Sears Holdings Reports Fourth Quarter and Full Year 2010 Results
HOFFMAN ESTATES, Ill., Feb. 24, 2011 /PRNewswire/ -- Sears Holdings Corporation ("Holdings," "we," "us," "our" or the "Company") (Nasdaq: SHLD) today reported its fourth quarter and full year 2010 results. In summary, we reported:
-- Net income attributable to Holdings' shareholders for the fourth quarter
of $374 million ($3.43 per diluted share) in 2010 and $430 million
($3.74 per diluted share) in 2009 and for the year of $133 million
($1.19 per diluted share) in 2010 and $235 million ($1.99 per diluted
share) in 2009;
-- Adjusted earnings per diluted share for the fourth quarter of $3.67 in
2010 and $3.69 in 2009 and for the full year of $2.07 in 2010 and $3.19
in 2009;
-- Adjusted EBITDA of $933 million for the fourth quarter of 2010 and
$1.453 billion for fiscal 2010;
-- These results were within our previously announced range (see
calculation in the attached schedule "Adjusted Earnings per Share"); and
-- An increase in comparable store sales at Kmart of 2.5% in the fourth
quarter 2010 and 0.7% for fiscal 2010.
Fourth Quarter and Full Year Revenues and Comparable Store Sales
Revenues decreased $103 million to $13.1 billion for the quarter ended January 29, 2011. Full year revenues decreased $717 million to $43.3 billion. The decreases were primarily due to lower comparable store sales and fewer Kmart and Sears full-line stores. The fourth quarter and full year 2010 revenues included an increase of $69 million and $433 million, respectively, due to foreign currency exchange rates.
For the quarter, domestic comparable store sales declined 1.2%, which comprises an increase at Kmart of 2.5% and a decline at Sears Domestic of 4.5%. For the year, domestic comparable store sales declined 1.6%, with an increase at Kmart of 0.7% and a decline at Sears Domestic of 3.6%. The Kmart increases in comparable store sales were driven by increases in most categories, with notable increases in the apparel, footwear, jewelry, sporting goods and toys categories, partially offset by declines in the food and consumables and pharmacy categories. Declines in sales at Sears Domestic were primarily driven by the hardlines categories, as well as apparel. Over half of the total decline in both periods occurred in consumer electronics. In contrast, Sears' footwear, jewelry, and automotive categories generated comparable store sales growth during the periods.
Operating Income
Operating income was $663 million for the quarter ended January 29, 2011 and $749 million for the quarter ended January 30, 2010. Operating income decreased $86 million primarily due to a decline in gross profit dollars due to lower overall sales and a decrease of 60 basis points in margin rate. Operating income for the fourth quarter of 2010 includes expenses of $55 million related to domestic pension plans, store closings and severance. Operating income for the fourth quarter of 2009 includes expenses of $85 million related to domestic pension plans, store closings and severance, as well as a $32 million gain recorded in connection with the settlement of Visa/MasterCard antitrust litigation.
Operating income was $474 million in 2010 and $713 million in 2009. Operating income decreased $239 million primarily due to lower gross profit dollars given lower overall sales and a decline in margin rate, partially offset by reductions in selling and administrative expenses, which includes incremental expenses of $135 million related to our continued investment in our multi-channel capabilities and the continued promotion of our Shop Your Way Rewards program. Operating income for fiscal 2010 also includes expenses of $156 million related to domestic pension plans, store closings and severance and a gain on sale of assets of $35 million. Operating income for fiscal 2009 includes expenses of $301 million related to domestic pension plans, store closings and severance, a $44 million gain recognized by Sears Canada on the sale of its former headquarters, and a $32 million gain recorded in connection with the settlement of Visa/MasterCard antitrust litigation. The impact these and other items had on our operating income and earnings is summarized in the attached schedule, "Adjusted Earnings per Share."
Financial Position
We had cash balances of $1.4 billion at January 29, 2011 ($960 million domestic and $430 million at Sears Canada) as compared to $1.7 billion at January 30, 2010. Commercial paper outstanding at January 29, 2011 was $360 million, as compared to $206 million at January 30, 2010. Uses of cash during fiscal 2010 included $603 million for the purchase of Sears Canada shares, repayments of long-term debt of $486 million, capital expenditures of $441 million, $394 million for share repurchases, and contributions to our pension and post-retirement benefit plans of $316 million. These uses of cash were funded in part from $1.25 billion of proceeds from our senior secured notes offering in October 2010.
Merchandise inventories at January 29, 2011 were $9.1 billion, as compared to $8.7 billion at January 30, 2010. Domestic inventory increased approximately $270 million to $8.3 billion at January 29, 2011. The increase was primarily in the Kmart apparel, electronics, toys, footwear and sporting goods categories. Sears Canada's inventory levels increased approximately $150 million to $868 million at January 29, 2011 primarily due to the change in exchange rates, lower sales and the timing of merchandise receipts.
There were no borrowings outstanding on our domestic revolver at the end of fiscal 2010, in contrast to fiscal 2009 when we had $119 million of borrowings outstanding. We had $235 million of letters of credit outstanding on the revolver at the end of the fiscal year, leaving remaining availability of $2.2 billion. We finished fiscal 2010 with total debt (consisting of short-term borrowings, long-term debt and capitalized lease obligations) of $3.5 billion, up from $2.5 billion at January 30, 2010, due primarily to the senior secured notes offering discussed above.
Share Repurchase
During the 13- and 52- week periods ended January 29, 2011, we repurchased approximately 1.2 million and 5.5 million common shares at a total cost of $77 million and $394 million, respectively, under our share repurchase program. Our repurchases for the 13- and 52- week periods ended January 29, 2011 were made at average prices of $66.35 and $71.76 per share, respectively. At January 29, 2011, we had remaining authorization to repurchase $187 million of common shares under the share repurchase program. The share repurchases may be implemented using a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, the purchase of call options, the sale of put options or otherwise, or by any combination of such methods. Timing will be dependent on prevailing market conditions, alternative uses of capital and other factors.
