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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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