Sears Holdings Reports Fourth Quarter And Full Year 2012 Results
Sears Holdings Reports Fourth Quarter And Full Year 2012 Results
PR Newswire
HOFFMAN ESTATES, Ill., Feb. 28, 2013
HOFFMAN ESTATES, Ill., Feb. 28, 2013 /PRNewswire/ -- Sears Holdings
Corporation ("Holdings," "we," "us," "our" or the "Company") (NASDAQ: SHLD)
today reported its fourth quarter and full year 2012 results. In summary, we
reported:
o Adjusted EBITDA of $429 million for the fourth quarter of 2012 and $626
million for the year, which were both in line with our guidance provided
on January 7, 2013. Adjusted EBITDA for the prior year fourth quarter and
year were $351 million and $277 million, respectively;
o Gross margin rate increased 130 basis points for the fourth quarter of
2012 and 90 basis points for the year from the comparable prior year
periods;
o Continued discipline of our investment in inventory with Domestic
inventory declining $895 million from the prior year. Excluding the
inventory related to the Sears Hometown and Outlet businesses, Domestic
inventory declined $501 million;
o Sears Domestic's comparable store sales improved 0.8% in the fourth
quarter of 2012 and declined 1.4% for the year. Kmart's comparable store
sales declined 3.7% in the fourth quarter and for the year. Sears Canada's
comparable store sales declined 3.8% in the fourth quarter and 5.6% for
the year;
o Our integrated online business grew over 25% in the fourth quarter of 2012
and 17% for the full year;
o SHOP YOUR WAY Members drove over 50 percent of our revenues at Sears
Domestic and Kmart for the 2012 fourth quarter and year;
o Net loss from continuing operations attributable to Holdings' shareholders
of $489 million and $930 million, ($4.61 and $8.78 loss per diluted share
from continuing operations), respectively, for the fourth quarter and full
year 2012. Prior year fourth quarter and year net losses were $2.4 billion
and $3.1 billion ($22.47 and $29.15 per diluted share from continuing
operations), respectively; and
o Adjusted earnings per diluted share from continuing operations for the
fourth quarter of $1.12 in 2012 and $0.54 in 2011 and adjusted loss per
diluted share from continuing operations for the year of $2.03 in 2012 and
$4.52 in 2011.
"Sears Holdings made progress in 2012 improving the profitability of our
business, but we know there's more work to be done in 2013," said Edward S.
Lampert, Sears Holdings' Chairman and Chief Executive Officer. "Our focus
continues to be on our core customers, our Members, and finding ways to
provide them value and convenience through Integrated Retail and our SHOP YOUR
WAY Membership platform. We have invested significantly in our online
ecommerce platforms, our Membership rewards program and the technology needed
to support these initiatives."
Fourth Quarter and Full Year Revenues and Comparable Store Sales
We follow a retail-based financial reporting calendar. Accordingly, our fourth
quarter and fiscal year 2012 results reflect the 14- and 53- week periods
ended February 2, 2013, respectively, whereas 2011 contained 13- and 52- weeks
for the fourth quarter and year, respectively.
For the quarter, revenues decreased $224 million to $12.3 billion for the
quarter ended February 2, 2013, as compared to revenues of $12.5 billion for
the quarter ended January 28, 2012. The decrease was primarily due to the
separation at the end of the third quarter of the Sears Hometown and Outlet
businesses, the effect of having fewer Kmart and Sears Full-line stores in
operation and lower comparable store sales, partially offset by the inclusion
of an additional week of revenues in the fourth quarter of 2012. Full year
revenues decreased $1.7 billion to $39.9 billion for the 53 weeks ended
February 2, 2013, as compared to revenues of $41.6 billion last year. The
decrease in full year revenues was primarily due to the effect of having fewer
Kmart and Sears Full-line stores in operation, lower comparable store sales
and the separation of the Sears Hometown and Outlet businesses, partially
offset by the inclusion of an additional week of revenues in the current year.
Fourth quarter 2012 revenues included an increase of $36 million due to
foreign currency exchange rates. Full year 2012 revenues included a decrease
of $37 million due to foreign currency exchange rates.
For the quarter, domestic comparable store sales declined 1.6%, comprised of a
decrease of 3.7% at Kmart and an increase at Sears Domestic of 0.8%. Excluding
the consumer electronics category, total domestic comparable store sales
decreased 0.2% with Sears Domestic increasing 2.4% and Kmart decreasing 2.5%.
Sears Domestic generated a comparable store sales increase of 0.8% in the
fourth quarter as increases in the apparel, home appliance and home categories
were partially offset by declines in the consumer electronics, sporting goods
and lawn & garden categories, as well as at Sears Auto Centers. The Sears
apparel category has now achieved comparable store sales increases for six
consecutive quarters.