Adjusted EBITDA
For purposes of evaluating operating performance, we use an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") measurement computed as net income attributable to Sears Holdings Corporation appearing on the statements of income excluding income attributable to noncontrolling interest, income tax expense, interest and investment income, other loss, interest expense, gains on sales of assets and depreciation and amortization. In addition, it further adjusts for 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. 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:
-- EBITDA excludes the effects of financing and investing activities by
eliminating the effects of interest and depreciation costs;
-- Management considers gains/losses on the sale of assets to result from
investing decisions rather than ongoing operations; and
-- 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:
13 Weeks Ended
--------------
January January
29, 30,
2011 2010
-------- --------
Net income attributable to
Holdings' Shareholders $374 $430
Income attributable to
noncontrolling interest 8 31
Income tax expense 187 217
Interest and investment income (8) (9)
Other loss 5 9
Interest expense 97 71
Gain on sales of assets (14) (4)
Depreciation and amortization 239 248
Before excluded items 888 993
Domestic pension expense 32 42
Closed store reserve and
severance 13 31
Visa/MasterCard settlement - (32)
Adjusted EBITDA as defined $933 $1,034
==== ======
% to revenues 7.1% 7.8%
52 Weeks Ended
--------------
January January
29, 30,
2011 2010
-------- --------
Net income attributable to
Holdings' Shareholders $133 $235
Income attributable to
noncontrolling interest 17 62
Income tax expense 36 123
Interest and investment income (36) (33)
Other loss 14 61
Interest expense 310 265
Gain on sales of assets (67) (74)
Depreciation and amortization 900 926
Before excluded items 1,307 1,565
Domestic pension expense 120 170
Closed store reserve and
severance 26 119
Visa/MasterCard settlement - (32)
Adjusted EBITDA as defined $1,453 $1,822
====== ======
% to revenues 3.4% 4.1%
Adjusted EBITDA for our segments are as follows:
Quarters Ended
--------------
Adjusted EBITDA
---------------
January January
29, 2011 30, 2010
-------- --------
Kmart $375 $341
Sears Domestic 420 491
Sears Canada (1) 138 202
--- ---
Total Adjusted EBITDA $933 $1,034
==== ======
Quarters Ended
--------------
% To Revenues
-------------
January January
29, 2011 30, 2010
-------- --------
Kmart 7.5% 6.9%
Sears Domestic 6.3% 7.1%
Sears Canada (1) 9.5% 14.1%
--- ----
Total Adjusted EBITDA 7.1% 7.8%
=== ===
(1) Fourth quarter EBITDA in Canadian dollars was $139 million in
fiscal 2010 and $213 million in fiscal 2009.
Fiscal Years Ended
------------------
Adjusted EBITDA
---------------
January January
29, 2011 30, 2010
-------- --------
Kmart $508 $364
Sears Domestic 626 1,003
Sears Canada (1) 319 455
--- ---
Total Adjusted EBITDA $1,453 $1,822
====== ======
Fiscal Years Ended
------------------
% To Revenues
-------------
January January
29, 2011 30, 2010
-------- --------
Kmart 3.3% 2.3%
Sears Domestic 2.7% 4.2%
Sears Canada (1) 6.7% 9.8%
--- ---
Total Adjusted EBITDA 3.4% 4.1%
=== ===
(1)Full year EBITDA in Canadian dollars was $327 million in fiscal
2010 and $510 million in fiscal 2009.
Annual Report on Form 10-K
We plan to file with the SEC our Annual Report on Form 10-K for the year ended January 29, 2011 on or before March 30, 2011.
Forward-Looking Statements
Results are preliminary and unaudited. This press release contains forward-looking statements about our expectations for fiscal year 2011. 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 inventory management and other capabilities; competitive conditions in the retail and related services industries; worldwide economic conditions and business uncertainty, the availability of consumer and commercial credit, changes in consumer confidence, tastes, preferences and spending, and changes in vendor relationships; 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; 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; 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. 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 the nation's fourth largest broadline retailer with over 4,000 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, consumer electronics and automotive repair and maintenance. Sears Holdings is the 2010 ENERGY STAR® Retail Partner of the Year. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart. We are the nation's largest provider of home services, with more than 11 million service calls made annually. 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.
Sears Holdings Corporation
Consolidated Statements of Income
(Unaudited)
Amounts are Preliminary and Subject to Change
13 Weeks Ended
--------------
January January
millions, except per share data 29, 30,
2011 2010
---- ----
REVENUES
Merchandise sales and services $13,144 $13,247
------- -------
COSTS AND EXPENSES
Cost of sales, buying and occupancy 9,476 9,467
Gross profit dollars 3,668 3,780
Margin rate 27.9% 28.5%
Selling and administrative 2,780 2,787
Selling and administrative expense as a
percentage of total revenues 21.2% 21.0%
Depreciation and amortization 239 248
Gain on sales of assets (14) (4)
Total costs and expenses 12,481 12,498
------ ------
Operating income 663 749
Interest expense (97) (71)
Interest and investment income 8 9
Other loss (5) (9)
--- ---
Income before income taxes 569 678
Income tax expense (187) (217)
---- ----
Net income 382 461
Income attributable to noncontrolling
interest (8) (31)
--- ---
NET INCOME ATTRIBUTABLE TO HOLDINGS'
SHAREHOLDERS $374 $430
==== ====
INCOME PER COMMON SHARE ATTRIBUTABLE
TO HOLDINGS' SHAREHOLDERS
Diluted income per share $3.43 $3.74
Diluted weighted average common shares
outstanding 109.1 114.9
Amounts are Preliminary and Subject to Change
52 Weeks Ended
--------------
January January
millions, except per share data 29, 30,
2011 2010
---- ----
REVENUES
Merchandise sales and services $43,326 $44,043
------- -------
COSTS AND EXPENSES
Cost of sales, buying and occupancy 31,448 31,824
Gross profit dollars 11,878 12,219
Margin rate 27.4% 27.7%
Selling and administrative 10,571 10,654
Selling and administrative expense as a
percentage of total revenues 24.4% 24.2%
Depreciation and amortization 900 926
Gain on sales of assets (67) (74)
Total costs and expenses 42,852 43,330
------ ------
Operating income 474 713
Interest expense (310) (265)
Interest and investment income 36 33
Other loss (14) (61)
--- ---
Income before income taxes 186 420
Income tax expense (36) (123)
--- ----
Net income 150 297
Income attributable to noncontrolling
interest (17) (62)
--- ---
NET INCOME ATTRIBUTABLE TO HOLDINGS'
SHAREHOLDERS $133 $235
==== ====
INCOME PER COMMON SHARE ATTRIBUTABLE
TO HOLDINGS' SHAREHOLDERS
Diluted income per share $1.19 $1.99
Diluted weighted average common shares
outstanding 111.7 117.9
Sears Holdings Corporation
Condensed Consolidated Balance Sheets
Amounts are Preliminary and Subject to Change
(Unaudited)
-----------
January January
millions 29, 30,
2011 2010
---- ----
ASSETS
Current assets
Cash and cash equivalents $1,375 $1,689
Restricted cash 15 11
