Wal-Mart Slashes Forecasts

The one bright spot in the US retail landscape has dimmed somewhat on the back of Wal-Mart's profit downgrade announced yesterday signaling that noone is immune from the retrenchment in consumer spending. From Bloomberg:

Wal-Mart’s Bleak December May Herald More Pain in ‘09

Wal-Mart Stores Inc., Macy’s Inc. and Gap Inc. slashed earnings forecasts after the worst holiday- shopping season in 40 years, and the retail landscape may not improve heading into 2009.

Wal-Mart, the world’s biggest retailer, today said fourth- quarter earnings will be at most 94 cents a share, down from a November projection of as much as $1.07. Sales at stores open at least a year rose 1.7 percent last month, missing the 2.7 percent average of analysts’ estimates compiled by Retail Metrics Inc.

To attract customers amid rising unemployment and tightening credit, some U.S. retailers cut prices in December by as much as 70 percent. That threatens to erode profit margins in the fourth quarter, the most important of the year. The discounting may continue this year as the stores try to clear inventory.

“Consumers have become so accustomed to markdowns that nobody wants to pay full retail anymore,” said Craig Johnson, president of retail-consulting firm Customer Growth Partners LLC in New Canaan, Connecticut. “There’s going to be profit pressure in the first quarter.”

U.S. December same-store sales dropped 1.7 percent, the International Council of Shopping Centers reported. The New York-based trade group said sales declined 2.2 percent in the last two months of the year, the biggest such drop since it started tracking the data in 1969.

Aussie Retail Sales Limp Forward in November

In trend terms, Retail Sales in Australia rose 0.1% in November and are up just 1.9% from one year ago. That is the lowest year over year rise in trend retail sales since the abs began compiling data in April 1982. This time last year retail sales were ticking over at more than an 8% annual growth rate.

Although annual general meetings can be rather boring affairs, it is worth reading the Chairman's address to shareholders every November. If like me, you read a few of the retailers addresses during the recent AGM season, there was not much cheer going around and for good reason.

Australian retailers are going to have a tougher 2009 than they did in 2008. As the great deflationary debt unwind continues Australian consumers, like their US counterparts are going to reign in their spending, whilst credit availability is curtailed and unemployment rises.

However, that hasn't stopped a nice rally in the shares of discretionary retail stocks. Whilst the All Ordinaries index is up 16.5% from the intraday low on November 21st, many major retailers are up significantly more. JB Hifi (JBH) is up almost 50% from it's intraday low whilst Harvey Norman (HVN), which has been doing it tougher than most, is still up 27%.


That's some pretty nice gains if you were lucky enough to pick them up close to their respective bottoms. It's natural to feel like you've missed the boat when see gains like these. Especially when more bullish commentary is starting appear in the media. But is that a reason to buy stocks or is it a reason be cautious?

Retail earnings will no doubt disappoint in 2009 as the Australian economy comes under more strain than most economists are currently forecasting. Thus you may just get another chance to buy these stocks at or close to their prior lows.

US Retail Sales Fall off a Cliff in October

As expected retail sales fell off a cliff in October dropping -2.8% from a lower revised September number. That is the fourth straight month of falling retail sales, a trend that has not been seen since 1974. This attest to just how tapped out the US consumer is as unemploymnet rises sharply and access to credit is much tougher.

The mainstream view is that the US economy will turn around in the second half of 2009, funnily enough if you remember, that was what was expected to happen in the second half of 2008.

How Bad Can it Get for Retail?

Hot on the heals of the Circuit City bankruptcy announced on Monday, Best Buy today announced a sharp revision to it's full year profit forecast citing the worst times in 42 years of retailing. From Bloomberg:

Best Buy Cuts Annual Profit, Sales Forecasts on Slump

Best Buy Co., the largest U.S. electronics retailer, said full-year profit will be lower than it expected because of the recent turmoil in the financial markets and the U.S. economic slump

The shares dropped as much as 17 percent in early New York trading after the chain said profit for the year through February 2009 will be $2.30 to $2.90 a share. Revenue may range from $43.7 billion to $45.5 billion, Best Buy said today in a statement.

Sales at stores open at least 14 months may decline as much as 15 percent in the four months through February as consumers grappling with the worst financial crisis since the Great Depression cut back on spending. Circuit City Stores Inc., Best Buy’s largest electronics competitor, filed for bankruptcy protection Nov. 10 after suppliers cut off credit and demanded cash for shipments.