Kmart's fourth quarter comparable store sales decline of 3.7% reflects a
significant decrease in the consumer electronics category, as well as declines
in the pharmacy and grocery & household categories. The decline in pharmacy
reflects the conversion of brand name drugs to equivalent generic drugs.
For the year, domestic comparable store sales declined 2.5%, with declines of
1.4% at Sears Domestic and 3.7% at Kmart. Excluding the consumer electronics
category, total domestic comparable store sales decreased 1.4% with Sears
Domestic decreasing only 0.1% and Kmart decreasing 2.8%.
Decreases in comparable store sales at Sears Domestic of 1.4% for the year
were driven by decreases in consumer electronics, lawn & garden and home
appliances, as well as at Sears Auto Centers. These decreases were partially
offset by increases in apparel and home. The Kmart decline in comparable store
sales of 3.7% reflects decreases in a majority of its categories, most notably
the consumer electronics, pharmacy, grocery & household and drug store
categories.
Operating Performance
Operating loss was $622 million for the quarter ended February 2, 2013,
compared to $691 million for the quarter ended January 28, 2012.
For the quarter, our gross margin increased $101 million to $3.2 billion in
2012. Gross margin included charges of $3 million and $93 million related to
store closures for 2012 and 2011, respectively. In addition, Sears Canada's
gross margin included an increase of $11 million related to the impact of
foreign currency exchange rates. Excluding these items, gross margin was flat
to the prior year as the decrease in total revenues noted above was more than
offset by an increase in gross margin due to improved rate.
As compared to the prior year, Sears Domestic's gross margin rate improved 120
basis points for the quarter primarily due to apparel and home services, which
were partially offset by declines in consumer electronics. Kmart's gross
margin rate for the fourth quarter improved 210 basis points primarily due to
apparel, toys and pharmacy which were partially offset by a decline in the
consumer electronics category. Sears Canada's gross margin rate declined 120
basis points for the fourth quarter due to accessories, women's intimates and
footwear categories.
Selling and administrative expenses increased $361 million in the fourth
quarter of 2012 compared to the fourth quarter of 2011 and included expenses
related to pension plans, store closings, store impairments and severance of
$543 million for 2012 and $114 million for 2011. The fourth quarter of 2012
also included $2 million of transaction costs associated with strategic
initiatives while the fourth quarter of 2011 included expense of $3 million
related to hurricane losses. Excluding these items, selling and administrative
expenses declined $67 million due to decreases in advertising and supplies
expenses, which were partially offset by an increase in domestic payroll
expense. Selling and administrative expenses at Sears Canada for 2012 included
a decrease of $8 million related to the impact of foreign currency exchange
rates.
Operating loss for the fourth quarter of 2012 included non-cash charges
related to our pension settlements and the impairment of Sears Canada goodwill
balances, expenses related to domestic pension plans, store closings, store
impairments and severance and transaction costs, as well as gains on sales of
assets, which aggregated to $863 million. Operating loss for the fourth
quarter of 2011 included a non-cash impairment charge for goodwill balances
related to our Sears Domestic segment, expenses related to domestic pension
plans, store closings, severance and hurricane losses, as well as gains on
sales of assets, which aggregated to $847 million. See the attached schedule,
"Adjusted Earnings per Share," for a reconciliation from GAAP to as adjusted
amounts, including adjusted earnings per diluted share from continuing
operations.
Our effective tax rate for the fourth quarter was a benefit of 1.4% in 2012
and an expense rate of 216.6% in 2011. The current year tax rate continues to
reflect the effect of not recognizing the benefit of current period losses in
certain domestic jurisdictions where it is not more likely than not that such
benefits would be realized. The prior year tax rate was the result of
significant tax matters in 2011, which included a non-cash charge of $1.7
billion to establish a valuation allowance against certain deferred income tax
assets.
Operating loss was $838 million for the year ended February 2, 2013, compared
to $1.5 billion for the year ended January 28, 2012.
For the year, our gross margin declined $87 million to $10.5 billion in 2012
and included charges of $35 million and $130 million related to store closures
for 2012 and 2011, respectively. Excluding these items, gross margin declined
$182 million as the above noted decline in revenues was only partially offset
by an improvement in gross margin rate. In addition, Sears Canada's gross
margin included a decrease of $11 million related to the impact of foreign
currency exchange rates.
Sears Domestic's gross margin rate improved 120 basis points in 2012 primarily
due to the apparel, home appliance and footwear categories, which were
partially offset by declines in the consumer electronics category and the
Lands' End customer direct business. Kmart's gross margin rate improved 70
basis points in 2012 mainly due to the apparel, pharmacy and toys categories
which were partially offset by a decline in the consumer electronics category.