Receivables 683 652
Merchandise inventories 9,123 8,705
Prepaid expenses and other current assets 339 381
--- ---
Total current assets 11,535 11,438
Property and equipment, net 7,365 7,709
Goodwill 1,392 1,392
Trade names and other intangible assets 3,139 3,208
Other assets 837 1,061
--- -----
TOTAL ASSETS $24,268 $24,808
======= =======
LIABILITIES
Current liabilities
Short-term borrowings $360 $325
Current portion of long-term debt and
capitalized lease obligations 509 482
Merchandise payables 3,101 3,335
Unearned revenues 976 1,012
Accrued expenses and other current
liabilities 3,672 3,632
----- -----
Total current liabilities 8,618 8,786
Long-term debt and capitalized lease
obligations 2,663 1,698
Pension and post-retirement benefits 2,151 2,271
Other long-term liabilities 2,222 2,618
----- -----
Total Liabilities 15,654 15,373
------ ------
Total Equity 8,614 9,435
----- -----
TOTAL LIABILITIES AND EQUITY $24,268 $24,808
======= =======
Total common shares outstanding 108.9 114.8
Sears Holdings Corporation
Segment Results
(Unaudited)
Amounts are Preliminary and Subject to Change
13 Weeks Ended January 29, 2011
-------------------------------
millions, except Sears Sears Sears
store data Kmart Domestic Canada Holdings
----- --------- ------ ---------
Merchandise sales and
services $4,999 $6,686 $1,459 $13,144
------ ------ ------ -------
Cost of sales, buying
and occupancy 3,714 4,762 1,000 9,476
Gross profit dollars 1,285 1,924 459 3,668
Margin rate 25.7% 28.8% 31.5% 27.9%
Selling and
administrative 915 1,544 321 2,780
Selling and
administrative
expense as a
percentage of total
revenues 18.3% 23.1% 22.0% 21.2%
Depreciation and
amortization 40 172 27 239
Gain on sales of
assets (1) 1 (14) (14)
Total costs and
expenses 4,668 6,479 1,334 12,481
----- ----- ----- ------
Operating income
(loss) $331 $207 $125 $663
==== ==== ==== ====
Number of:
Kmart Stores 1,307 - - 1,307
Full-Line Stores - 894 122 1,016
Specialty Stores - 1,354 361 1,715
Total Stores 1,307 2,248 483 4,038
===== ===== === =====
13 Weeks Ended January 30, 2010
-------------------------------
millions, except Sears Sears Sears
store data Kmart Domestic Canada Holdings
----- --------- ------ ---------
Merchandise sales and
services $4,918 $6,892 $1,437 $13,247
------ ------ ------ -------
Cost of sales, buying
and occupancy 3,686 4,832 949 9,467
Gross profit dollars 1,232 2,060 488 3,780
Margin rate 25.1% 29.9% 34.0% 28.5%
Selling and
administrative 897 1,604 286 2,787
Selling and
administrative
expense as a
percentage of total
revenues 18.2% 23.3% 19.9% 21.0%
Depreciation and
amortization 43 177 28 248
Gain on sales of
assets (4) - - (4)
Total costs and
expenses 4,622 6,613 1,263 12,498
----- ----- ----- ------
Operating income
(loss) $296 $279 $174 $749
==== ==== ==== ====
Number of:
Kmart Stores 1,327 - - 1,327
Full-Line Stores - 908 122 1,030
Specialty Stores - 1,313 280 1,593
Total Stores 1,327 2,221 402 3,950
===== ===== === =====
Sears Holdings Corporation
Segment Results
(Unaudited)
Amounts are Preliminary and Subject to Change
52 Weeks Ended January 29, 2011
-------------------------------
millions, except Sears Sears Sears
store data Kmart Domestic Canada Holdings
----- --------- ------ ---------
Merchandise sales
and services $15,593 $22,937 $4,796 $43,326
------- ------- ------ -------
Cost of sales,
buying and
occupancy 11,757 16,358 3,333 31,448
Gross profit dollars 3,836 6,579 1,463 11,878
Margin rate 24.6% 28.7% 30.5% 27.4%
Selling and
administrative 3,341 6,086 1,144 10,571
Selling and
administrative
expense as a
percentage of total
revenues 21.4% 26.5% 23.9% 24.4%
Depreciation and
amortization 149 651 100 900
Gain on sales of
assets (7) (46) (14) (67)
Total costs and
expenses 15,240 23,049 4,563 42,852
------ ------ ----- ------
Operating income
(loss) $353 $(112) $233 $474
==== ===== ==== ====
Number of:
Kmart Stores 1,307 - - 1,307
Full-Line Stores - 894 122 1,016
Specialty Stores - 1,354 361 1,715
Total Stores 1,307 2,248 483 4,038
===== ===== === =====
52 Weeks Ended January 30, 2010
-------------------------------
millions, except Sears Sears Sears
store data Kmart Domestic Canada Holdings
----- --------- ------ ---------
Merchandise sales
and services $15,743 $23,672 $4,628 $44,043
------- ------- ------ -------
Cost of sales,
buying and
occupancy 12,038 16,653 3,133 31,824
Gross profit dollars 3,705 7,019 1,495 12,219
Margin rate 23.5% 29.7% 32.3% 27.7%
Selling and
administrative 3,386 6,220 1,048 10,654
Selling and
administrative
expense as a
percentage of total
revenues 21.5% 26.3% 22.6% 24.2%
Depreciation and
amortization 152 672 102 926
Gain on sales of
assets (23) (6) (45) (74)
Total costs and
expenses 15,553 23,539 4,238 43,330
------ ------ ----- ------
Operating income
(loss) $190 $133 $390 $713
==== ==== ==== ====
Number of:
Kmart Stores 1,327 - - 1,327
Full-Line Stores - 908 122 1,030
Specialty Stores - 1,313 280 1,593
Total Stores 1,327 2,221 402 3,950
===== ===== === =====
Sears Holdings Corporation
Adjusted EBITDA
Amounts are Preliminary and Subject to Change
13 Weeks Ended
--------------
millions January 29, 2011
----------------
Sears Sears Sears
Kmart Domestic Canada Holdings
----- --------- ------ ---------
Operating income per statement
of operations $331 $207 $125 $663
Depreciation and amortization 40 172 27 239
Gain on sales of assets (1) 1 (14) (14)
--- --- --- ---
Before excluded items 370 380 138 888
Closed store reserve and
severance 5 8 - 13
Domestic pension expense - 32 - 32
Visa/MasterCard settlement - - - -
Adjusted EBITDA as defined $375 $420 $138 $933
==== ==== ==== ====
% to revenues 7.5% 6.3% 9.5% 7.1%
13 Weeks Ended
--------------
millions January 30, 2010
----------------
Sears Sears Sears
Kmart Domestic Canada Holdings
----- --------- ------ ---------
Operating income per
statement of
operations $296 $279 $174 $749
Depreciation and
amortization 43 177 28 248
Gain on sales of assets (4) - - (4)
--- --- --- ---
Before excluded items 335 456 202 993
Closed store reserve
and severance 23 8 - 31
Domestic pension
expense - 42 - 42
Visa/MasterCard
settlement (17) (15) - (32)
Adjusted EBITDA as
defined $341 $491 $202 $1,034
==== ==== ==== ======
% to revenues 6.9% 7.1% 14.1% 7.8%
52 Weeks Ended
--------------
millions January 29, 2011
----------------
Sears Sears Sears
Kmart Domestic Canada Holdings
----- --------- ------ ---------
Operating income per statement
of operations $353 $(112) $233 $474
Depreciation and amortization 149 651 100 900
Gain on sales of assets (7) (46) (14) (67)
--- --- --- ---
Before excluded items 495 493 319 1,307
Closed store reserve and
severance 13 13 - 26
Domestic pension expense - 120 - 120
Visa/MasterCard settlement - - - -
Adjusted EBITDA as defined $508 $626 $319 $1,453
==== ==== ==== ======
% to revenues 3.3% 2.7% 6.7% 3.4%
52 Weeks Ended
--------------
millions January 30, 2010
----------------
Sears Sears Sears
Kmart Domestic Canada Holdings
----- --------- ------ ---------
Operating income per
statement of
operations $190 $133 $390 $713
Depreciation and
amortization 152 672 102 926
Gain on sales of
assets (23) (6) (45) (74)
--- --- --- ---
Before excluded items 319 799 447 1,565
Closed store reserve
and severance 62 49 8 119
