Sears Holdings Announces December Comparable Store Sales and Fourth Quarter Outlook
Sears Holdings Corporation ("Holdings", "we", "us", "our" or the "Company") (NASDAQ: SHLD) today announced domestic comparable store sales for the five-week ("December"), quarter-to-date ("QTD") and year-to-date ("YTD") periods ended January 2, 2010 for its Kmart and Sears stores as follows:
December QTD YTD
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Kmart 5.3% 2.6% -0.7%
Sears Domestic -4.3% -6.0% -8.8%
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Total 0.4% -2.0% -5.2%
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Kmart's December comparable store sales benefited from increases in the toys, home and apparel categories, as well as the impact of assuming the operations of its footwear business from a third party effective January 2009. Sears Domestic's December comparable store sales reflect reduced sales of higher ticket hardline items, partially offset by increases in the tools and automotive categories.
We currently expect net income attributable to Holdings' shareholders for the quarter ending January 30, 2010 will be between $385 million and $465 million, or between $3.36 and $4.06 per diluted share. Our expectation of fourth quarter net income attributable to Holdings' shareholders and earnings per share attributable to Holdings' shareholders excludes the potential impact, if any, related to store closings and impairment charges, restructuring activities including severance, and mark-to-market gains and losses on hedge transactions executed by Sears Canada. We expect the fourth quarter effective tax rate to be approximately 32%, due to the favorable resolution of certain federal and state income tax matters. In the fourth quarter of the prior year, the Company reported net income attributable to Holdings' shareholders of $190 million, or $1.55 per diluted share.
For the full year ending January 30, 2010, the Company expects net income attributable to Holdings' shareholders to be between $190 million and $270 million, or between $1.61 and $2.29 per diluted share, which also excludes the potential fourth quarter impact, if any, related to store closings and impairment charges, restructuring activities including severance, and mark-to-market gains and losses on hedge transactions executed by Sears Canada. For the full year ended January 31, 2009, the Company reported net income attributable to Holdings' shareholders of $53 million, or $0.42 per diluted share.
Financial Position
We currently expect to end the fiscal year with approximately $1.7 billion in cash balances (of which approximately $500 million will be domestic and $1.2 billion will be Sears Canada).
During December 2009, we repaid all borrowings under our revolving credit facility as working capital needs declined as expected. Short-term borrowings (consisting of commercial paper and borrowings under our revolving credit facility) are projected to be approximately $200 million at January 30, 2010, down from last year's balance of $442 million. Further, letters of credit issued are expected to be $684 million at January 30, 2010, down from $968 million last year. Accordingly, we expect to have approximately $3.2 billion of availability on the credit facility at year end. As previously disclosed, the facility will reduce in size by $1.7 billion to $2.4 billion on March 24, 2010. The expected short-term borrowing balance indicated does not give effect to any share repurchase activity after January 6, 2010.
During the fourth quarter through January 6, 2010, we repurchased 0.9 million common shares at a total cost of $66 million (or $71.68 per share) under our share repurchase program. As of January 6, 2010, we had remaining authorization to repurchase $582 million of common shares under the previously approved programs.
Adjusted EBITDA
The Company expects to report total Adjusted EBITDA (consisting of Kmart, Sears Domestic and Sears Canada segments) of $1.720 to $1.830 billion in the current year, which is computed as follows:
-- expected operating income of $665 to $755 million; -- plus expected depreciation expense of $900 to $920 million; -- less gains on sales of assets through January 2, 2010 of $71 million; -- less gain realized from Visa/MasterCard settlement of $32 million; -- plus expected domestic pension expense of $170 million; -- plus expected closed store / severance costs of $88 million.
Our expectation of fourth quarter operating income excludes the potential impact, if any, related to store closings and impairment charges and restructuring activities including severance. For further discussion of the reconciling items, see the Company's press release on third quarter results issued on November 19, 2009.
Forward-Looking Statements
Results are preliminary and unaudited. This press release contains forward-looking statements about our expectations for fiscal year 2009. 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; and the outcome of pending and/or future legal proceedings, including product liability claims and bankruptcy claims, including proceedings with respect to which the parties have reached a preliminary settlement. 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 approximately 3,900 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, home electronics and automotive repair and maintenance. 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 exclusively by Sears and Kmart. We are the nation's largest provider of home services, with more than 12 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.
First Call Analyst:
FCMN Contact: kfreely@searshc.com
SOURCE: Sears Holdings Corporation
CONTACT: Sears Holdings Public Relations, +1-847-286-8371
Web Site: http://www.searsholdings.com/
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