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Sears, Roebuck and Co. reported net income of U.S. $147 million, or $0.52 per share, for the third quarter ended Sept. 27, 2003, compared with net income of $189 million, or $0.59 per share, in the third quarter of 2002.
Sears' third quarter 2003 earnings included a pretax charge of $141 million ($89 million after-tax), or $0.32 per share, related to the company's previously announced refinement of its business strategy for The Great Indoors.
Retail and Related Services reported an operating loss of $85 million for the third quarter of 2003, compared with operating income of $42 million in the third quarter of 2002. Included in these results is the pretax charge of $141 million related to The Great Indoors, which consists of asset impairment charges of $99 million on exited and certain ongoing stores, inventory clearance costs of $29 million, and other exit costs of $13 million. Of the $141 million charge, $112 million is reflected in special charges and impairments and $29 million in cost of sales.
Revenues for the third quarter were $7.3 billion, an increase of 1.1 percent over the same period last year, primarily due to the 1.2-percent increase in domestic comparable store sales. In the home group, the lawn and garden and fitness businesses continued to experience strong performances across all formats, while home appliances showed solid improvements in the quarter.
The company's domestic gross margin rate for the quarter declined from 27.5 percent to 26.2 percent, as improvements in sourcing were more than offset by an increase in promotional and clearance activities and the $29 million charge for inventory clearance activities in connection with The Great Indoors' restructuring.
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