Credit Card Woes As Sears Income Sags

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First-quarter results were down at Sears, Roebuck and Co., the company said yesterday, because of weak sales and continued problems with its credit card business.


Operating income was $309 million, down from $356 million in the year-ago quarter. Retail and Related Services reported an operating loss of $23 million for the quarter. That segment posted operating income of $87 million in the year-ago period.


Even an increase was tainted. Net income was up from $110 million last year to $192 million, but last year's Q1 net income included an after-tax charge of $208 million.


Credit and Financial Products had operating income of $395 million in the quarter, a drop of $48 million from the prior year, primarily due to an increase in the provision for uncollectable accounts.


Domestic Credit and Financial Products revenue rose about 1 percent from a year ago to $1.33 billion. Domestic credit card receivables at the end of the first quarter increased 9.4 percent over the prior year to $29.5 billion.


The amount set aside for uncollectable accounts rose from $381 million to $483 million. Year-over-year delinquencies increased from 7.31 percent to 7.87 percent.


Last month it was announced that Sears might sell its $30 billion credit card portfolio to focus on its retail business, adding that it was exploring alternatives and expected to complete a review in the second half of the year. The company's credit card business has been a problem because of rising loan defaults largely due to the struggling economy.


* Office Depot Inc., Delray Beach, FL, said that company sales in the first quarter ended March 29 rose 1 percent to $3.1 billion compared with last year's first quarter. Worldwide comparable sales in its 885 stores and 39 delivery centers that have been open more than one year fell 3 percent in the quarter. Operating profit fell 1 percent to $161.3 million as the company experienced a 7 percent decline in comparable North American Retail sales. Global e-commerce sales reached $599.2 million in the quarter, up 23 percent. Domestic e-commerce sales grew 21 percent.


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