Domestic pension
expense - 170 - 170
Visa/MasterCard
settlement (17) (15) - (32)
Adjusted EBITDA as
defined $364 $1,003 $455 $1,822
==== ====== ==== ======
% to revenues 2.3% 4.2% 9.8% 4.1%
Sears Holdings Corporation
Adjusted Earnings per Share
Amounts are Preliminary and Subject to Change
13 Weeks Ended January 29, 2011
-------------------------------
Closed January
Store Mark- 11,
Reserve to- 2011
millions, except and Market Outlook
per share data GAAP Severance Losses Adjusted
---- --------- ------ --------
Cost of sales,
buying and
occupancy impact $9,476 $(7) $- $9,469
Selling and
administrative
impact 2,780 (6) - 2,774
Depreciation and
amortization
impact 239 (10) - 229
Operating income
impact 663 23 - 686
Other loss impact (5) - 5 -
Income tax expense
impact (187) (8) (2) (197)
After tax and
noncontrolling
interest impact 374 15 3 392
Diluted income per
share impact $3.43 (1) $0.14 (1)/(2) $0.03 (1)/(2) $3.60
13 Weeks Ended January 29, 2011
-------------------------------
Domestic
millions, except Pension Tax As
per share data Expense Matters Adjusted
--------- ------- --------
Cost of sales,
buying and
occupancy impact $- $- $9,469
Selling and
administrative
impact (32) - 2,742
Depreciation and
amortization
impact - 229
Operating income
impact 32 - 718
Other loss impact - - -
Income tax expense
impact (11) (13) (221)
After tax and
noncontrolling
interest impact 21 (13) 400
Diluted income per
share impact $0.19 $(0.12) $3.67
13 Weeks Ended January 30, 2010
-------------------------------
Closed
Store Mark-
Reserve to- Domestic
millions, except and Market Pension
per share data GAAP Severance Gains Expense
---- ---------- ------ ---------
Cost of sales,
buying and
occupancy impact $9,467 $(16) $- $-
Selling and
administrative
impact 2,787 (15) - (42)
Depreciation and
amortization
impact 248 (12) - -
Operating income
impact 749 43 - 42
Other loss impact (9) - (1) -
Income tax expense
impact (217) (13) - (13)
After tax and
noncontrolling
interest impact 430 30 (1) 29
Diluted income per
share impact $3.74 $0.26 $(0.01) $0.25
13 Weeks Ended January 30, 2010
-------------------------------
Visa /
millions, except MasterCard Tax As
per share data Settlement Matters Adjusted
----------- ------- --------
Cost of sales,
buying and
occupancy impact $- $- $9,451
Selling and
administrative
impact 32 - 2,762
Depreciation and
amortization
impact - - 236
Operating income
impact (32) - 802
Other loss impact - - (10)
Income tax expense
impact 10 (41) (274)
After tax and
noncontrolling
interest impact (22) (41) 425
Diluted income per
share impact $(0.19) $(0.36) $3.69
52 Weeks Ended January 29, 2011
-------------------------------
Closed
Store Mark-
Reserve to- Domestic
millions, except and Market Pension
per share data GAAP Severance Losses Expense
---- --------- ------ --------
Cost of sales,
buying and
occupancy impact $31,448 $(12) $- $-
Selling and
administrative
impact 10,571 (14) - (120)
Depreciation and
amortization
impact 900 (10) - -
Gain on sales of
assets impact (67) - - -
Operating income
impact 474 36 - 120
Other loss impact (14) - 6 -
Income tax expense
impact (36) (6) (1) (24)
Noncontrolling
interest impact (17) - (1) -
After tax and
noncontrolling
interest impact 133 30 4 96
Diluted income per
share impact $1.19 (2) $0.27 $0.04 $0.86
52 Weeks Ended January 29, 2011
-------------------------------
Gain on Canadian
Sales of Dividend
millions, except Real Tax Tax As
per share data Estate Impact Matters Adjusted
-------- -------- ------- --------
Cost of sales,
buying and
occupancy impact $- $- $- $31,436
Selling and
administrative
impact - - - 10,437
Depreciation and
amortization
impact - - - 890
Gain on sales of
assets impact 35 - - (32)
Operating income
impact (35) - - 595
Other loss impact - - - (8)
Income tax expense
impact 7 9 (13) (64)
Noncontrolling
interest impact - - - (18)
After tax and
noncontrolling
interest impact (28) 9 (13) 231
Diluted income per
share impact $(0.25) $0.08 $(0.12) $2.07
52 Weeks Ended January 30, 2010
-------------------------------
Closed
Store Mark-
Reserve to- Domestic
millions, except and Market Pension
per share data GAAP Severance Losses Expense
---- --------- ------ --------
Cost of sales,
buying and
occupancy impact $31,824 $(37) $- $-
Selling and
administrative
impact 10,654 (82) - (170)
Depreciation and
amortization
impact 926 (12) - -
Gain on sales of
assets impact (74) - - -
Operating income
impact 713 131 - 170
Other loss impact (61) - 33 -
Income tax expense
impact (123) (38) (8) (50)
Noncontrolling
interest impact (62) (3) (9) -
After tax and
noncontrolling
interest impact 235 90 16 120
Diluted income per
share impact $1.99 $0.77 $0.14 $1.02
52 Weeks Ended January 30, 2010
-------------------------------
Gain on
Sale of
Sears Visa /
millions, except Canada MasterCard Tax As
per share data Headquarters Settlement Matters Adjusted
------------- ---------- ------- --------
Cost of sales,
buying and
occupancy impact $- $- $- $31,787
Selling and
administrative
impact - 32 - 10,434
Depreciation and
amortization
impact - - - 914
Gain on sales of
assets impact 44 - - (30)
Operating income
impact (44) (32) - 938
Other loss impact - - - (28)
Income tax expense
impact 10 10 (41) (240)
Noncontrolling
interest impact 12 - - (62)
After tax and
noncontrolling
interest impact (22) (22) (41) 376
Diluted income per
share impact $(0.19) $(0.19) $(0.35) $3.19
This schedule provides a reconciliation from GAAP results to our
adjusted earnings amounts, including adjusted earnings per diluted
share.
(1) As compared to our January 11, 2011 outlook range of $3.39 to
$4.12, fourth quarter EPS was $3.60. The outlook excluded any
fourth quarter store closing costs and mark-to-market
gains and losses on hedge transactions executed by Sears Canada which
aggregated to $0.17 per share.
(2) As compared to our January 11, 2011 outlook range of $1.16 to
$1.88, full year EPS was $1.36. The outlook excluded any fourth
quarter store closing costs and mark-to-market
gains and losses on hedge transactions executed by Sears Canada which
aggregated to $0.17 per share.
SOURCE Sears Holdings Corporation
SOURCE: Sears Holdings Corporation
PR Newswire
HOFFMAN ESTATES, Ill., Feb. 24, 2011
HOFFMAN ESTATES, Ill., Feb. 24, 2011 /PRNewswire/ -- Sears Holdings Corporation ("Holdings," "we," "us," "our" or the "Company") (Nasdaq: SHLD) today reported its fourth quarter and full year 2010 results. In summary, we reported:
- Net income attributable to Holdings' shareholders for the fourth quarter of $374 million ($3.43 per diluted share) in 2010 and $430 million ($3.74 per diluted share) in 2009 and for the year of $133 million ($1.19 per diluted share) in 2010 and $235 million ($1.99 per diluted share) in 2009;
- Adjusted earnings per diluted share for the fourth quarter of $3.67 in 2010 and $3.69 in 2009 and for the full year of $2.07 in 2010 and $3.19 in 2009;
- Adjusted EBITDA of $933 million for the fourth quarter of 2010 and $1.453 billion for fiscal 2010;
- These results were within our previously announced range (see calculation in the attached schedule "Adjusted Earnings per Share"); and
- An increase in comparable store sales at Kmart of 2.5% in the fourth quarter 2010 and 0.7% for fiscal 2010.