“In 42 years of retailing, we’ve never seen such difficult times for the consumer,” Brian Dunn, president and chief operating officer, said in the statement. “People are making dramatic changes in how much they spend, and we’re not immune from those forces.”

Best Buy forecast in September adjusted full-year profit of $3.25 to $3.40 a share on revenue of $47 billion. Analysts surveyed by Bloomberg estimated profit of $3.04 a share on sales of $46.4 billion.

Best Buy dropped $2.79, or 12 percent, to $21.09 at 8:29 a.m. in trading before the New York Stock Exchange opened.

With such a wide range given on profit numbers it's clear that there is very little visibility with respect to earnings in the next couple of quarters and in such an environment it is difficult for investors to have confidence buying stocks when CEO's are saying the type of things highlighted above.

Sign of the Times in Retail

Oh well, Friday in the US turned out to be somewhat of a fizzer, the market falling just -3.5%. A year ago a move of that magnitude would have seen major headlines, today however, such moves seem relatively tame.

Markets in asia today continued to slide, the Nikkei opened up and is now down more than -5% as I write. But enough of the market commentary. This post is about somethign much more trivial. Today I had a read of Specialty Fashion Group's annual CEO's report. This is what it had to say on the outlook for 2009.

We anticipate a tough financial year ahead. As mentioned previously, July trading was good and we saw positive growth compared to last year. However, since then we have experienced a decrease in foot traffic through our stores and like for like sales have been negative for the past three months.

We certainly support the Federal Government’s pre Christmas spending package and anticipate the extra cash for pensioners and families will provide some boost for us through the significant Christmas trading period.

The environment is very volatile at present and with the Christmas trading period still ahead of us, our first half results remain unpredictable.

There is nothing special in this, it is just a continuation of a growing trend within the retail industry. If you didn't see it last week, here is what Harvey Norman had to say on their October sales:

Like for like writen sales for the 28 days ended 19th October 2008 from the franchised "Havey Norman" stores in Australia decreased by 5.8% when compared to the same period last year. Retail margins continue to be under pressure.

I'm aware that retailers like JB Hifi seem to be continuing to do well, but for how long can that be sustained? Unemployment in Australia has yet to rise significantly and with households carrying the biggest debt burden in history the stimulus lobbed at Australian consumers by the government will be barely noticed.

Whilst the stock prices of retailers have taken a battering along with the rest of the market, given the headwinds faced by consumers, I believe the extent of the economic slowdown in Australia is yet to be priced in for most of the major retailers. My favourite pick in this sector is TRS, but even they need to get cheaper for me to dip my toe in.

How Good Were May Retail Sales Really?

According to a report released by the ABS today, retail sales rose a seasonally adjusted 0.7%. That was well above consensus estimates of a rise of 0.2% and is the strongerst month on month change since November 2007.

However, digging a little deeper shows that more than half the gain came from food which was up 1.0% month on month and most of that was due to price rises. Department Stores, Clothing and Soft Goods and Household Goods all declined.

If there was any doubt about a softening in retail conditions Just Group's profit downgrade today should have put that to rest . Here are the money quotes from that announcement:

Despite positive same store sales growth in the month of June 2008 by Dotti, Smiggle and Jacqui E, overall same store sales for Just Group’s Australian and New Zealand stores declined. Overall gross margins also fell in June 2008 due to the increased level of industry-wide discounting.

The revised Directors’ pro-forma forecast for FY2008 assumes that lower sales, gross margins and profit will also be achieved in July 2008 compared to that anticipated at the date of Just Group’s Target’s Statement.

Just Group’s management believe that the trading conditions are likely to remain difficult for at least six months, at levels lower than those previously anticipated.

Whilst the financial year is over expect to see more of those kinds of statements about the outlook for 2009 when FY08 results are released. Australian consumers are clearly feeling the pinch of higher prices for food and energy and that is set to continue for the medium term.

Aussie Retail Sales Fall in April

Figures released from ther ABS add more evidence to the case that RBA's interest rate hikes are having an effect on the Australian consumer. Retail sales fell a seasonally adjusted -0.2% in April and are up 4.7% from a year earlier.

SFE futures are now factoring in 0% chance of a rate hike at the RBA's meeting tomorrow. I continue to believe the RBA has done enough however inflation fears have not abated and remain a chief concern.

