
Sears stock was down 50 cents a share to $41.625 in late New York Stock Exchange trading.
Chairman Edward A. Brennan said in a statement that he was encouraged by recent retail sales trends. Arthur C. Martinez, hired in August to head the merchandise group, said Sears’ store-within-a-store “power formats” were working.
The third-quarter loss equaled $2.25 a share and contrasted with a profit of $229.2 million, or 67 cents a share, a year earlier. Revenue for the three months ended Sept. 30 edged higher to $14.49 billion from $14.3 billion.
The overall results included an after-tax charge of $20.5 million for a write-off of the Phar-Mor investment. Sears owns less than 5% of Phar-Mor’s stock.
Allstate lost $840.2 million, contrasted with a $158.2-million profit a year earlier, mainly because of claims for damage from hurricanes Andrew and Iniki that amounted to $1.25 billion after taxes. Allstate revenue grew 2.1% to $5.07 billion.
The merchandise group lost $36.4 million in the quarter, contrasted with a profit of $54.4 million in the third quarter of 1991.
Brennan said automotive sales dropped about $80 million amid charges in California and New Jersey that Sears Auto Centers recommended or performed unnecessary work on cars.
The company did not provide year-ago automotive revenue but said automotive sales have been down 10% to 15% since the charges were aired.
