HOFFMAN ESTATES, Ill.,
Nov. 15, 2012 /PRNewswire/ -- Sears
Holdings Corporation ("Holdings," "we," "us," "our" or the
"Company") (NASDAQ: SHLD) today reported its third quarter 2012
results. In summary, we reported:
- Adjusted EBITDA increased $34
million for the quarter to a loss of $156 million in 2012 versus a loss of
$190 million in 2011. Domestic
Adjusted EBITDA increased $18 million
(a loss of $164 million in 2012
versus a loss of $182 million in
2011). Sears Canada's Adjusted
EBITDA improved $16 million
($8 million in 2012 versus a loss of
$8 million in 2011);
- Net loss from continuing operations attributable to Holdings'
shareholders for the third quarter of $498
million ($4.70 loss per
diluted share) and $410 million
($3.85 loss per diluted share), in
2012 and 2011, respectively. The third quarter included an
effective tax rate of 2.3% in 2012 versus a benefit rate of 18.0%
in 2011;
- Adjusted loss per diluted share from continuing operations for
the third quarter of $1.99 in 2012
and $2.55 in 2011;
- For the quarter, selling and administrative expenses declined
$139 million;
- Sears Domestic's comparable store sales declined 1.6% in the
third quarter of 2012, Kmart's comparable store sales declined
4.8%, and Sears Canada's comparable store sales declined 5.7%;
- Continued discipline of our investment in inventory with
domestic inventory declining $1.4
billion from the prior year balance ($972 million excluding the inventory related to
the Sears Hometown and Outlet businesses);
- Completed the separation of Sears Hometown and Outlet Stores,
Inc. on October 11, 2012 which raised
$446.5 million in gross proceeds;
and
- Partial spin-off to our shareholders of 45% of the outstanding
common shares of Sears Canada closed on November 13, 2012.
Lou D'Ambrosio, Sears Holdings' Chief Executive Officer and
President, said, "For the 3rd quarter and year-to-date,
we improved EBITDA, accelerated our strategic actions and
generated significant cash by delivering on the actions we outlined
at our Annual meeting. Our EBITDA improvement in the
quarter came from some of our most important categories like
Appliances, Apparel, and Home Services as we introduced new offers,
honed pricing, effectively managed costs and implemented better
inventory management. We did experience shortfalls, however,
in categories like Grocery and Household and Consumer Electronics,
and are taking actions to improve that performance.
We will continue to take the actions necessary to create value
and retain the flexibility to invest in the strategic priorities of
our company. We are rapidly moving to a member based business
model. Our investments are focused on our members and their
experience -- at the store, online, and mobile -- which is why
we are investing in Integrated Retail and our SHOP YOUR WAY
membership program. Over half of our revenues at Sears
Domestic and Kmart now come from SHOP YOUR
WAY membership.
As we commence the holidays, I also want to thank our associates
for their hard work and commitment and for most recently their
incredible support to help the victims of Hurricane
Sandy. Associates across Sears Holdings worked tirelessly to
bring essential goods -- from water to blankets to
generators - to the people hit hardest by the storm."
Third Quarter Revenues and Comparable Store Sales
Revenues decreased $548 million to
$8.9 billion for the quarter ended
October 27, 2012 compared to the prior year quarter. The
decline in revenue was primarily due to the effect of having fewer
Kmart and Sears Full-line stores in operation and lower domestic
comparable store sales for the quarter. Sears Canada's comparable store sales also decreased
and included an increase of $15
million due to changes in foreign currency exchange
rates.
Domestic comparable store sales declined 3.1%, comprised of
declines of 1.6% at Sears Domestic and 4.8% at Kmart. During
the quarter, we saw increased comparable store sales in our apparel
and home appliance categories at Sears Domestic. These increases
were offset by four primary factors. The largest impact at both
Sears Domestic and Kmart was in consumer electronics, which
continues to be negatively impacted by price compression, as well
as market shifts such as moves to smartphone technology and away
from digital cameras, GPS devices, MP3 Players and camcorders in
addition to transitions to online gaming and
applications. Adjusting for the decline in consumer
electronics, Sears Domestic comparable store sales were up over the
prior year. Grocery and household declined at Kmart partly due to
the intensely competitive nature of that industry. Lawn and
garden declined at Sears Domestic due to strong preseason sales of
snow clean-up product in the third quarter of 2011 as a result of
product shortages during the prior year winter season. Lastly,
pharmacy sales declined at Kmart due to a conversion of brand name
drugs to equivalent generic drugs. Sears Canada's comparable store sales decreased 5.7%
for the quarter primarily due to sales decreases in snow throwers,
women's apparel, electronics, men's apparel and home decor
partially offset by improved performance in home appliances and
mattresses.