US retail sales fell -0.2% in April from the previous month but were up 2.0% from April 2007.
Remember that retail sales are reported in nominal dollars. As the chart from Calculated Risk shows below, adjusted for inflation, retail sales were actually negative on a year over year basis in April.



A closer look at the composition of retail sales for the month of April shows that most categories were either flat or down with the exception of food and gas. The only reason those categories were up of course is because of rising prices.


All in all a very uninspiring report on the state of the US consumer. The consumer continues to face a number of headwinds and whilst rebate checks will prop up spending for a few months, the medium term outlook remains grim for the US consumer.

Tis The Season For Bankrupticies

Linens 'n Things files for bankruptcy protection

Linens Holding Co., the operator of Linens 'n Things home furnishings retail chain, said Friday it filed for Chapter 11 bankruptcy protection with plans to shut 120 underperforming stores, becoming the latest retailer to fall under the weight of declining housing markets and other economic worries.

The chain, which private equity firm Apollo Management LP bought for $1.3 billion in February 2006, will continue to operate without interruption. It also expects to be well stocked ahead of the back-to-school and holiday selling seasons as it secures $700 million in debtor in possession financing from General Electric Capital Corp.

Chief Executive Robert DiNicola will become executive chairman while restructuring expert Michael Gries was named chief restructuring officer and interim CEO.

The retailer, which had 2007 sales of about $2.8 billion with 589 stores across the U.S. and Canada, also expects the bankruptcy court to allow it to continue paying employee salaries and honor gift cards. It said its key vendors have been supporting the company with new merchandise in recent weeks.

The company also said the filing doesn't apply to its Canadian operation, where stores are among the strongest performers in its chain.

"The significant deterioration in the mortgage, housing and credit markets and the resulting impact on the retail marketplace, particularly the home sector, has overwhelmed the operating and merchandising improvements that we have made over the past two years," DiNicola said.

Click on the link for the full story. As flagged previously expect more bankrupticies to come in the year ahead and into 2009.

Aussie Retail Sales Show Continued Weakness

Australian Retail Sales rose a seasonally adjusted 0.5% in March according to the abs report released today. That doesn't sound too bad until you realise that most of the gain was driven by food retailers. Why does that matter? Basically because the rise in food retailing has been driven by inflation. Retail sales are reported in nominal terms(they aren't adjusted for inflation).


As can be seen above, 5 out of 7 components turned negative in the latest month. Food and Household goods were the only components showing positive gains and as stated above the increase in food can be attributed to price inflation.

Recent data suggests that the Australian economy is slowing and that may be enough to prevent the RBA from raising rates again this cycle.

Signs of a Slow Christmas for Retailers

Signs that the US consumer are reigning in their spending is seeping into retailers reports. October same stores sales growth showed that 7 out of 10 retailers missed analysts forecasts. From Bloomberg.com:

U.S. Retail Sales in October Trail Analyst Estimates

Sales at Wal-Mart Stores Inc., Macy's Inc. and other U.S. retailers trailed analysts' estimates last month after record-high temperatures in the Northeast reduced demand for jackets and sweaters.

Seven out of 10 retailers reported sales below forecasts, according to Retail Metrics LLC. A 4.2 percent drop in the average U.S. home price in September and gasoline prices that are one-third higher than a year ago buffeted consumers, raising concerns that spending may slow as the holidays approach....

U.S. October retail sales increased 1.6 percent, the worst for October since 1995's 0.2 percent increase, the International Council of Shopping Centers said today. The results, based on 44 chains, missed the New York-based group's 2 percent forecast and suggest a slowdown in holiday spending.

About 30 percent of retailers' annual profits occur in the three months through January, according to ICSC Chief Economist Michael Niemira. The group has forecast November and December sales to gain 2.5 percent, the slowest in three years. The National Retail Federation anticipates the smallest holiday sales increase in five years.

"Consumers are slowing down, being more discretionary in their purchases, and retailers are going to have to be promotional,'' said Lauri Brunner, a retail analyst at Thrivent Investment Management in Minneapolis, which has $70.6 billion in assets. "The promotions are starting earlier and earlier.''

The above table comes from Minyanville and tells the story for retailers in October. The accompanying post by Jeff Macke is well worth a read for commentary on some of the major names in the retail space.

September Retail sales get boost from autos & gas

U.S. retail sales increased 0.6% in September, double that expected by economists driven mainly by strong sales of gasoline, automobiles and food.