Fourth Quarter and Full Year Revenues and Comparable Store Sales
Revenues decreased $103 million to $13.1 billion for the quarter ended January 29, 2011. Full year revenues decreased $717 million to $43.3 billion. The decreases were primarily due to lower comparable store sales and fewer Kmart and Sears full-line stores. The fourth quarter and full year 2010 revenues included an increase of $69 million and $433 million, respectively, due to foreign currency exchange rates.
For the quarter, domestic comparable store sales declined 1.2%, which comprises an increase at Kmart of 2.5% and a decline at Sears Domestic of 4.5%. For the year, domestic comparable store sales declined 1.6%, with an increase at Kmart of 0.7% and a decline at Sears Domestic of 3.6%. The Kmart increases in comparable store sales were driven by increases in most categories, with notable increases in the apparel, footwear, jewelry, sporting goods and toys categories, partially offset by declines in the food and consumables and pharmacy categories. Declines in sales at Sears Domestic were primarily driven by the hardlines categories, as well as apparel. Over half of the total decline in both periods occurred in consumer electronics. In contrast, Sears' footwear, jewelry, and automotive categories generated comparable store sales growth during the periods.
Operating Income
Operating income was $663 million for the quarter ended January 29, 2011 and $749 million for the quarter ended January 30, 2010. Operating income decreased $86 million primarily due to a decline in gross profit dollars due to lower overall sales and a decrease of 60 basis points in margin rate. Operating income for the fourth quarter of 2010 includes expenses of $55 million related to domestic pension plans, store closings and severance. Operating income for the fourth quarter of 2009 includes expenses of $85 million related to domestic pension plans, store closings and severance, as well as a $32 million gain recorded in connection with the settlement of Visa/MasterCard antitrust litigation.
Operating income was $474 million in 2010 and $713 million in 2009. Operating income decreased $239 million primarily due to lower gross profit dollars given lower overall sales and a decline in margin rate, partially offset by reductions in selling and administrative expenses, which includes incremental expenses of $135 million related to our continued investment in our multi-channel capabilities and the continued promotion of our Shop Your WayRewards program. Operating income for fiscal 2010 also includes expenses of $156 million related to domestic pension plans, store closings and severance and a gain on sale of assets of $35 million. Operating income for fiscal 2009 includes expenses of $301 million related to domestic pension plans, store closings and severance, a $44 million gain recognized by Sears Canada on the sale of its former headquarters, and a $32 million gain recorded in connection with the settlement of Visa/MasterCard antitrust litigation. The impact these and other items had on our operating income and earnings is summarized in the attached schedule, "Adjusted Earnings per Share."
Financial Position
We had cash balances of $1.4 billion at January 29, 2011 ($960 million domestic and $430 million at Sears Canada) as compared to $1.7 billion at January 30, 2010. Commercial paper outstanding at January 29, 2011 was $360 million, as compared to $206 million at January 30, 2010. Uses of cash during fiscal 2010 included $603 million for the purchase of Sears Canada shares, repayments of long-term debt of $486 million, capital expenditures of $441 million, $394 million for share repurchases, and contributions to our pension and post-retirement benefit plans of $316 million. These uses of cash were funded in part from $1.25 billion of proceeds from our senior secured notes offering in October 2010.
Merchandise inventories at January 29, 2011 were $9.1 billion, as compared to $8.7 billion at January 30, 2010. Domestic inventory increased approximately $270 million to $8.3 billion at January 29, 2011. The increase was primarily in the Kmart apparel, electronics, toys, footwear and sporting goods categories. Sears Canada's inventory levels increased approximately $150 million to $868 million at January 29, 2011 primarily due to the change in exchange rates, lower sales and the timing of merchandise receipts.
There were no borrowings outstanding on our domestic revolver at the end of fiscal 2010, in contrast to fiscal 2009 when we had $119 million of borrowings outstanding. We had $235 million of letters of credit outstanding on the revolver at the end of the fiscal year, leaving remaining availability of $2.2 billion. We finished fiscal 2010 with total debt (consisting of short-term borrowings, long-term debt and capitalized lease obligations) of $3.5 billion, up from $2.5 billion at January 30, 2010, due primarily to the senior secured notes offering discussed above.
Share Repurchase
During the 13- and 52- week periods ended January 29, 2011, we repurchased approximately 1.2 million and 5.5 million common shares at a total cost of $77 million and $394 million, respectively, under our share repurchase program. Our repurchases for the 13- and 52- week periods ended January 29, 2011 were made at average prices of $66.35 and $71.76 per share, respectively. At January 29, 2011, we had remaining authorization to repurchase $187 million of common shares under the share repurchase program. The share repurchases may be implemented using a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, the purchase of call options, the sale of put options or otherwise, or by any combination of such methods. Timing will be dependent on prevailing market conditions, alternative uses of capital and other factors.
Adjusted EBITDA
For purposes of evaluating operating performance, we use an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") measurement computed as net income attributable to Sears Holdings Corporation appearing on the statements of income excluding income attributable to noncontrolling interest, income tax expense, interest and investment income, other loss, interest expense, gains on sales of assets and depreciation and amortization. In addition, it further adjusts for 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. 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:
- EBITDA excludes the effects of financing and investing activities by eliminating the effects of interest and depreciation costs;
- Management considers gains/losses on the sale of assets to result from investing decisions rather than ongoing operations; and
- 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: | |||||||||
13 Weeks Ended | 52 Weeks Ended | ||||||||
January 29, 2011 | January 30, 2010 | January 29, 2011 | January 30, 2010 | ||||||
Net income attributable to Holdings' Shareholders | $ 374 | $ 430 | $ 133 | $ 235 | |||||
Income attributable to noncontrolling interest | 8 | 31 | 17 | 62 | |||||
Income tax expense | 187 | 217 | 36 | 123 | |||||
Interest and investment income | (8) | (9) | (36) | (33) | |||||
Other loss | 5 | 9 | 14 | 61 | |||||
Interest expense | 97 | 71 | 310 | 265 | |||||
Gain on sales of assets | (14) | (4) | (67) | (74) | |||||
Depreciation and amortization | 239 | 248 | 900 | 926 | |||||
Before excluded items | 888 | 993 | 1,307 | 1,565 | |||||
Domestic pension expense | 32 | 42 | 120 | 170 | |||||
Closed store reserve and severance | 13 | 31 | 26 | 119 | |||||
Visa/MasterCard settlement | - | (32) | - | (32) | |||||
Adjusted EBITDA as defined | $ 933 | $ 1,034 | $ 1,453 | $ 1,822 | |||||
% to revenues | 7.1% | 7.8% | 3.4% | 4.1% | |||||
Adjusted EBITDA for our segments are as follows: | |||||||||
Quarters Ended | |||||||||
Adjusted EBITDA | % To Revenues | ||||||||
January 29, 2011 | January 30, 2010 | January 29, 2011 | January 30, 2010 | ||||||
Kmart | $ 375 | $ 341 | 7.5% | 6.9% | |||||
Sears Domestic | 420 | 491 | 6.3% | 7.1% | |||||
Sears Canada (1) | 138 | 202 | 9.5% | 14.1% | |||||
Total Adjusted EBITDA | $ 933 | $ 1,034 | 7.1% | 7.8% | |||||
(1) Fourth quarter EBITDA in Canadian dollars was $139 million in fiscal 2010 and $213 million in fiscal 2009. | |||||||||
Fiscal Years Ended | |||||||||
Adjusted EBITDA | % To Revenues | ||||||||
January 29, 2011 | January 30, 2010 | January 29, 2011 | January 30, 2010 | ||||||
Kmart | $ 508 | $ 364 | 3.3% | 2.3% | |||||
Sears Domestic | 626 | 1,003 | 2.7% | 4.2% | |||||
Sears Canada (1) | 319 | 455 | 6.7% | 9.8% | |||||
Total Adjusted EBITDA | $ 1,453 | $ 1,822 | 3.4% | 4.1% | |||||
(1)Full year EBITDA in Canadian dollars was $327 million in fiscal 2010 and $510 million in fiscal 2009. | |||||||||
Annual Report on Form 10-K
We plan to file with the SEC our Annual Report on Form 10-K for the year ended January 29, 2011 on or before March 30, 2011.