Sears Canada's gross margin rate decreased 10 basis points in 2012 due to the
fitness & recreation, children's wear, jewelry, accessories & luggage and
footwear categories.
For the year, selling and administrative expenses were flat to the prior year
and included expenses related to pension plans, store closings, store
impairments and severance of $725 million and $198 million for 2012 and 2011,
respectively. The current year also included $12 million of transaction costs
associated with strategic initiatives while 2011 included expense of $12
million related to hurricane losses. Excluding these items, selling and
administrative expenses declined $531 million due to reductions in
advertising, supplies and payroll expenses. Selling and administrative
expenses at Sears Canada for 2012 included a decrease of $10 million related
to the impact of foreign currency exchange rates.
Operating loss for 2012 included non-cash charges related to pension
settlements and the impairment of Sears Canada goodwill balances, expenses
related to domestic pension plans, store closings, store impairments and
severance and transaction costs, as well as gains on sales of assets which
aggregated to $705 million. Operating loss for 2011 included a non-cash
impairment charge for goodwill balances related to our Sears Domestic segment,
expenses related to domestic pension plans, store closings, severance and
hurricane losses, and a net gain on sales of assets, which aggregated to $964
million. See the attached schedule, "Adjusted Earnings per Share," for a
reconciliation from GAAP to as adjusted amounts, including adjusted loss per
diluted share.
Our effective tax rate for the year was 4.4% in 2012 and 78.2% in 2011. The
2012 year tax rate continues to reflect the effect of not recognizing the
benefit of current period losses in certain domestic jurisdictions where it is
not more likely than not that such benefits would be realized. The prior year
tax rate is the result of significant tax matters in 2011, which included a
non-cash charge of $1.8 billion to establish a valuation allowance against
certain deferred income tax assets.
Financial Position
"As we previously announced, we expect to generate at least $500 million of
additional liquidity through monetization of assets over the next twelve
months," said Rob Schriesheim, Sears Holdings' Chief Financial Officer. "We
are an asset-rich enterprise with substantial liquidity, unencumbered real
estate and well-established stand-alone businesses, including Lands' End and
Sears Canada. In addition to our asset monetizations, we currently expect to
reduce 2013 peak domestic inventory by $500 million from the 2012 level of
$8.6 billion at the end of the third quarter as a result of stores already or
expected to be closed, initiatives underway to reduce slow-moving inventory
and modest productivity improvement. This action is expected to generate $300
million of cash after consideration of related payables. We also expect to
further reduce our fixed cost base by another $200 million. In 2012, we
generated an additional $1.8 billion in liquidity by unlocking value in our
asset base."
We had cash balances of $618 million at February 2, 2013 ($380 million
domestic and $238 million at Sears Canada) as compared to $754 million ($357
million domestic and $397 million at Sears Canada) at January 28, 2012. The
decrease in cash during 2012 was primarily due to contributions to our pension
and post-retirement benefit plans of $593 million, capital expenditures of
$378 million and repayments of long-term debt of $335 million, partially
offset by cash generated from the sales of properties of $532 million and from
the dividend from and sale of Sears Hometown and Outlet Stores, Inc. of $447
million and reductions in working capital needs.
Merchandise inventories at February 2, 2013 were $7.6 billion, as compared to
$8.4 billion at January 28, 2012. Domestic inventory decreased $895 million to
$6.8 billion at February 2, 2013. Excluding the inventory related to the Sears
Hometown and Outlet businesses, domestic inventory decreased $501 million from
the prior year's fourth quarter driven by both improved productivity and store
closures. Sears Domestic inventory decreased in virtually all categories, with
the most notable decreases in the consumer electronics, home appliances, home
and tools & paint categories. Kmart inventory also decreased in virtually all
categories with the most notable decreases in consumer electronics, pharmacy &
drug and grocery & household categories. Sears Canada's inventory levels
increased $46 million to $791 million at February 2, 2013, primarily due to
the timing of receipts and a reduction in reserves due to improved inventory
quality.
Total debt (consisting of short-term borrowings, long-term debt and capital
lease obligations) was $3.1 billion at February 2, 2013, down from $3.5
billion at January 28, 2012. Availability under our credit facilities was $2.3
billion ($1.8 billion domestic and $0.5 billion at Sears Canada, prior to
taking into consideration possible reserves) at the end of 2012. Availability
under our credit facilities was $2.2 billion ($1.8 billion domestic and $0.4
billion at Sears Canada) at the end of 2011.
Sears Canada Partial Spin-off
On November 13, 2012, we completed a partial spin-off (the "spin-off") of our
interest in Sears Canada. Prior to the spin-off, Holdings owned approximately
96% of the issued and outstanding common shares of Sears Canada. In connection
with the spin-off, we distributed approximately 45 million common shares of
Sears Canada held by Holdings on a pro rata basis to holders of Holdings'
common stock. Following the spin-off, Holdings was beneficial holder of
approximately 51% of the issued and outstanding common shares of Sears
Canada.
