Post by Dominiko on Jan 21, 2011 19:56:55 GMT -5
By Caitlin Nish and Tess Stynes
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Sears Holdings Corp. (SHLD) projected fourth-quarter earnings that topped analysts' expectations because of a lower tax rate, sending shares of the retailer higher.
However, the company also reported its domestic same-store sales declined during December due to continued weakness at its U.S. Sears stores, particularly in consumer electronics.
The retailer has struggled as it continues losing business to rivals and worries remain that consumers are keeping a tight grip on their wallets amid economic uncertainty and high unemployment.
But Sears said Tuesday that for the period ending Jan. 29, it expects earnings of $3.39 to $4.12 a share. Analysts polled by Thomson Reuters most recently expected $3.09.
The company added that it expects the fourth-quarter effective tax rate to be approximately 32%, due to the favorable resolution of certain federal and state income tax matters.
UBS AG pointed out in a note that the expected tax rate compares to a normalized rate of 39%, adding roughly 35 cents on the low end of the guidance range and 42 cents on the high end, putting Street expectations effectively within the range excluding the tax benefit.
Sears' shares were up 6.6% to $75.28 in recent trading, after earlier hitting a high of $78.25. The stock is off 24% in the past twelve months.
Sears also said same-store sales declined 1.7% in December, including a 6% drop at U.S. Sears stores that more than offset 2.3% growth at Kmart, which has been the relatively stronger of the two operations recently.
Sears attributed more than half of the 5.3% quarter-to-date decline in same-store-sales at its Sears stores to consumer electronics, with appliances and tools also dropping. However, footwear, jewelry and automotive categories reported sales growth.
"Sears domestic is struggling a bit still. They have a lot of appliances, and a lot of home goods, but that stuff lags in a recession and its also housing-related," said Paul Swinand, a securities analyst at Morningstar.
However, "if Sears just barely grows over the long term and makes average cash flow margins compared to history, the stock is still very undervalued," Swinand said.
The company expects to release its fourth-quarter results Feb. 24.
-By Caitlin Nish and Tess Stynes, Dow Jones Newswires; 212-416-2076; caitlin.nish@dowjones.com
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Sears Holdings Corp. (SHLD) projected fourth-quarter earnings that topped analysts' expectations because of a lower tax rate, sending shares of the retailer higher.
However, the company also reported its domestic same-store sales declined during December due to continued weakness at its U.S. Sears stores, particularly in consumer electronics.
The retailer has struggled as it continues losing business to rivals and worries remain that consumers are keeping a tight grip on their wallets amid economic uncertainty and high unemployment.
But Sears said Tuesday that for the period ending Jan. 29, it expects earnings of $3.39 to $4.12 a share. Analysts polled by Thomson Reuters most recently expected $3.09.
The company added that it expects the fourth-quarter effective tax rate to be approximately 32%, due to the favorable resolution of certain federal and state income tax matters.
UBS AG pointed out in a note that the expected tax rate compares to a normalized rate of 39%, adding roughly 35 cents on the low end of the guidance range and 42 cents on the high end, putting Street expectations effectively within the range excluding the tax benefit.
Sears' shares were up 6.6% to $75.28 in recent trading, after earlier hitting a high of $78.25. The stock is off 24% in the past twelve months.
Sears also said same-store sales declined 1.7% in December, including a 6% drop at U.S. Sears stores that more than offset 2.3% growth at Kmart, which has been the relatively stronger of the two operations recently.
Sears attributed more than half of the 5.3% quarter-to-date decline in same-store-sales at its Sears stores to consumer electronics, with appliances and tools also dropping. However, footwear, jewelry and automotive categories reported sales growth.
"Sears domestic is struggling a bit still. They have a lot of appliances, and a lot of home goods, but that stuff lags in a recession and its also housing-related," said Paul Swinand, a securities analyst at Morningstar.
However, "if Sears just barely grows over the long term and makes average cash flow margins compared to history, the stock is still very undervalued," Swinand said.
The company expects to release its fourth-quarter results Feb. 24.
-By Caitlin Nish and Tess Stynes, Dow Jones Newswires; 212-416-2076; caitlin.nish@dowjones.com