Operating Loss
Operating loss was $428 million
and $447 million for the quarters
ended October 27, 2012 and October 29, 2011,
respectively. The improvement in operating loss of $19 million was primarily due to the reduction in
selling and administrative expenses, which was offset by a decline
in gross margin dollars driven by lower overall sales and a slight
decline in margin rate.
For the quarter, our gross margin decreased $141 million to $2.3
billion in 2012, predominately due to the above noted
decline in overall sales. Gross margin included charges of
$32 million and $14 million related to store closures for 2012
and 2011, respectively. In addition, Sears Canada's gross margin
included an increase of $5 million
related to the impact of foreign currency exchange rates.
Sears Canada's gross margin
rate improved 220 basis points for the third quarter as the prior
year included activity related to clearing excess inventory. Sears
Domestic's gross margin rate improved 10 basis points during the
third quarter mainly due to improvements in apparel, home
appliances and home services, which were partially offset by
declines in consumer electronics, fine jewelry, lawn and garden,
and our Lands' End customer direct business. These improvements
were offset by a 110 basis point decline in Kmart's gross margin
rate during the third quarter as improvements in pharmacy and
apparel were more than offset by declines in consumer electronics
and grocery and household.
Domestic selling and administrative expenses decreased
$132 million in the third quarter of
2012 compared to the third quarter of 2011 predominately due to
decreases in payroll and advertising expenses, which were partially
offset by higher pension expense. Selling and administrative
expenses at Sears Canada for the quarter decreased $7 million compared to the prior year quarter,
and included an increase of $4
million related to the impact of foreign currency exchange
rates. On a Canadian dollar basis, selling and administrative
expenses decreased $11 million
primarily due to decreases in advertising and payroll expenses.
Selling and administrative expenses included expenses related to
domestic pension plans, store closings and severance of
$48 million and $28 million for 2012 and 2011, respectively. The
third quarter of 2012 also included $7
million of transaction costs associated with strategic
initiatives while the third quarter of 2011 included expense of
$9 million related to hurricane Irene
losses.
Operating loss for both the third quarter of 2012 and 2011
included expenses related to domestic pension plans, store closings
and severance which aggregated to $89
million and $42 million,
respectively. Operating loss for the third quarter of 2012 also
included the $7 million of
transaction costs associated with strategic initiatives as well as
a gain on sales of assets of $12
million related to the sale of a store in Texas operated under The Great Indoors format,
while the third quarter of 2011 also included $9 million of expense related to hurricane Irene
losses. 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 provision was 2.3% for the third quarter
of 2012 as compared to an effective tax benefit rate of 18.0% in
2011. The current year tax rate was impacted by the establishment
of a valuation allowance in 2011 against certain deferred income
tax assets and the utilization of part of our net operating loss
deferred tax asset in 2012. In addition, the current year tax rate
reflects 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 will be realized. The
amount of the deferred tax asset considered realizable, however,
could be adjusted in the future if estimates of future taxable
income during the carryforward period are reduced or increased, or
if objective negative evidence in the form of cumulative losses is
no longer present and additional weight may be given to subjective
evidence such as our projections for growth. The third quarter of
2011 included a non-cash charge of $100
million to establish a valuation allowance against certain
state income deferred tax assets.
Financial Position
Rob Schriesheim, Sears Holdings'
Chief Financial Officer, said, "In February, we laid out a number
of actions intended to generate more than $1
billion of additional liquidity, improve our financial
performance and unlock value. We have executed against these
goals, are on track to generate $1.8
billion of additional liquidity and improved our EBITDA by
$271 million through the first three
quarters of this fiscal year as compared to the same period last
year. In addition to generating liquidity, these actions served to
de-risk our operations and balance sheet as we transform the
Company to a member-centric business model that is less
asset-intensive. Specifically, we reduced our risk related to our
lease obligations, investment in inventory, fixed cost base, as
well as began the process of settling a portion of our legacy
pension obligations. We intend to continue to be proactive in
generating at least $500 million in
additional liquidity over the next 12 months through selective
actions that are consistent with our focus on creating long term
value. The exact form and amount will depend on specific
circumstances and opportunities, including market conditions."