Adjusted EBITDA
In addition to our net loss determined in accordance with GAAP, for purposes
of evaluating operating performance, we use an Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
measurement. Adjusted EBITDA is computed as net loss attributable to Sears
Holdings Corporation appearing on the statements of operations excluding loss
attributable to noncontrolling interest, income tax expense, interest expense,
interest and investment income, other income (loss), depreciation and
amortization and gain on sales of assets. In addition, it is adjusted to
exclude certain significant items as set forth below. Our management uses
Adjusted EBITDA to evaluate the operating performance of our businesses, as
well as executive compensation metrics, for comparable periods. Adjusted
EBITDA should not be used by investors or other third parties as the sole
basis for formulating investment decisions as it excludes a number of
important cash and non-cash recurring items. While Adjusted EBITDA is a
non-GAAP measurement, management believes that it is an important indicator of
operating performance because:
o EBITDA excludes the effects of financing and investing activities by
eliminating the effects of interest and depreciation costs;
o Management considers gains/(losses) on the sale of assets to result from
investing decisions rather than ongoing operations; and
o Other significant items, while periodically affecting our results, may
vary significantly from period to period and have a disproportionate
effect in a given period, which affects the comparability of results.
Adjusted EBITDA was determined as follows:
Quarters Ended Years Ended
February 2, January 28, February 2, January 28,
millions
2013 2012 2013 2012
Net loss attributable to
SHC per statement of $ (489) $ (2,403) $ (930) $ (3,140)
operations
Loss attributable to (128) (1) (124) (7)
noncontrolling interest
Loss from discontinued — 17 — 27
operations, net of tax
Income tax expense (9) 1,633 44 1,369
(benefit)
Interest expense 68 73 267 289
Interest and investment (66) (10) (94) (41)
income
Other income (loss) 2 — (1) 2
Operating loss (622) (691) (838) (1,501)
Depreciation and 205 212 830 853
amortization
Gain on sales of assets (32) (29) (468) (64)
Before excluded items (449) (508) (476) (712)
Impairment charges 330 649 330 649
Pension settlements 455 — 455 —
Closed store reserve and 50 189 140 254
severance
Domestic pension expense 41 18 165 74
Transaction costs 2 — 12 —
Hurricane losses — 3 — 12
Adjusted EBITDA as defined $ 429 $ 351 $ 626 $ 277
% to revenues 3.5% 2.8% 1.6% 0.7%
Adjusted EBITDA for our segments is as follows:
Quarters Ended
Adjusted EBITDA % To Revenues
February 2, January 28, February 2, January 28,
millions
2013 2012 2013 2012
Kmart $ 168 $ 158 3.6% 3.3%
Sears Domestic 197 96 3.2% 1.5%
Sears Canada 64 97 4.9% 7.3%
Total Adjusted EBITDA $ 429 $ 351 3.5% 2.8%
Years Ended
Adjusted EBITDA % To Revenues
February 2, January 28, February 2, January 28,
millions
2013 2012 2013 2012
Kmart $ 201 $ 172 1.4% 1.1%
Sears Domestic 356 4 1.7% —
Sears Canada 69 101 1.6% 2.2%
Total Adjusted EBITDA $ 626 $ 277 1.6% 0.7%
Forward-Looking Statements
Results are preliminary and unaudited. This press release contains
forward-looking statements about our expectations for the fourth quarter of
fiscal 2012. Forward-looking statements are subject to risks and uncertainties
that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by these forward-looking statements. Such statements are
based upon the current beliefs and expectations of our management and are
subject to significant risks and uncertainties. The following factors, among
others, could cause actual results to differ from those set forth in the
forward-looking statements: our ability to offer merchandise and services that
our customers want, including our proprietary brand products; our ability to
successfully implement initiatives to improve our liquidity through inventory
management and other actions; competitive conditions in the retail and related
services industries; worldwide economic conditions and business uncertainty,
including the availability of consumer and commercial credit, changes in
consumer confidence and spending, the impact of rising fuel prices, and
changes in vendor relationships, including the impact of increases in the cost
of raw materials experienced by certain of our vendors; vendors' lack of
willingness to provide acceptable payment terms or otherwise restricting
financing to purchase inventory or services; the impact of seasonal buying
patterns, including seasonal fluctuations due to weather conditions, which are
difficult to forecast with certainty; our dependence on sources outside the
United States for significant amounts of our merchandise; our extensive
reliance on computer systems to process transactions, summarize results and
manage our business, which may be subject to disruptions or security breaches;
our reliance on third parties to provide us with services in connection with
the administration of certain aspects of our business; impairment charges for
goodwill and intangible assets or fixed-asset impairment for long-lived
assets; our ability to attract, motivate and retain key executives and other
associates; our ability to protect or preserve the image of our brands; the
outcome of pending and/or future legal proceedings, including product
liability claims and proceedings with respect to which the parties have
reached a preliminary settlement; and the timing and amount of required
pension plan funding; and other risks, uncertainties and factors discussed in
our most recent Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission. We intend the forward-looking statements
to speak only as of the time made and do not undertake to update or revise
them as more information becomes available.
