Sears Canada Acknowledges Sears Holdings Report on Fourth Quarter Update
TORONTO, Jan. 9, 2014 /CNW/ - Sears Canada Inc. (TSX: SCC) acknowledges the
release today by Sears Holdings Corporation (NASDAQ: SHLD) of its update for
the fourth quarter and full year of 2013. The release refers to financial
information related to Sears Canada's projected fourth quarter and annual 2013
performance. Sears Canada adds that the same-store-sales performance of
-4.4% contained in the Sears Holdings update, for the period of November 3,
2013 to January 6, 2014, reflects a 1.5% same-store-sales increase in Sears
Canada's Apparel and Accessories business. The text of the Sears Holdings
release, which includes financial information prepared under United States
Generally Accepted Accounting Principles (U.S. GAAP) and presented in U.S.
dollars, is set out below. Sears Canada expects to release its unaudited
fourth quarter earnings, which will include financial information prepared
under International Financial Reporting Standards (IFRS), on February 26, 2014.
Although the Company believes that the forward-looking information presented
with respect to the fourth quarter and annual update is reasonable, such
forward-looking information involves known and unknown risks, uncertainties
and other factors which may cause actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking information, and
undue reliance should not be placed on such information. The forward-looking
statements in this release are made as of the date hereof. The Company does
not undertake any obligation to update publicly or to revise any
forward-looking information, whether as a result of new information, future
events or otherwise, except as required by law.
The financial outlook set out below is preliminary and therefore subject to
change. In addition, there can be no assurance that U.S. GAAP and IFRS will
not differ, and such differences could be material. Accordingly, the update
should be read with caution.
The following is the text of the Sears Holdings release:
NEWS MEDIA CONTACT:
Sears Holdings Public Relations
SEARS HOLDINGS PROVIDES UPDATE
HOFFMAN ESTATES, IL - Sears Holdings Corporation ("Holdings," "we," "us,"
"our," or the "Company") (Nasdaq: SHLD) today is providing an update on our
quarter-to-date performance and financial position.
During the quarter, we continued to proactively transform our business to a
member-centric integrated retailer leveraging our Shop Your Way(TM) ("SYW")
program and platform. As previously stated, we are transitioning from a
business that has historically focused on running a store network into a
business that provides and delivers value by serving its members in the manner
most convenient for them: whether in store, in home or through digital
devices. We are driving this transformation by investing in capabilities to
enable members access to the broadest possible assortment of products and
services, enhancing our membership benefits associated with SYW, developing
digital and social relationships with our members, using data and analytics to
make targeted offers and decisions delivered in real time and expanding our
reach through Marketplace and delivery options.
We believe that we are making progress in this transformation, as we are
seeing continued increases in our SYW member engagement metrics with 69% of
our sales in the nine-week period ended January 4, 2014 derived from members
as compared to 58% last year. We are intentionally transitioning business
models in a thoughtful manner and are making the investments which we believe
will demonstrate the value of SYW to our members. Throughout this transition,
we have continued with traditional promotional programs and marketing
expenditures while investing in our member-centric model, which has impacted
our margin and expenses. For the nine-week period ended January 4, 2014 we
spent $69 million more on SYW points expense compared to the same period last
Comparable store sales for the quarter-to-date ("QTD") and year-to-date
("YTD") periods ended January 6, 2014 for its Kmart and Sears Domestic stores
were as follows:
Kmart -5.7% -3.7%
Sears Domestic -9.2% -4.2%
Total -7.4% -3.9%
Total domestic comparable store sales for the quarter-to-date period declined
7.4%, comprised of decreases of 5.7% at Kmart and 9.2% at Sears Domestic.
Kmart's quarter-to-date comparable store sales decline reflects declines in
most categories including consumer electronics, grocery & household and toys.
Sears Domestic's quarter-to-date comparable store sales decline is
attributable to decreases in most categories including consumer electronics,
tools and home appliances. Sears Canada comparable store sales for the
quarter-to-date period ended January 6, 2014 were -4.4%.
We currently expect consolidated Adjusted EBITDA, which excludes certain
significant items as set forth below, for the fourth quarter will be between
$(65) million and $65 million, as compared to $429 million in last year's
fourth quarter. We expect fourth quarter domestic Adjusted EBITDA of between
$(80) million and $20 million, as compared to $365 million for last year's
fourth quarter. We expect that Sears Canada fourth quarter Adjusted EBITDA
will be between $15 million and $45 million, as compared to $64 million last
year. Please see the Adjusted EBITDA reconciliation below.
For the full year, consolidated Adjusted EBITDA is expected to be between
$(284) million and $(414) million, as compared to $626 million last year. We
expect domestic Adjusted EBITDA of between $(308) million and $(408) million,
as compared to $557 million last year. We expect that Sears Canada Adjusted
EBITDA will be between $(6) million and $24 million, as compared to $69
million last year.
We currently expect our reported net loss attributable to Holdings'
shareholders for the quarter ending February 1, 2014 will be between $250
million and $360 million, or between $2.35 and $3.39 loss per diluted share.