Higher energy prices saw gasoline sales rising 2%, coupled with a surprising 1.2% gain in motor vehicle sales provided the bulk of the increase. Excluding gas and cars, sales rose just 0.2%.

As usual the devil is in the detail:

• Retail sales at general merchandise stores fell 0.1%, including a 0.5% drop at department stores. Sales at clothing stores dropped 0.4%.

• Sales at furniture stores fell 0.6%, reflecting the slump in home sales. However sales at electronics and appliance stores, rose 0.9%.

• Sales at building materials and garden stores nudged 0.1% higher.

• Sales at grocery stores rose 0.8%, recovering after a rare decline in August. September's sales at restaurants and bars were flat.

• Sales at health and personal-care stores rose 1%.

• Sales at leisure-time activity stores, such as music, books and sporting goods, fell 0.7%.

• Sales at nonstore retailers, such as catalogs and online stores, rose 1.1%.

Comments from legion of economists:

"The increase in car and truck sales will add to growth, but the rest of retail sales seems to have been flat on the month in real terms," Robert Brusca, chief economist for FAO Economics.

"Sales show a moderately healthy trend for consumer demand, which is impressive in light of the shocks permeating through the financial markets," Stephen Gallagher, economist for Societe Generale

"The real September story is the slowdown in core retail sales," Richard Moody, chief economist for Mission Residential.

Interestingly automakers reported that unit sales were down in September. It's doubtful they increased prices as there were plenty of stories of discounting flying around. Regardless, you'd have to say the US consumer is still hanging in there.

Retailers report sluggish September sales

From marketwatch.com:

Retailers post worse than expected monthly sales

Given housing concerns and credit worries, U.S. retailers could be headed for their worst holiday season in five years, according to the National Retail Federation, the world's largest retail-trade association.

Retailers' sales at stores open at least a year, a key retail performance measure, rose 1.7% last month -- the worst in five months, and below the average monthly sales gain in each of the past four years, according to the International Council of Shopping Centers. ICSC earlier this week already had trimmed its estimate for same-store sales to a gain of 2%, from as much as 2.5%.

About two-thirds of retailers missed expectations, well above the norm of 44%, according to research firm Retail Metrics. Retailers across discount, department-store, apparel and teen sectors all missed analysts' forecasts, according to Thomson Financial.

A couple of points:

• Measured in 'real' terms (ex-inflation) retail sales are probably down for the year.

• There was a significant increase in the number of retailers missing forecasts.

• Wal-Mart (WM) upped it's earnings forecast but missed sales expectations. How long can the world's biggest retailer continue to cut costs to offset sluggish top-line growth?

Retailers sound profit warnings

Last week it was transports, yesterday it was retailers with profit warnings.

Firstly Lowe's Companies Inc. (LOW) warned on Monday that full-year profit could trail its prior forecast, saying dry conditions in some parts of the United States were hurting sales. Analyst Colin McGranahan of Sanford Bernstein noted that:

"Lowe's sales trends have reversed the apparent improvement seen" in the second quarter.... "while part of the weakness is weather related, Lowe's cautious outlook on 2008 suggests underlying trends are weaker than the company expected against easy compares,"

"easy compares" means comparable sales from last year that were not great and thus expected that this year's comparable period would easily be better. The company said it now expects profit for the year ending in February to be at the low end or below a forecast of $1.97 to $2.01 a share it gave in August.

Target Corp. (TGT) said after the close on Monday that it now expects same-store sales to rise 1.5% to 2.5% for the month, down from its previous forecast of 4% to 6% citing particularly weak sales in the northeast. Analyst Edward Weller of ThinkEquity Partners had this to say:

"This is a little bit surprising," "It seems to be a setback." It's not clear why traffic fell during the month, but he said that a quick recovery should be in store for Target. "It's not like these guys don't know how to adjust and adapt to the environment,"

It seems to be a setback? I'd say that was a fairly significant revision given the relatively short time frame. It's not clear why traffic fell but they should recover. Gees, some top class analysis there. ThinkEquity Partners need to think a little harder.

Retail Sales sluggish but not yet recessionary

From marketwatch.com:

Retail sales rose 0.3% in August, led by a 2.8% increase in auto sales, the Commerce Department said Friday. Excluding motor vehicles, sales fell 0.4%, the biggest decline since last September.

Sales were slightly weaker than expected, but an upward revision to July's figures to a 0.5% increase put the level of sales closer to expectations.

In a nutshell strong auto sales carried August retail sales. The number is not terrible but neither does it instill confidence. Why were auto sales so strong?