About Sears Holdings Corporation
Sears Holdings Corporation is a leading integrated retailer with over 2,500
full-line and specialty retail stores in the United States and Canada and the
home of SHOP YOUR WAY, a social shopping experience where members have the
ability to earn points and receive benefits across a wide variety of physical
and digital formats through ShopYourWay.com. Sears Holdings is the leading
home appliance retailer as well as a leader in tools, lawn and garden, fitness
equipment and automotive repair and maintenance. Key proprietary brands
include Kenmore, Craftsman and DieHard, with a broad apparel offering,
including such well-known labels as Lands' End, the Kardashian Kollection,
Jaclyn Smith and Joe Boxer, as well as Sofia by Sofia Vergara and The Country
Living Home Collection. We are the nation's largest provider of home
services, with more than 15 million service and installation calls made
annually and have a long-established commitment to those who serve in the
military through initiatives like the Heroes at Home program. We have been
named the 2011 Mobile Retailer of the Year, Recipient of the 2012 ENERGY STAR®
"Corporate Commitment Award" for Product Retailing and Energy Management and
one of the Top 20 Best Places to Work for Recent Grads. Sears Holdings
Corporation operates through its subsidiaries, including Sears, Roebuck and
Co. and Kmart Corporation. For more information, visit Sears Holdings' website
at www.searsholdings.com. Twitter: @searsholdings | |Facebook:
http://www.facebook.com/SHCCareers
NEWS MEDIA CONTACT:
Sears Holdings Public Relations
(847) 286-8371
Sears Holdings Corporation
Consolidated Statements of Operations
(Unaudited)
Amounts are Preliminary and Subject to Change
Quarters Ended Years Ended
millions, except per February 2, January 28, February 2, January 28,
share data
2013 2012 2013 2012
REVENUES
Merchandise sales and $ 12,260 $ 12,484 $ 39,854 $ 41,567
services
COSTS AND EXPENSES
Cost of sales, buying 9,097 9,422 29,340 30,966
and occupancy
Gross margin dollars 3,163 3,062 10,514 10,601
Gross margin rate 25.8% 24.5% 26.4% 25.5%
Selling and 3,282 2,921 10,660 10,664
administrative
Selling and
administrative expense 26.8% 23.4% 26.7% 25.7%
as a percentage of total
revenues
Depreciation and 205 212 830 853
amortization
Impairment charges 330 649 330 649
Gain on sales of assets (32) (29) (468) (64)
Total costs and 12,882 13,175 40,692 43,068
expenses
Operating loss (622) (691) (838) (1,501)
Interest expense (68) (73) (267) (289)
Interest and investment 66 10 94 41
income
Other income (loss) (2) — 1 (2)
Loss from continuing
operations before income (626) (754) (1,010) (1,751)
taxes
Income tax (expense) 9 (1,633) (44) (1,369)
benefit
Loss from continuing (617) (2,387) (1,054) (3,120)
operations
Loss from discontinued — (17) — (27)
operations, net of tax
Net loss (617) (2,404) (1,054) (3,147)
Loss attributable to 128 1 124 7
noncontrolling interest
NET LOSS ATTRIBUTABLE TO $ (489) $ (2,403) $ (930) $ (3,140)
HOLDINGS' SHAREHOLDERS
Amounts attributable to
Holdings' shareholders:
Loss from continuing $ (489) $ (2,386) $ (930) $ (3,113)
operations, net of tax
Loss from discontinued — (17) — (27)
operations, net of tax
Net loss $ (489) $ (2,403) $ (930) $ (3,140)
NET LOSS PER COMMON
SHARE:
Diluted:
Continuing operations $ (4.61) $ (22.47) $ (8.78) $ (29.15)
Discontinued operations — (0.16) — (0.25)
$ (4.61) $ (22.63) $ (8.78) $ (29.40)
Diluted weighted average
common shares 106.0 106.2 105.9 106.8
outstanding
Sears Holdings Corporation
Condensed Consolidated Balance Sheets
Amounts are Preliminary and Subject to Change
(Unaudited)
February 2, January 28,
millions
2013 2012
