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Sears Narrows Its Loss; Shares Drop

Sears narrowed its losses because of improved profit margins at Kmart.
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narrowed its losses in the second quarter because of improved profit margins at Kmart.

Net loss attributable to Sears Holdings' shareholders for the quarter was $39 million, or 35 cents la share, vs. a year-earlier loss of $94 million, or 79 cents. The adjusted loss for the latest second quarter was 19 cents.

Sears said during the quarter, it saw "significantly improved profitability in the Kmart format" as gross margin increased 230 basis points from a year ago.

Sears said total revenue decreased to $10.5 billion for the quarter vs. $10.6 billion a year ago. The decline in total revenue for the quarter was primarily a result of a 2.2% decrease in domestic comparable store sales and the effect of having fewer Kmart and Sears full-line stores in operation -- partially offset by an increase of $96 million due to changes in the Canadian foreign exchange rate.

The consensus estimate for the quarter was a loss of 18 cents a share on revenue of $10.62 billion.

The company said the domestic comparable-store sales decrease included declines of 1.4% at Kmart and 2.8% at Sears Domestic. Kmart's quarterly decrease in comparable store sales was primarily driven by the food and consumables category, and partially offset by increases in apparel, including footwear, and toys.

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Shares of Sears are changing hands at $64.11 a half hour after the opening bell Thursday, down 4.7% on the day.

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