Heavy discounting seems to have been at work. This would also account for the contradiction between the strong same store sales growth at big chain retailers and the surprising weakness in categories like apparel which fell 0.1% in August according to today's report. For more info on discounting see this post over at THE BIG PICTURE.

Also of note yesterday was the first decline in manufacturing output in 6 months. Manufacturing fell 0.3% driven by - surprise, surprise, a 2.6% decline in automotive production. What does that tell you? Obviously auto makers had pent up inventory which they successfully shifted in August via heavy discounting.

How long can retailers continue to discount heavily? Who knows, however the longer they continue to do so the more it will affect margins and therefore earnings. In other news consumer sentiment was virtually unchanged from a month ago rising slightly to 83.8 from 83.4.

The consumer spending shoe has not dropped but it is definitely experiencing some slippage. It will be interesting to see what effect Fed rate cuts will have on consumer confidence as they contend with a worsening housing market, an increase in mortgage resets and looming higher gas prices with oil piercing $80 a barrel.

US consumer shows resilience in August

I've mentioned a number of times that US consumers are a resilient bunch and that is just what August retail sales show.

U.S. retailers posted a 3.1% gain in same-store sales, better than an original estimate of a 2.5% increase. That compared against a 3.9% advance a year earlier, according to Thomson Financial.

August is the biggest selling month of the back-to-school period, which covers sales from July to September and represents the No. 2 shopping season after the crucial holiday period, said Michael Niemira, chief economist of International Council of Shopping Centers.

Teen retailers posted a 6.5% increase, leading the gain among retail sectors, according to Thomson Financial. More than two-thirds of retailers posted better-than-predicted results, while the rest missed, according to Thomson, which surveyed 45 retailers.

Even Walmart (WMT) beat estimates posting 3% same stores sales growth as opposed to the 1.5% expected by analysts.

Although growth was slightly lower that August last year for the retail industry the numbers are still robust. What is not evident is the extent to which sales were driven by discounts, which can cut into profit. Remember Wal-Mart had cut prices on about 16,000 back-to-school items to drive sales. Gap Inc (GPS) whilst beating forecasts noted that profit margins declined.

"Although merchandise margins were below last year, we're pleased with the progress we're making across our brands," Sabrina Simmons, executive vice president of Gap Inc. finance, said in a statement.

Still it looks as though it's going to take a lot more buffeting from housing and employment to dent the US consumer's enthusiasm.

Retail bellweathers fail to inspire confidence

As mentioned a number of times before, strong consumer spending is key to a robust US economy. Wal-mart (WMT), the biggest retailer in the world, provides a good gauge of how the US consumer is faring.

Yesterday Wal-mart reported earnings of 72c a share after stripping out one off gains. That compares to 72c a share from the same period last year despite a 9% increase in sales in the current year.

Last Thursday, the company signaled that profit margins were pressured and from the flat bottom line result on rising sales that has become evident.

Deep discounting on back-to-school merchandise in the final weeks of the quarter hurt profit. In early July, Wal-Mart slashed prices on 16,000 items with the aim of stealing a beat on back-to-school sales.

CEO Lee Scott admitted rather candidly that:

"It's no secret that many customers are running out of money by the end of the month." "The paycheck cycle is more pronounced now than it's ever been."

Wal-mart now expects to earn $3.05 to $3.13 a share from continuing operations this year, against a previous estimate of $3.15 to $3.23.



Home Depot (HD) also reported earnings yesterday. The company had been giving away warnings all quarter that their business is under pressure. HD reported a 15% decline in 2Q07 profit.

The company also announced that it remains 'in talks' with prospective buyers of its contractor-supply business. That's funny I could if swore it was a done deal a month ago, how times change.

CEO Frank Blake had this to say about the company's outlook:

"We believe the housing and home-improvement markets will remain soft into 2008,"

Last week Home Depot also shaved the per-share price on a tender offer to buy back 250 million common shares to a range of $37 to $42 each, citing economic conditions. The initial pricing range was set at $39 to $44 a share.

If these results are anything to go by clearly consumers are feeling the pressure. The situation is far from dire but it does little to inspire confidence in a consumer led robust growth picture for 2H07.

How bad were July Auto sales really?

This from Minyanville.com's Five Things You Need to Know column yesterday:

3. Glass Cracked and Leaking On Our Pants?

As many feared, auto sales were horrible in July, falling 12% in figures that encompass most major auto manufacturers including Toyota (TM), which saw a 7% decline.