ASSETS
Current assets
Cash and cash equivalents $ 609 $ 747
Restricted cash 9 7
Accounts receivable 635 695
Merchandise inventories 7,558 8,407
Prepaid expenses and other current assets 454 388
Total current assets 9,265 10,244
Property and equipment, net 6,053 6,577
Goodwill 379 841
Trade names and other intangible assets 2,881 2,937
Other assets 762 782
TOTAL ASSETS $ 19,340 $ 21,381
LIABILITIES
Current liabilities
Short-term borrowings $ 1,094 $ 1,175
Current portion of long-term debt and 83 230
capitalized lease obligations
Merchandise payables 2,761 2,912
Unearned revenues 931 964
Other taxes 480 523
Short-term deferred tax liabilities 382 516
Other current liabilities 2,683 2,892
Total current liabilities 8,414 9,212
Long-term debt and capitalized lease obligations 1,943 2,088
Pension and postretirement benefits 2,730 2,738
Long-term deferred tax liabilities 955 816
Other long-term liabilities 2,126 2,186
Total Liabilities 16,168 17,040
Total Equity 3,172 4,341
TOTAL LIABILITIES AND EQUITY $ 19,340 $ 21,381
Total common shares outstanding 106.4 106.3
Sears Holdings Corporation
Segment Results
(Unaudited)
Amounts are Preliminary and Subject to Change
Quarter Ended February 2, 2013
millions, except store data Kmart Sears Sears Sears
Domestic Canada Holdings
Merchandise sales and services $ 4,697 $ 6,253 $ 1,310 $ 12,260
Cost of sales, buying and occupancy 3,598 4,561 938 9,097
Gross margin dollars 1,099 1,692 372 3,163
Gross margin rate 23.4% 27.1% 28.4% 25.8%
Selling and administrative 969 1,987 326 3,282
Selling and administrative expense as a 20.6% 31.8% 24.9% 26.8%
percentage of total revenues
Depreciation and amortization 37 141 27 205
Impairment charges 10 25 295 330
Gain on sales of assets (20) (11) (1) (32)
Total costs and expenses 4,594 6,703 1,585 12,882
Operating income (loss) $ 103 $ (450) $ (275) $ (622)
Number of:
Kmart Stores 1,221 — — 1,221
Full-Line Stores — 798 118 916
Specialty Stores — 54 357 411
Total Stores 1,221 852 475 2,548
Quarter Ended January 28, 2012
millions, except store data Kmart Sears Sears Sears
Domestic Canada Holdings
Merchandise sales and services $ 4,840 $ 6,308 $ 1,336 $ 12,484
Cost of sales, buying and occupancy 3,807 4,674 941 9,422
Gross margin dollars 1,033 1,634 395 3,062
Gross margin rate 21.3% 25.9% 29.6% 24.5%
Selling and administrative 936 1,674 311 2,921
Selling and administrative expense as a 19.3% 26.5% 23.3% 23.4%
percentage of total revenues
Depreciation and amortization 38 148 26 212
Impairment charges 15 634 — 649
Gain on sales of assets (25) (4) — (29)
Total costs and expenses 4,771 7,126 1,278 13,175
Operating income (loss) $ 69 $ (818) $ 58 $ (691)
Number of:
Kmart Stores 1,305 — — 1,305
Full-Line Stores — 867 122 989
Specialty Stores — 1,338 378 1,716
Total Stores 1,305 2,205 500 4,010
Sears Holdings Corporation
Segment Results
(Unaudited)
Amounts are Preliminary and Subject to Change
Year Ended February 2, 2013
millions, except store data Kmart Sears Sears Sears
Domestic Canada Holdings
Merchandise sales and services $ 14,567 $ 20,977 $ 4,310 $ 39,854
Cost of sales, buying and occupancy 11,158 15,107 3,075 29,340
Gross margin dollars 3,409 5,870 1,235 10,514
Gross margin rate 23.4% 28.0% 28.7% 26.4%
Selling and administrative 3,284 6,184 1,192 10,660
Selling and administrative expense as 22.5% 29.5% 27.7% 26.7%
a percentage of total revenues
Depreciation and amortization 147 578 105 830
Impairment charges 10 25 295 330
Gain on sales of assets (37) (261) (170) (468)
Total costs and expenses 14,562 21,633 4,497 40,692
Operating income (loss) $ 5 $ (656) $ (187) $ (838)
Number of:
Kmart Stores 1,221 — — 1,221
Full-Line Stores — 798 118 916
Specialty Stores — 54 357 411