Forward-Looking Statements
Results are preliminary and unaudited. This press release contains forward-looking statements about our expectations for fiscal year 2011. 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 inventory management and other capabilities; competitive conditions in the retail and related services industries; worldwide economic conditions and business uncertainty, the availability of consumer and commercial credit, changes in consumer confidence, tastes, preferences and spending, and changes in vendor relationships; 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; 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; 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. 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 the nation's fourth largest broadline retailer with over 4,000 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, consumer electronics and automotive repair and maintenance. Sears Holdings is the 2010 ENERGY STAR® Retail Partner of the Year. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart. We are the nation's largest provider of home services, with more than 11 million service calls made annually. 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.
Sears Holdings Corporation | ||||||||||
Consolidated Statements of Income | ||||||||||
(Unaudited) | ||||||||||
Amounts are Preliminary and Subject to Change | ||||||||||
13 Weeks Ended | 52 Weeks Ended | |||||||||
millions, except per share data | January 29, | January 30, | January 29, | January 30, | ||||||
2011 | 2010 | 2011 | 2010 | |||||||
REVENUES | ||||||||||
Merchandise sales and services | $ 13,144 | $ 13,247 | $ 43,326 | $ 44,043 | ||||||
COSTS AND EXPENSES | ||||||||||
Cost of sales, buying and occupancy | 9,476 | 9,467 | 31,448 | 31,824 | ||||||
Gross profit dollars | 3,668 | 3,780 | 11,878 | 12,219 | ||||||
Margin rate | 27.9% | 28.5% | 27.4% | 27.7% | ||||||
Selling and administrative | 2,780 | 2,787 | 10,571 | 10,654 | ||||||
Selling and administrative expense as a percentage of total revenues | 21.2% | 21.0% | 24.4% | 24.2% | ||||||
Depreciation and amortization | 239 | 248 | 900 | 926 | ||||||
Gain on sales of assets | (14) | (4) | (67) | (74) | ||||||
Total costs and expenses | 12,481 | 12,498 | 42,852 | 43,330 | ||||||
Operating income | 663 | 749 | 474 | 713 | ||||||
Interest expense | (97) | (71) | (310) | (265) | ||||||
Interest and investment income | 8 | 9 | 36 | 33 | ||||||
Other loss | (5) | (9) | (14) | (61) | ||||||
Income before income taxes | 569 | 678 | 186 | 420 | ||||||
Income tax expense | (187) | (217) | (36) | (123) | ||||||
Net income | 382 | 461 | 150 | 297 | ||||||
Income attributable to noncontrolling interest | (8) | (31) | (17) | (62) | ||||||
NET INCOME ATTRIBUTABLE TO HOLDINGS' | ||||||||||
SHAREHOLDERS | $ 374 | $ 430 | $ 133 | $ 235 | ||||||
INCOME PER COMMON SHARE ATTRIBUTABLE | ||||||||||
TO HOLDINGS' SHAREHOLDERS | ||||||||||
Diluted income per share | $ 3.43 | $ 3.74 | $ 1.19 | $ 1.99 | ||||||
Diluted weighted average common shares outstanding | 109.1 | 114.9 | 111.7 | 117.9 | ||||||
Sears Holdings Corporation | |||||
Condensed Consolidated Balance Sheets | |||||
Amounts are Preliminary and Subject to Change | |||||
(Unaudited) | |||||
millions | January 29, | January 30, | |||
2011 | 2010 | ||||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | $ 1,375 | $ 1,689 | |||
Restricted cash | 15 | 11 | |||
Receivables | 683 | 652 | |||
Merchandise inventories | 9,123 | 8,705 | |||
Prepaid expenses and other current assets | 339 | 381 | |||
Total current assets | 11,535 | 11,438 | |||
Property and equipment, net | 7,365 | 7,709 | |||
Goodwill | 1,392 | 1,392 | |||
Trade names and other intangible assets | 3,139 | 3,208 | |||
Other assets | 837 | 1,061 | |||
TOTAL ASSETS | $ 24,268 | $ 24,808 | |||
LIABILITIES | |||||
Current liabilities | |||||
Short-term borrowings | $ 360 | $ 325 | |||
Current portion of long-term debt and capitalized lease obligations | 509 | 482 | |||
Merchandise payables | 3,101 | 3,335 | |||
Unearned revenues | 976 | 1,012 | |||
Accrued expenses and other current liabilities | 3,672 | 3,632 | |||
Total current liabilities | 8,618 | 8,786 | |||
Long-term debt and capitalized lease obligations | 2,663 | 1,698 | |||
Pension and post-retirement benefits | 2,151 | 2,271 | |||
Other long-term liabilities | 2,222 | 2,618 | |||
Total Liabilities | 15,654 | 15,373 | |||
Total Equity | 8,614 | 9,435 | |||
TOTAL LIABILITIES AND EQUITY | $ 24,268 | $ 24,808 | |||
Total common shares outstanding | 108.9 | 114.8 | |||
Sears Holdings Corporation | |||||||||
Segment Results | |||||||||
(Unaudited) | |||||||||
Amounts are Preliminary and Subject to Change | |||||||||
13 Weeks Ended January 29, 2011 | |||||||||
millions, except store data | Kmart | Sears Domestic | Sears Canada | Sears Holdings | |||||
Merchandise sales and services | $ 4,999 | $ 6,686 | $1,459 | $13,144 | |||||
Cost of sales, buying and occupancy | 3,714 | 4,762 | 1,000 | 9,476 | |||||
Gross profit dollars | 1,285 | 1,924 | 459 | 3,668 | |||||
Margin rate | 25.7% | 28.8% | 31.5% | 27.9% | |||||
Selling and administrative | 915 | 1,544 | 321 | 2,780 | |||||
Selling and administrative expense as a percentage of total revenues | 18.3% | 23.1% | 22.0% | 21.2% | |||||
Depreciation and amortization | 40 | 172 | 27 | 239 | |||||
Gain on sales of assets | (1) | 1 | (14) | (14) | |||||
Total costs and expenses | 4,668 | 6,479 | 1,334 | 12,481 | |||||