• General Motors (GM) sales fell 22%, Ford Motor Co. (F) fell 19% and Chrysler Group (DCX) 8%.

• As well, Detroit automakers' share of the U.S. market dropped below 50% in July for the first time in history, according to Jesse Toprak, senior analyst for the Edmunds.com automotive Web site.

• These sales figures go hand-in-hand with the consumer view expressed int he WSJ/NBC poll that if we aren't already in recession, we may soon be.

• It's not every month we see double digit year-over-year declines in auto sales.

• According to Merrill's David Rosenberg, other months where auto sales were down double digits include a 12% year-over-year decline in Dec. 2000; a 10.8% decline in April 1990; a 10.8% decline in July 1981; and an 11.1% decline in Dec, 1979.

• What do all of those months have in common? According to Rosenberg they were three months or less away from the official start of an economic downturn.

Weak retail sales fails to deter bulls

Figures released by the department of commerce on Friday showed a 0.9% fall in retail sales for the month of June - the worst reading since August 2005. Analysts had been expecting a fall of 0.3%. Sales ex autos fell 0.4% the worst since last September. Analysts had forecast a rise of 0.2% ex autos.

It seems investors are willing to look past weak retail numbers and sub-prime jitters and pin their hopes on better than expected earnings for 2Q07. General Electric gave comfort to the market on Friday announcing that they would divest their sub-prime business and deploy more capital in buybacks and reiterated their full-year earnings forecasts.

Large companies with international operations exposed to strong global growth are the place to be as they can insulate themselves from a slowing domestic economy, reap the benefits of a weak dollar and prop up earnings with share buybacks. They can't do it indefinitely but can they do it long enough to ride out the current slowdown?


Consumer sentiment rebounds in July
University of Michigan/Reuters gauge increases to 92.4
By Greg Robb, MarketWatch
Last Update: 4:17 PM ET Jul 13, 2007

WASHINGTON (MarketWatch) -- U.S. consumer sentiment rebounded in early July, as rising stock prices and falling gasoline prices brightened the outlook.

The consumer sentiment index rose to 92.4 in July from 85.3 in June, according to a monthly survey released Friday by Reuters and the University of Michigan.
This is the highest level since January. The level in June was the lowest since last August.

Economists were expecting an improved reading of around 86.5, according to a survey conducted by MarketWatch.

The current conditions index rose to 105.7 from 101.9, the highest level since February. The expectations index jumped to 83.9 from 74.7, the highest level since January.

Economists attributed the improvement to the strength of the stock market and the recent drop in gasoline prices.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, noted that gasoline prices are rising again, so he said it was doubtful the jump in sentiment "represents the start of a sustainable trend."

Earlier on Friday, the Commerce Department reported retail sales fell 0.9%, the biggest decline since August 2005.

The economic team at Action Economics said the various measures of consumer confidence are at solid levels, supporting the notion that retail sales will recover from their June weakness.

Earlier today, the government also said oil prices boosted import prices by 1% in June. In addition, the government reported business inventories rose 0.5% in May.

S&P500 heavyweights join downgrade brigade

Home Depot Inc. (HD) reported that the housing market is having a deeper impact on their business than first thought lowering it's 2007 profit guidance to a drop of between 15 - 18% down from an earlier forecast of a fall of 15%.

After taking into account the $12bn in sales contributed by the recently sold Home Depot Supply division total retail sales are expected to dip between 1% and 2%.

Comparable store sales are expected to fall by mid-single digits and the company expects its operating margin to contract by between 1.2 and 1.5 percentage points due to negative same-store sales and its continued investment in its core retail operations.


Retailer Sears Holdings Corp. (SHLD) announced that same-store sales for the nine-weeks ended July 7 fell 3.9% at domestic Kmart stores, with declines across most categories. Sears domestic same-store sales, or sales at stores open at least one year, fell 4%, with declines across most categories partially offset by increases in women's apparel and footwear.

Sears said that if the sales trends experienced during the first nine weeks of the second quarter continue through the rest of the 2Q07, which ends Aug. 4, net income will be between $1.06 and $1.32 a share. Analysts, on average, expected it to earn $2.12 for 2Q07.

Sears also said its board approved the repurchase of up to an additional $1 billion of its common shares. This authorization is on top of the $121 million worth of shares that remain available for repurchase under the company's existing repurchase program.