Total Stores 1,221 852 475 2,548
Year Ended January 28, 2012
millions, except store data Kmart Sears Sears Sears
Domestic Canada Holdings
Merchandise sales and services $ 15,285 $ 21,649 $ 4,633 $ 41,567
Cost of sales, buying and occupancy 11,818 15,849 3,299 30,966
Gross margin dollars 3,467 5,800 1,334 10,601
Gross margin rate 22.7% 26.8% 28.8% 25.5%
Selling and administrative 3,371 6,042 1,251 10,664
Selling and administrative expense as 22.1% 27.9% 27.0% 25.7%
a percentage of total revenues
Depreciation and amortization 149 601 103 853
Impairment charges 15 634 — 649
Gain on sales of assets (34) (30) — (64)
Total costs and expenses 15,319 23,096 4,653 43,068
Operating loss $ (34) $ (1,447) $ (20) $ (1,501)
Number of:
Kmart Stores 1,305 — — 1,305
Full-Line Stores — 867 122 989
Specialty Stores — 1,338 378 1,716
Total Stores 1,305 2,205 500 4,010
Sears Holdings Corporation
Adjusted EBITDA
Amounts are Preliminary and
Subject to Change
Quarters Ended
millions February 2, 2013 January 28, 2012
Kmart Sears Sears Sears Kmart Sears Sears Sears
Domestic Canada Holdings Domestic Canada Holdings
Operating
income
(loss) per $ 103 $ (450) $ (275) $ (622) $ 69 $ (818) $ 58 $ (691)
statement of
operations
Depreciation
and 37 141 27 205 38 148 26 212
amortization
Gain on
sales of (20) (11) (1) (32) (25) (4) — (29)
assets
Before
excluded 120 (320) (249) (449) 82 (674) 84 (508)
items
Closed store
reserve and 38 (3) 15 50 61 115 13 189
severance
Impairment 10 25 295 330 15 634 — 649
charges
Pension — 452 3 455 — — — —
settlements
Domestic
pension — 41 — 41 — 18 — 18
expense
Transaction — 2 — 2 — — — —
costs
Hurricane — — — — — 3 — 3
losses
Adjusted
EBITDA as $ 168 $ 197 $ 64 $ 429 $ 158 $ 96 $ 97 $ 351
defined
% to 3.6% 3.2% 4.9% 3.5% 3.3% 1.5% 7.3% 2.8%
revenues
Years Ended
millions February 2, 2013 January 28, 2012
Kmart Sears Sears Sears Kmart Sears Sears Sears
Domestic Canada Holdings Domestic Canada Holdings
Operating
income
(loss) per $ 5 $ (656) $ (187) $ (838) $ (34) $ (1,447) $ (20) $ (1,501)
statement of
operations
Depreciation
and 147 578 105 830 149 601 103 853
amortization
Gain on
sales of (37) (261) (170) (468) (34) (30) — (64)
assets
Before
excluded 115 (339) (252) (476) 81 (876) 83 (712)
items
Closed store
reserve and 76 44 20 140 76 160 18 254
severance
Impairment 10 25 295 330 15 634 — 649
charges
Pension — 452 3 455 — — — —
settlements
Domestic
pension — 165 — 165 — 74 — 74
expense
Transaction — 9 3 12 — — — —
costs
Hurricane — — — — — 12 — 12
losses
Adjusted
EBITDA as $ 201 $ 356 $ 69 $ 626 $ 172 $ 4 $ 101 $ 277
defined
% to 1.4% 1.7% 1.6% 1.6% 1.1% —% 2.2% 0.7%
revenues
Sears Holdings Corporation
Adjusted Earnings per Share
Amounts are Preliminary and Subject to Change
Quarter Ended February 2, 2013
Closed
Store January Gain on
millions, Reserve, Gain on Transaction Goodwill 7, Pension Domestic Sale of Tax As
except per GAAP Store Sales of Costs Impairment 2013 Settlements Pension Canadian Matters Adjusted
share data Impairments Assets Outlook Expense Joint
and Adjusted Venture
Severance
Cost of sales,
buying and $ 9,097 $ (3) $ — $ — $ — $ 9,094 $ — $ — $ — $ — $ 9,094
occupancy
impact
Selling and
administrative 3,282 (47) — (2) — 3,233 (455) (41) — — 2,737
impact
Depreciation
and 205 (6) — — — 199 — — — — 199
amortization
impact
Impairment 330 (35) — — (295) — — — — — —
charges impact
Gain on sales
of assets (32) — 21 — — (11) — — — — (11)
impact
Operating loss (622) 91 (21) 2 295 (255) 455 41 — — 241
impact
Interest and
investment 66 — — — — 66 — — (25) — 41
income impact
Income tax 9 (35) 8 (1) — (19) — (15) 9 (55) (80)
benefit impact
Loss
attributable
to 128 (7) — — (145) (24) (1) — 12 — (13)
