Sears Holdings Corp. (NASDAQ: SHLD) saw profits rise 20 percent in its fiscal first quarter, pushed by special gains, but sales declined at its major retail outlets.
The Hoffman Estates, Ill.-based retailerâ€™s net income rose to $216 million, or $1.40 a share, in its fiscal first quarter, compared to $180 million, or $1.14 a share, a year earlier.
Excluding special items, earnings were $1.10 per share, compared with $1.11 in the same quarter last year.
In early May, Sears said it expected a net income of $1.30 to $1.53 a share.
Sales fell 2.5 percent, to $11.7 billion compared to $12 billion in the year-ago quarter.
Analysts, on average, had been expecting the company to post a profit of $1.22 a share on revenue of $11.5 billion, according to Thomson Financial.
During the quarter the company said it reached legal settlements which boosted earnings by 12 cents per share. It also received insurance claims from hurricane damage incurred during 2005, which added 6 cents per share.
Aylwin Lewis, the companyâ€™s president and CEO said external factors, such as higher energy and a slower market contributed to the slowdown.
However, as an organization, we need to overcome these factors by better controlling costs and developing innovative solutions that better meet our customers' needs and allow us to generate a more reasonable level of profitability even in the face of such challenges, he added.
Comparable store sales were down 3.4 percent at Sears and down 4.4 percent at Kmart.
Sears shares fell $4.10, or 2.2 percent to $179.15 in late afternoon trading.