Sears Holdings Corp. (NASDAQ: ) is scheduled to release its second quarter financial results before the market open on Thursday, August 20, 2009. Analysts currently expect the company to report earnings of 35 cents per share on revenue of $11.76 billion. In the year ago period, Sears Holdings reported earnings of 50 cents a share on revenue of $11.76 billion.

Sears Holdings Corporation operates as a broadline retailer. The parent company was formed in 2005 by the merger of Sears Roebuck (Sears) and Kmart Holdings. Sears Holdings is composed of three business segments: Kmart, Sears Domestic, and Sears Canada.  As of January 31, 2009, the company operated approximately 1368 Kmart stores, 856 Full-line stores, 73 Sears Essentials/Grand stores, and 1233 specialty stores in the United States, as well as 122 full-line stores, 171 dealer stores, 5 appliances and mattresses stores, 30 corbeil stores, 11 outlet stores, 30 floor covering stores, 1858 catalog pick-up locations, and 106 travel offices in Canada.

The company's first quarter net income totaled $26 million or 21 cents a share, compared to year-ago loss of $56 million or 43 cents a share. Excluding one-time items, earnings were 38 cents a share. Revenue for the quarter fell 9.2% to $10.1 billion from $11.1 billion last year. Analysts on average expected a loss of 88 cents a share for the quarter on revenue of $10.06 billion. Same store sales declined 7.4% overall, including declines of 11.7% at Sears and 2.1% at Kmart.

Sear Holding's first quarter results were primarily helped by improved gross margins, reduced inventories, and cost control measures. Gross margins for the quarter improved 130 basis points to 28.6% from 27.3%. Inventories were reduced to $9.5 billion from $10.3 billion last year, and debt to $3 billion from $3.5 billion. Selling and administrative expenses declined by $242 million from last year, mainly due to a $107 million reduction in advertising expense and an $84 million reduction in payroll and benefits expense.

However, the company's home appliance and household goods, and apparel divisions were hit hard by the weak housing market. Moreover, the retailer has continued to lose market share to the likes of Wal-Mart (NYSE: ) and Target (NYSE: ).

The company is busy preparing for upcoming holiday season even though it's still August. Sears Holdings recently announced that it will begin to offer toys in 20 of its Sears stores. The retailers used to be America's first choice for toys in the 1950s. The stores eliminated year-round toy departments in the mid-1990s, in the face of tough competition, but they still bring in toys over the holidays in two-thirds of their stores. Selling toys gives Sears an opportunity to attract shoppers during the crucial shopping season and boost revenue. It has also introduced Christmas Club cards to encourage savings for holiday purchases.

In its second quarter, Sears Holding Corp. (NASDAQ: ) arranged a $4 billion loan from GE Capital and announced the Kmart Design Center. Sears is expected to report that its earnings grew 38.7% from a year ago to $0.31 per share.

Shares of the company are currently trading at 39 times consensus 2011 EPS estimates. In terms of stock performance, Wal-Mart shares have gained 78% since the beginning of the year. On Tuesday, shares of the company rose $1.65 or 2.29% to $73.71.

Disclosure: Author doesn’t own any of the stocks mentioned here.