Operating income (loss) | $ 331 | $ 207 | $ 125 | $ 663 | |||||
Number of: | |||||||||
Kmart Stores | 1,307 | - | - | 1,307 | |||||
Full-Line Stores | - | 894 | 122 | 1,016 | |||||
Specialty Stores | - | 1,354 | 361 | 1,715 | |||||
Total Stores | 1,307 | 2,248 | 483 | 4,038 | |||||
13 Weeks Ended January 30, 2010 | |||||||||
millions, except store data | Kmart | Sears Domestic | Sears Canada | Sears Holdings | |||||
Merchandise sales and services | $ 4,918 | $ 6,892 | $1,437 | $13,247 | |||||
Cost of sales, buying and occupancy | 3,686 | 4,832 | 949 | 9,467 | |||||
Gross profit dollars | 1,232 | 2,060 | 488 | 3,780 | |||||
Margin rate | 25.1% | 29.9% | 34.0% | 28.5% | |||||
Selling and administrative | 897 | 1,604 | 286 | 2,787 | |||||
Selling and administrative expense as a percentage of total revenues | 18.2% | 23.3% | 19.9% | 21.0% | |||||
Depreciation and amortization | 43 | 177 | 28 | 248 | |||||
Gain on sales of assets | (4) | - | - | (4) | |||||
Total costs and expenses | 4,622 | 6,613 | 1,263 | 12,498 | |||||
Operating income (loss) | $ 296 | $ 279 | $ 174 | $ 749 | |||||
Number of: | |||||||||
Kmart Stores | 1,327 | - | - | 1,327 | |||||
Full-Line Stores | - | 908 | 122 | 1,030 | |||||
Specialty Stores | - | 1,313 | 280 | 1,593 | |||||
Total Stores | 1,327 | 2,221 | 402 | 3,950 | |||||
Sears Holdings Corporation | |||||||||
Segment Results | |||||||||
(Unaudited) | |||||||||
Amounts are Preliminary and Subject to Change | |||||||||
52 Weeks Ended January 29, 2011 | |||||||||
millions, except store data | Kmart | Sears Domestic | Sears Canada | Sears Holdings | |||||
Merchandise sales and services | $15,593 | $22,937 | $4,796 | $43,326 | |||||
Cost of sales, buying and occupancy | 11,757 | 16,358 | 3,333 | 31,448 | |||||
Gross profit dollars | 3,836 | 6,579 | 1,463 | 11,878 | |||||
Margin rate | 24.6% | 28.7% | 30.5% | 27.4% | |||||
Selling and administrative | 3,341 | 6,086 | 1,144 | 10,571 | |||||
Selling and administrative expense as a percentage of total revenues | 21.4% | 26.5% | 23.9% | 24.4% | |||||
Depreciation and amortization | 149 | 651 | 100 | 900 | |||||
Gain on sales of assets | (7) | (46) | (14) | (67) | |||||
Total costs and expenses | 15,240 | 23,049 | 4,563 | 42,852 | |||||
Operating income (loss) | $ 353 | $ (112) | $ 233 | $ 474 | |||||
Number of: | |||||||||
Kmart Stores | 1,307 | - | - | 1,307 | |||||
Full-Line Stores | - | 894 | 122 | 1,016 | |||||
Specialty Stores | - | 1,354 | 361 | 1,715 | |||||
Total Stores | 1,307 | 2,248 | 483 | 4,038 | |||||
52 Weeks Ended January 30, 2010 | |||||||||
millions, except store data | Kmart | Sears Domestic | Sears Canada | Sears Holdings | |||||
Merchandise sales and services | $15,743 | $23,672 | $4,628 | $44,043 | |||||
Cost of sales, buying and occupancy | 12,038 | 16,653 | 3,133 | 31,824 | |||||
Gross profit dollars | 3,705 | 7,019 | 1,495 | 12,219 | |||||
Margin rate | 23.5% | 29.7% | 32.3% | 27.7% | |||||
Selling and administrative | 3,386 | 6,220 | 1,048 | 10,654 | |||||
Selling and administrative expense as a percentage of total revenues | 21.5% | 26.3% | 22.6% | 24.2% | |||||
Depreciation and amortization | 152 | 672 | 102 | 926 | |||||
Gain on sales of assets | (23) | (6) | (45) | (74) | |||||
Total costs and expenses | 15,553 | 23,539 | 4,238 | 43,330 | |||||
Operating income (loss) | $ 190 | $ 133 | $ 390 | $ 713 | |||||
Number of: | |||||||||
Kmart Stores | 1,327 | - | - | 1,327 | |||||
Full-Line Stores | - | 908 | 122 | 1,030 | |||||
Specialty Stores | - | 1,313 | 280 | 1,593 | |||||
Total Stores | 1,327 | 2,221 | 402 | 3,950 | |||||
Sears Holdings Corporation | |||||||||||
Adjusted EBITDA | |||||||||||
Amounts are Preliminary and Subject to Change | |||||||||||
13 Weeks Ended | |||||||||||
millions | January 29, 2011 | January 30, 2010 | |||||||||
Kmart | Sears Domestic | Sears Canada | Sears Holdings | Kmart | Sears Domestic | Sears Canada | Sears Holdings | ||||
Operating income per statement of operations | $331 | $ 207 | $ 125 | $ 663 | $296 | $ 279 | $ 174 | $ 749 | |||
Depreciation and amortization | 40 | 172 | 27 | 239 | 43 | 177 | 28 | 248 | |||
Gain on sales of assets | (1) | 1 | (14) | (14) | (4) | - | - | (4) | |||
Before excluded items | 370 | 380 | 138 | 888 | 335 | 456 | 202 | 993 | |||
Closed store reserve and severance | 5 | 8 | - | 13 | 23 | 8 | - | 31 | |||
Domestic pension expense | - | 32 | - | 32 | - | 42 | - | 42 | |||
Visa/MasterCard settlement | - | - | - | - | (17) | (15) | - | (32) | |||
Adjusted EBITDA as defined | $375 | $ 420 | $ 138 | $ 933 | $341 | $ 491 | $ 202 | $ 1,034 | |||
% to revenues | 7.5% | 6.3% | 9.5% | 7.1% | 6.9% | 7.1% | 14.1% | 7.8% | |||
52 Weeks Ended | |||||||||||
millions | January 29, 2011 | January 30, 2010 | |||||||||
Kmart | Sears Domestic | Sears Canada | Sears Holdings | Kmart | Sears Domestic | Sears Canada | Sears Holdings | ||||
Operating income per statement of operations | $353 | $ (112) | $ 233 | $ 474 | $190 | $ 133 | $ 390 | $ 713 | |||
Depreciation and amortization | 149 | 651 | 100 | 900 | 152 | 672 | 102 | 926 | |||
Gain on sales of assets | (7) | (46) | (14) | (67) | (23) | (6) | (45) | (74) | |||
Before excluded items | 495 | 493 | 319 | 1,307 | 319 | 799 | 447 | 1,565 | |||
Closed store reserve and severance | 13 | 13 | - | 26 | 62 | 49 | 8 | 119 | |||
Domestic pension expense | - | 120 | - | 120 | - | 170 | - | 170 | |||
Visa/MasterCard settlement | - | - | - | - | (17) | (15) | - | (32) | |||