We had cash balances of $633
million at October 27, 2012 ($406 million domestic and $227 million at Sears Canada) as compared to
$754 million at January 28,
2012. The decrease in cash during the first nine months of 2012 was
primarily due to uses of cash for contributions to our pension and
post-retirement benefit plans of $493
million, capital expenditures of $257
million, repayments of long-term debt of $247 million and other working capital needs,
partially offset by cash generated from the dividend from and sale
of Sears Hometown and Outlet Stores, Inc. of $447 million and from the sales of properties of
$511 million.
Merchandise inventories at October 27, 2012 were
$9.6 billion, as compared to
$10.9 billion at October 29,
2011. Domestic inventory decreased $1.4
billion to $8.6 billion at
October 27, 2012. Excluding the inventory related to the Sears
Hometown and Outlet businesses, domestic inventory decreased
$972 million from the prior year
third quarter driven by both improved productivity and store
closures. Sears Domestic inventory decreased in all categories,
with the most notable decreases in the home appliances, apparel and
consumer electronics categories. Kmart inventory also decreased in
all categories with the most notable decreases in apparel, consumer
electronics and pharmacy and drug. Sears Canada's inventory levels increased
$16 million to $941 million at October 27, 2012, primarily
due to the timing of merchandise receipts.
Total debt (consisting of short-term borrowings, long-term debt
and capital lease obligations) was $4.0
billion at October 27, 2012, compared to $3.5 billion at January 28, 2012 and
$4.2 billion at October 29, 2011. Availability under our credit
facilities was approximately $1.4
billion as of October 27, 2012
($1.0 billion domestic and
approximately $0.4 billion at Sears
Canada, after taking into account possible reserves).
On September 14, 2012 the Company
voluntarily elected to contribute an additional $203 million to its domestic pension plan
("Plan") bringing the Plan to the 80% funded level under applicable
law thereby allowing the Plan to offer lump-sum settlements to
former associates who have vested pension benefits. The
Company believes that it is beneficial to settle pension
obligations through lump-sum payments to Plan participants so as to
reduce the Company's exposure to the gross pension obligation
(which was $6.1 billion as reported
in the Company's Annual Report on Form 10-K for the fiscal year
ended January 28,
2012). Specific risks of the gross pension obligation that the
Company would expect to be mitigated through settlement of a
portion of the gross pension obligation include:
- Investment return risk on pension assets;
- Interest rate risk on pension liabilities;
- Mortality risk on pension participants; and
- Regulatory risk from changes in applicable laws and associated
fees.
This voluntary offer was made to approximately 86,000 former
associates with vested pension benefits, representing approximately
$2.0 billion of the Company's total
qualified pension plan liabilities. Eligible participants will have
until November 19, 2012 to make their
election. The Company expects to make the payments in December 2012 and will fund the payments from
existing pension plan assets. The Company currently estimates
that it will incur a non-cash charge to operations of approximately
$300 million to $400 million pre-tax
in the fourth quarter as a result of the requirement to expense the
unrealized actuarial losses. The charge will have no effect on
equity because the unrealized actuarial losses are already
recognized in accumulated other comprehensive
income/(loss). Accordingly, the effect on retained earnings
will be offset by a corresponding reduction in accumulated other
comprehensive loss. Actual participation rates and payout
amounts will not be known until December 2012. The Company now
estimates that its minimum contribution to its domestic pension
plan for fiscal 2013 will be approximately $350 million.