This includes $41 million of pension expense, $29 million for store closures
and severance and $12 million from gains on sales of assets.Adjusted for
these items, net loss is expected to be between $213 million and $316 million,
or between $2.01 and $2.98 loss per diluted share. The ranges exclude the
impact related to the Sears Canada real estate transactions previously
announced, restructuring activities including severance, store closings and
impairment charges, an estimated non-cash charge of approximately $145 million
related to the establishment of an additional valuation allowance against our
state separate entity deferred tax assets, as well as other tax related
matters and any non-cash impairment charges for fixed assets. In the fourth
quarter of the prior year, the Company reported a net loss attributable to
Holdings' shareholders of $489 million, or $4.61 loss per diluted share, which
included a non-cash charge of $455 million related to pension settlements,
non-cash impairment charges of $330 million and other adjustments which can be
found in our 8-K filed on February 28, 2013. Adjusted for these items, the
Company reported net income of $119 million, or $1.12 per diluted share.
For the full year ending February 1, 2014, the Company expects our reported
net loss attributable to Holdings' shareholders will be between $1.3 billion
and $1.4 billion, or between $11.85 and $12.88 loss per diluted share, which
includes the fourth quarter-to-date items noted above, as well as the
year-to-date adjustments disclosed in our third quarter 10-Q report filed on
November 21, 2013. Adjusted for these items, net loss is expected to be
between $811 million and $914 million, or between $7.64 and $8.61 loss per
diluted share. The ranges exclude the impact related to the Sears Canada real
estate transactions previously announced, fourth quarter restructuring
activities including severance, store closings and impairment charges, an
estimated non-cash charge of approximately $145 million related to the
establishment of an additional valuation allowance against our state separate
entity deferred tax assets, as well as other tax related matters and any
non-cash impairment charges for fixed assets. For the full year ended February
2, 2013, the Company reported a net loss attributable to Holdings'
shareholders of $930 million, or $8.78 loss per diluted share, which included
a non-cash charge of $455 million related to pension settlements, a non-cash
impairment charge of $330 million and other adjustments which can be found in
our 8-K report filed on February 28, 2013. Adjusted for these items, net loss
was $215 million, or $2.03 loss per diluted share.
As of January 4, 2014, we had total cash of approximately $1.0 billion and
availability under our credit facilities of $2.3 billion ($1.8 billion under
our domestic facility and $0.5 billion under our Sears Canada facility, prior
to taking into consideration possible reserves) and $6 million in commercial
paper outstanding, with commercial paper capacity of $500 million. The cash
balance does not include $300 million Canadian in proceeds from the Sears
Canada real estate transactions announced on November 11, 2013, which are
expected to be received January 10, 2014.
As previously announced, we are evaluating separating both our Lands' End
business and Sears Auto Center ("SAC") business. On December 6, 2013 we filed
with the Securities and Exchange Commission a registration statement on Form
10 related to the spin-off of Lands' End through a potential pro rata
distribution to Holdings' shareholders. We are considering strategic
alternatives for our SAC business, any of which would be subject to approval
by Holdings' Board of Directors and other conditions. In addition, we continue
to reduce unprofitable stores as leases expire and in some cases accelerate
closings when circumstances dictate.
Finally, as previously announced in October, we also are continuing to work
with the board and management of Sears Canada with a goal of increasing the
value of our 51% interest and realizing significant cash proceeds to support
our transformation and to create value for our shareholders. As of January 8,
2014, the market value of this interest was $670 million.
Fourth Quarter Earnings Release
The Company currently plans to release financial results for its fiscal 2013
fourth quarter and full year on or about February 27, 2014, before the market
opens and hold an analyst and investor conference call on that date.
Instructions for participating in the call will be provided in February in
advance of the call.
Adjusted EBITDA Reconciliation
millions Q4 2013
Range Q4 2012
-- expected net loss $(360) $(250) $(489)
-- plus other 70 70 878
not included in
-- plus income 225 245 40
statement line items
not included in
and gain on sales of
January 4, 2014
Adjusted EBITDA $(65) $65 $429
Results are preliminary and unaudited. This press release contains
forward-looking statements about our expectations for the fourth quarter of
fiscal 2013, our transformation through our integrated retail strategy and
possible transactions discussed elsewhere in this press release.
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 our integrated retail strategy; 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; our ability to complete possible transactions
with respect to Lands' End and/or Sears Auto Centers on terms that are
acceptable to us, on intended timetables or at all and the impact of the
evaluation and/or completion of those transactions on our other businesses;
the potential impact on our business and our relationships from any such
transactions; our ability to successfully achieve our plans to generate
liquidity, reduce inventory and reduce fixed costs; conditions and possible
limits on our access to capital markets and other financing sources; 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, including legacy systems, to
implement our integrated retail strategy, 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 and
the transfer of significant internal historical knowledge of such parties;
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 (NASDAQ: SHLD) is a leading integrated retailer
with almost 2,500 full-line and specialty retail stores inthe United
StatesandCanadaand 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 SmithandJoe Boxer, as well as Sofia
bySofia Vergaraand The Country Living Home Collection. We are the nation's
largest provider of home services, with more than 14 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 2013 ENERGY STAR® "Partner of the Year - Sustained Excellence Award" for
Product Retailing and Energy Management and was named 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 |
* * * * *
This is the conclusion of the text of the Sears Holdings release.
Sears Canada is a multi-channel retailer with a network that includes 181
corporate stores, 241 Hometown stores, over 1,400 catalogue and online
merchandise pick-up locations, 101 Sears Travel offices and a nationwide
repair and service network. The Company also publishes Canada's most extensive
general merchandise catalogue and offers shopping online at www.sears.ca.
SOURCE Sears Canada Inc.
Media Relations Contact: Vincent Power Sears Canada Inc. 416-941-4422
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