EARNINGS : Sears Reports 63.7% Drop in Net Income

CHICAGO — Sears, Roebuck & Co. Monday reported a 63.7% drop in its first-quarter net income but the retailing giant said the results were distorted by an accounting change that inflated last year’s earnings.

Excluding the $544.2-million credit Sears gained in the first quarter of 1988 with a new accounting method, the company’s net income rose 56.3% in the first quarter of 1989, Sears said in a news release.

Sears reported net income of $257.7 million, or 70 cents a share, for the first three months of this year. The figure compared to $709.1 million, or $1.87 a share, for the same period a year ago.

First-quarter revenue rose 10.9% to $12.16 billion, compared to $10.96 billion in 1988’s first quarter.

Chairman Edward A. Brennan said all Sears’ business groups reported record-high quarterly revenue.

‘Delighted’ With Response

Sales of the Sears Merchandise Group, the retailing division, rose 11.9% to $6.76 billion during the first quarter from $6.04 billion a year earlier. The division’s revenue jumped 16.4% in March following the introduction of a new low pricing policy.

“We are delighted with consumer response,” Brennan said. “The results confirmed our belief that everyday low pricing is an idea whose time has come.”

Sears also owns Allstate Insurance, Dean Witter Financial Services and Coldwell Banker Real Estate.