Adjusted EBITDA as defined | $508 | $ 626 | $ 319 | $ 1,453 | $364 | $ 1,003 | $ 455 | $ 1,822 | |||
% to revenues | 3.3% | 2.7% | 6.7% | 3.4% | 2.3% | 4.2% | 9.8% | 4.1% | |||
Sears Holdings Corporation | ||||||||||||||
Adjusted Earnings per Share | ||||||||||||||
Amounts are Preliminary and Subject to Change | ||||||||||||||
13 Weeks Ended January 29, 2011 | ||||||||||||||
millions, except per share data | GAAP | Closed Store Reserve and Severance | Mark-to- Market Losses | January 11, 2011 Outlook Adjusted | Domestic Pension Expense | Tax Matters | As Adjusted | |||||||
Cost of sales, buying and occupancy impact | $ 9,476 | $ (7) | $ - | $ 9,469 | $ - | $ - | $ 9,469 | |||||||
Selling and administrative impact | 2,780 | (6) | - | 2,774 | (32) | - | 2,742 | |||||||
Depreciation and amortization impact | 239 | (10) | - | 229 | - | 229 | ||||||||
Operating income impact | 663 | 23 | - | 686 | 32 | - | 718 | |||||||
Other loss impact | (5) | - | 5 | - | - | - | - | |||||||
Income tax expense impact | (187) | (8) | (2) | (197) | (11) | (13) | (221) | |||||||
After tax and noncontrolling interest impact | 374 | 15 | 3 | 392 | 21 | (13) | 400 | |||||||
Diluted income per share impact | $ 3.43 | (1) | $ 0.14 | (1)/(2) | $ 0.03 | (1)/(2) | $ 3.60 | $ 0.19 | $ (0.12) | $ 3.67 | ||||
13 Weeks Ended January 30, 2010 | ||||||||||||||
millions, except per share data | GAAP | Closed Store Reserve and Severance | Mark-to- Market Gains | Domestic Pension Expense | Visa / MasterCard Settlement | Tax Matters | As Adjusted | |||||||
Cost of sales, buying and occupancy impact | $ 9,467 | $ (16) | $ - | $ - | $ - | $ - | $ 9,451 | |||||||
Selling and administrative impact | 2,787 | (15) | - | (42) | 32 | - | 2,762 | |||||||
Depreciation and amortization impact | 248 | (12) | - | - | - | - | 236 | |||||||
Operating income impact | 749 | 43 | - | 42 | (32) | - | 802 | |||||||
Other loss impact | (9) | - | (1) | - | - | - | (10) | |||||||
Income tax expense impact | (217) | (13) | - | (13) | 10 | (41) | (274) | |||||||
After tax and noncontrolling interest impact | 430 | 30 | (1) | 29 | (22) | (41) | 425 | |||||||
Diluted income per share impact | $ 3.74 | $ 0.26 | $ (0.01) | $ 0.25 | $ (0.19) | $ (0.36) | $ 3.69 | |||||||
52 Weeks Ended January 29, 2011 | ||||||||||||||||
millions, except per share data | GAAP | Closed Store Reserve and Severance | Mark-to- Market Losses | Domestic Pension Expense | Gain on Sales of Real Estate | Canadian Dividend Tax Impact | Tax Matters | As Adjusted | ||||||||
Cost of sales, buying and occupancy impact | $31,448 | $ (12) | $ - | $ - | $ - | $ - | $ - | $31,436 | ||||||||
Selling and administrative impact | 10,571 | (14) | - | (120) | - | - | - | 10,437 | ||||||||
Depreciation and amortization impact | 900 | (10) | - | - | - | - | - | 890 | ||||||||
Gain on sales of assets impact | (67) | - | - | - | 35 | - | - | (32) | ||||||||
Operating income impact | 474 | 36 | - | 120 | (35) | - | - | 595 | ||||||||
Other loss impact | (14) | - | 6 | - | - | - | - | (8) | ||||||||
Income tax expense impact | (36) | (6) | (1) | (24) | 7 | 9 | (13) | (64) | ||||||||
Noncontrolling interest impact | (17) | - | (1) | - | - | - | - | (18) | ||||||||
After tax and noncontrolling interest impact | 133 | 30 | 4 | 96 | (28) | 9 | (13) | 231 | ||||||||
Diluted income per share impact | $ 1.19 | (2) | $ 0.27 | $ 0.04 | $ 0.86 | $ (0.25) | $ 0.08 | $ (0.12) | $ 2.07 | |||||||
52 Weeks Ended January 30, 2010 | ||||||||||||||||
millions, except per share data | GAAP | Closed Store Reserve and Severance | Mark-to- Market Losses | Domestic Pension Expense | Gain on Sale of Sears Canada Headquarters | Visa / MasterCard Settlement | Tax Matters | As Adjusted | ||||||||
Cost of sales, buying and occupancy impact | $31,824 | $ (37) | $ - | $ - | $ - | $ - | $ - | $31,787 | ||||||||
Selling and administrative impact | 10,654 | (82) | - | (170) | - | 32 | - | 10,434 | ||||||||
Depreciation and amortization impact | 926 | (12) | - | - | - | - | - | 914 | ||||||||
Gain on sales of assets impact | (74) | - | - | - | 44 | - | - | (30) | ||||||||
Operating income impact | 713 | 131 | - | 170 | (44) | (32) | - | 938 | ||||||||
Other loss impact | (61) | - | 33 | - | - | - | - | (28) | ||||||||
Income tax expense impact | (123) | (38) | (8) | (50) | 10 | 10 | (41) | (240) | ||||||||
Noncontrolling interest impact | (62) | (3) | (9) | - | 12 | - | - | (62) | ||||||||
After tax and noncontrolling interest impact | 235 | 90 | 16 | 120 | (22) | (22) | (41) | 376 | ||||||||
Diluted income per share impact | $ 1.99 | $ 0.77 | $ 0.14 | $ 1.02 | $ (0.19) | $ (0.19) | $ (0.35) | $ 3.19 | ||||||||
This schedule provides a reconciliation from GAAP results to our adjusted earnings amounts, including adjusted earnings per diluted share. | ||||||||||||||||
(1) As compared to our January 11, 2011 outlook range of $3.39 to $4.12, fourth quarter EPS was $3.60. The outlook excluded any fourth quarter store closing costs and mark-to-market gains and losses on hedge transactions executed by Sears Canada which aggregated to $0.17 per share. | ||||||||||||||||
(2) As compared to our January 11, 2011 outlook range of $1.16 to $1.88, full year EPS was $1.36. The outlook excluded any fourth quarter store closing costs and mark-to-market gains and losses on hedge transactions executed by Sears Canada which aggregated to $0.17 per share. | ||||||||||||||||
SOURCE Sears Holdings Corporation
CONTACT: Sears Holdings Public Relations, +1-847-286-8371
Web Site: http://www.searsholdings.com