Sears Holdings Posts Wider Loss; Dollar General Profit Down, Tightens Outlook

(RTTNews) - Department store chain Sears Holdings Corp. (SHLD) Thursday reported a wider loss for the third quarter, reflecting lower revenues as well as a tax expense.

Discount retailer Dollar General Corp. (DG) said its third-quarter net income declined due to increase in tax expense, despite growth in sales. Earnings per share, however, improved from last year. For fiscal 2014, the company now expects adjusted earnings to be in the middle of its earlier outlook range, and sales growth at the low end of its prior guidance range.

For the third quarter ended November 1, 2014, Sears Holdings' net loss attributable to shareholders widened to $548 million or $5.15 per share from $534 million or $5.03 per share in the previous year.

Adjusted for the results of the Sears Canada business which were included in results prior to the disposition, loss per share was $2.71 per share, while the firm posted $2.96 per share last year.

Sears Holdings noted that as a result of the Sears Canada rights offering, it no longer consolidates the results of Sears Canada as of October 16, 2014, and that the financial position as of the third quarter of 2014 does not include Sears Canada.

The company recorded income tax expense of $159 million for the recent quarter.

Dollar General posted net income of $236.32 million, down from $237.39 million in the prior year. Earnings per share rose to $0.78 from $0.74 per share a year ago.

On an adjusted basis, earnings were $0.79 per share, while the firm posted $0.72 per share for the year-ago quarter. On average, 25 analysts polled by Thomson Reuters expected earnings per share of $0.80 for the quarter. Analysts' estimates typically exclude one-time items.

Income tax expense of Dollar General totaled $135.99 million, up from $131.33 million last year.

Sears Holdings' revenues from merchandise sales and services fell to $7.21 billion from $8.27 billion a year earlier.

According to the firm, the majority of the revenue decline was related to significant items comprising $384 million from separation of Lands' End business, $340 million in less revenue from fewer Kmart and Sears Full-line stores and $326 million associated with Sears Canada, which was de-consolidated in October this year.

For the quarter, domestic comparable-store sales declined 0.1 percent, comprising an increase of 0.5 percent at Kmart and a decrease of 0.7 percent at Sears Domestic. Online and multi-channel sales rose about 9 percent, as the firm continues to transform to an Integrated Retail Platform.

Dollar General said its net sales for the quarter grew 7.8 percent to $4.72 billion from $4.38 billion, with same-store sales up 2.8 percent. Analysts estimated quarterly revenues of $4.76 billion.

Year-to-date, the company closed, or announced for closure, nearly 235 underperforming stores, the majority of which are Kmart stores.

For fiscal 2014, Dollar General now expects adjusted earnings to be in the middle of its previous full year range of $3.45 to $3.55. Analysts project fiscal year earnings of $3.50 per share.

The firm sees total sales growth of nearly 8.0 percent over the 2013 fiscal year, which is at the low end of its prior guidance range of 8.0 to 9.0 percent.

In addition, Dollar General plans to open around 730 new stores in fiscal 2015.

SHLD closed Wednesday's regular trading at $34.25, up 0.91 percent. In the pre-market activity on Thursday, the shares are up 2.25 percent.

DG ended at $66.69, down 0.86 percent.