noncontrolling
interest
impact
After tax and
noncontrolling (489) 49 (13) 1 150 (302) 454 26 (4) (55) 119
interest
impact
Diluted loss
per share $ (4.61) $ 0.46 $ (0.12) $ 0.01 $ 1.41 $ (2.85) $ 4.28 $ 0.25 $ (0.04) $ (0.52) $ 1.12
impact
Quarter Ended January 28, 2012
Closed Store
millions, Domestic Reserve, Gain on
except per GAAP Pension Store Sales of Hurricane Goodwill Tax Discontinued As
share data Expense Impairments Assets Losses Impairment Matters Operations Adjusted
and
Severance
Cost of sales,
buying and $ 9,422 $ — $ (93) $ — $ — $ — $ — $ — $ 9,329
occupancy
impact
Selling and
administrative 2,921 (18) (96) — (3) — — — 2,804
impact
Impairment 649 — (98) — — (551) — — —
charges impact
Gain on sales
of assets (29) — — 12 — — — — (17)
impact
Operating loss (691) 18 287 (12) 3 551 — — 156
impact
Income tax (1,633) (7) (108) 5 (1) — 1,709 — (35)
expense impact
Loss from
discontinued
operations, (17) — — — — — — 17 —
net of tax
impact
Loss
attributable
to 1 — (1) — — — — — —
noncontrolling
interest
impact
After tax and
noncontrolling (2,403) 11 178 (7) 2 551 1,709 17 58
interest
impact
Diluted loss
per share $ (22.63) $ 0.10 $ 1.68 $ (0.07) $ 0.02 $ 5.19 $ 16.09 $ 0.16 $ 0.54
impact
Sears Holdings Corporation
Adjusted Earnings per Share
Amounts are Preliminary and Subject to Change
Year Ended February 2, 2013
Closed Store Gain on
millions, Reserve, Gain on Domestic Sale of
except per GAAP Store Sales of Transaction Goodwill Pension Pension Canadian Tax As
share data Impairments Assets Costs Impairment Settlements Expense Joint Matters Adjusted
and Venture
Severance
Cost of sales,
buying and $ 29,340 $ (35) $ — $ — $ — $ — $ — $ — $ — $ 29,305
occupancy
impact
Selling and
administrative 10,660 (105) — (12) — (455) (165) — — 9,923
impact
Depreciation
and 830 (22) — — — — — — — 808
amortization
impact
Impairment 330 (35) — — (295) — — — — —
charges impact
Gain on sales
of assets (468) — 419 — — — — — — (49)
impact
Operating loss (838) 197 (419) 12 295 455 165 — — (133)
impact
Interest and
investment 94 — — — — — — (25) — 69
income impact
Income tax (44) (74) 157 (5) — — (62) 9 143 124
expense impact
Loss
attributable
to 124 (7) 8 — (145) (1) — 12 — (9)
noncontrolling
interest
impact
After tax and
noncontrolling (930) 116 (254) 7 150 454 103 (4) 143 (215)
interest
impact
Diluted loss
per share $ (8.78) $ 1.09 $ (2.40) $ 0.07 $ 1.42 $ 4.29 $ 0.97 $ (0.04) $ 1.35 $ (2.03)
impact
Year Ended January 28, 2012
Closed Store
millions, Domestic Reserve, Mark-to- Gain on
except per GAAP Pension Store Market Sales Hurricane Goodwill Tax Discontinued As
share data Expense Impairments Losses of Losses Impairment Matters Operations Adjusted
and Assets
Severance
Cost of sales,
buying and $ 30,966 $ — $ (130) $ — $ — $ — $ — — $ — $ 30,836
occupancy
impact
Selling and
administrative 10,664 (74) (124) — — (12) — — — 10,454
impact
Depreciation
and 853 — (8) — — — — — — 845
amortization
impact
Impairment 649 — (98) — — — (551) — — —
charges impact
Gain on sales
of assets (64) — — — 33 — — — — (31)
impact
Operating loss (1,501) 74 360 — (33) 12 551 — — (537)
impact
Other loss (2) — — 6 — — — — — 4
impact
Income tax (1,369) (28) (134) (2) 13 (5) — 1,819 — 294
expense impact
Loss from
discontinued
operations, (27) — — — — — — — 27 —
net of tax
impact
Loss
attributable
to 7 — (1) (1) — — — — — 5
noncontrolling
interest
impact
After tax and
noncontrolling (3,140) 46 225 3 (20) 7 551 1,819 27 (482)
interest
impact
Diluted loss
per share $ (29.40) $ 0.43 $ 2.10 $ 0.03 $ (0.19 $ 0.07 $ 5.16 $ 17.03 $ 0.25 $ (4.52)
impact
SOURCE Sears Holdings Corporation
Website: http://www.searsholdings.com
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