Sears’ losses less than expected
Sears reported a $244 million net income gain for the quarter, compared to a $471 million loss during the prior year period. Adjusted for significant items, the retailer would have experienced a net loss of $230 million for the quarter. The net loss of $2.15 per share beat analysts’ expectations of a $3.05 loss per share.
Revenue for the quarter hit $4.3 billion, down from $5.4 billion for the same period of 2016. The decrease in revenue resulted from a 11.9% decline in comp sales and store closures at both Kmart and Sears, which accounted for $557 million of the decline.
Kmart comps dropped by 11.2% due to declines in grocery & household, pharmacy, apparel and home. Sears’ domestic same store sales decreased by 12.4% thanks to drop offs in home appliances, apparel, and lawn and garden.
Gross margin decreased by $247 million compared to the prior year period due to the drop in sales and increased promotions.
Total cash balances for the retailer were $264 million, down from $286 million at the end of the fourth quarter of 2016.
The company, which has set a cost savings target of $1.25 billion, reported it has cut $700 million in costs to date. To reach its goal, Sears has closed 150 stores, plans to shutter 92 pharmacies in Kmart locations and axe 50 Sears Auto Centers.
Sears recently got an extension on its $500 million secured loan facility that was due June 2017 until January 2018 with an option to extend maturity until July 2018. It also entered an agreement with Metropolitan Life Insurance Company to annuitize $515 million of its pension obligations.
PVH beat expectations, raises guidance
PVH, which includes Calvin Klein, Tommy Hilfiger and a variety of private label programs, reported revenue up for the first quarter by 4 percent, beating guidance. Earnings per share were $1.65 compared to a guidance of $1.58 to $.160.
“We continue to experience strong momentum in our Calvin Klein and Tommy Hilfiger businesses, which allowed us to exceed both our sales and earnings guidance for the first quarter despite the volatile macroeconomic environment and the highly promotional retail market in the U.S,” said Emanuel Chirico, chairman and chief executive officer.
Revenue for Calvin Klein increased 5 percent to $756 million, helped by an 11 percent increase in international business. The Tommy Hilfiger business was up 6 percent for the quarter to $842 million. A 5 percent decrease domestically was offset by a 15 percent increase internationally. The Heritage Brands business decreased 3 percent to $391 million.
The company raised its full year guidance to $7.40 to $7.50 from $7.30 to $7.40.
“We are pleased to increase our earnings guidance for the year despite the volatility that continues to persist in the macroeconomic environment,” Chirico said. “We believe the investments we have made and continue to make in our business will deliver long-term sustainable growth and stockholder value.”
Guess rides Asian and European gains
Guess reported adjusted net loss of $19.4 million for the first quarter, ended April 29. That’s a 0.5% drop from the same period the previous year.
“We are pleased to report that our first quarter results finished above the high-end of our expectations for revenues, adjusted operating margin and earnings per share,” said chief executive officer Victor Herrero. “In the Americas, as the performance of our business and the environment remain soft, we are more than ever focused on shrinking our footprint and profitability improvements.”
The brand reported a revenue increase of 2.2% to $458.6 million from $448.8 million. Retail business in the Americas decreased by 14.9%, while comp sales, including e-commerce, dropped by 15 percent. The company’s wholesale business in the Americas increased by 5.7%. Licensing revenue fell off by 9.3%. The news was better in the rest of the world with 23.3% and 16.9% jump in revenues out of Europe and Asia, respectively.
Guess directly operated 949 retail stores in the Americas, Europe and Asia at the end of the quarter, with 440 of those locations in the U.S. and Canada. The company says in the next three to four years, that number could be reduced to 300 as it closes stores as leases expire.
The brand’s licensees and distributors operated 721 additional retail stores worldwide at the close of the quarter.