HOFFMAN ESTATES, Ill.-First-quarter net income for Sears Holdings dropped 38 percent to $16 million.
The decline occurred in spite of the fact that other key numbers for the company were relatively flat in the quarter. Revenues finished the quarter at $10 billion, less than 1 percent off the first quarter of last year; and selling and administrative expenses actually declined by 0.7 percent. W. Bruce Johnson, Sears Holdings’ interim chief executive officer and president, noted that the company’s gross margin dipped by 40 basis points to 28.2 percent. There was also a gain of 14 percent on the company’s interest expense.
The gross margin drop “was mainly due to reduced margins in our home appliance category, driven primarily by increased promotional markdowns, as well as reduced margins in the home electronics category,” the company said in a press release.
The revenue picture included same-store sales increases of 1.7 percent for Kmart and 1.2 percent for Sears domestic stores. Johnson said Kmart had a particularly upbeat quarter, improving its gross margin and nearly doubling its operating income.