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 income (loss) attributable to noncontrolling interest,
loss from discontinued operations, net of tax, income tax (expense)
benefit, 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:
- 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
|
|
39 Weeks
Ended
|
millions
|
October 27,
2012
|
|
October 29,
2011
|
|
October 27,
2012
|
|
October 29,
2011
|
Net loss
attributable to SHC per statement of operations
|
$
|
(498)
|
|
$
|
(421)
|
|
$
|
(441)
|
|
$
|
(737)
|
Income
(loss) attributable to noncontrolling interest
|
—
|
|
(4)
|
|
4
|
|
(6)
|
Loss from
discontinued operations, net of tax
|
—
|
|
11
|
|
—
|
|
10
|
Income tax
expense (benefit)
|
11
|
|
(91)
|
|
53
|
|
(264)
|
Interest
expense
|
68
|
|
70
|
|
199
|
|
216
|
Interest
and investment income
|
(7)
|
|
(6)
|
|
(28)
|
|
(31)
|
Other
(income) loss
|
(2)
|
|
(6)
|
|
(3)
|
|
2
|
Operating
loss
|
(428)
|
|
(447)
|
|
(216)
|
|
(810)
|
Depreciation and amortization
|
211
|
|
210
|
|
625
|
|
641
|
Gain on
sales of assets
|
(26)
|
|
(4)
|
|
(436)
|
|
(35)
|
Before
excluded items
|
(243)
|
|
(241)
|
|
(27)
|
|
(204)
|
Domestic
pension expense
|
42
|
|
19
|
|
124
|
|
56
|
Closed
store reserve and severance
|
38
|
|
23
|
|
90
|
|
65
|
Transaction costs
|
7
|
|
—
|
|
10
|
|
—
|
Hurricane
losses
|
—
|
|
9
|
|
—
|
|
9
|
Adjusted
EBITDA as defined
|
$
|
(156)
|
|
$
|
(190)
|
|
$
|
197
|
|
$
|
(74)
|
% to
revenues
|
(1.8)%
|
|
(2.0)%
|
|
0.7%
|
|
(0.3)%
|
Adjusted EBITDA for our segments was as follows:
|
13 Weeks
Ended
|
|
Adjusted
EBITDA
|
|
% To
Revenues
|
millions
|
October 27,
2012
|
|
October 29,
2011
|
|
October 27,
2012
|
|
October 29,
2011
|
Kmart
|
(101)
|
|
(68)
|
|
(3.3)%
|
|
(2.0)%
|
Sears
Domestic
|
(63)
|
|
(114)
|
|
(1.3)%
|
|
(2.3)%
|
Sears
Canada
|
8
|
|
(8)
|
|
0.8%
|
|
(0.7)%
|
Total
Adjusted EBITDA
|
(156)
|
|
(190)
|
|
(1.8)%
|
|
(2.0)%
|
|
|
|
39 Weeks
Ended
|
|
Adjusted
EBITDA
|
|
% To
Revenues
|
millions
|
October 27,
2012
|
|
October 29,
2011
|
|
October 27,
2012
|
|
October 29,
2011
|
Kmart
|
33
|
|
14
|
|
0.3%
|
|
0.1%
|
Sears
Domestic
|
159
|
|
(93)
|
|
1.1%
|
|
(0.6)%
|
Sears
Canada
|
5
|
|
5
|
|
0.2%
|
|
0.2%
|
Total
Adjusted EBITDA
|
197
|
|
(74)
|
|
0.7%
|
|
(0.3)%
|
Forward-Looking Statements
Results are preliminary and unaudited. This press release
contains forward-looking statements about our expectations for the
third 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 2,600 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
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
39 Weeks
Ended
|
|
millions, except per share data
|
|
October 27,
2012
|
|
October 29,
2011
|
|
October 27,
2012
|
|
October 29,
2011
|
REVENUES
|
|
|
|
|
|
|
|
|
|
Merchandise sales and services
|
|
$
|
8,857
|
|
$
|
9,405
|
|
$
|
27,594
|
|
$
|
29,083
|
COSTS
AND EXPENSES
|
|
|
|
|
|
|
|
|
|
Cost of
sales, buying and occupancy
|
|
6,604
|
|
7,011
|
|
20,243
|
|
21,544
|
|
Gross
margin dollars
|
|
2,253
|
|
2,394
|
|
7,351
|
|
7,539
|
|
Gross
margin rate
|
|
25.4%
|
|
25.5%
|
|
26.6%
|
|
25.9%
|
|
Selling
and administrative
|
|
2,496
|
|
2,635
|
|
7,378
|
|
7,743
|
|
Selling
and administrative expense as a percentage of total
revenues
|
|
28.2%
|
|
28.0%
|
|
26.7%
|
|
26.6%
|
|
Depreciation and amortization
|
|
211
|
|
210
|
|
625
|
|
641
|
|
Gain on
sales of assets
|
|
(26)
|
|
(4)
|
|
(436)
|
|
(35)
|
|
Total
costs and expenses
|
|
9,285
|
|
9,852
|
|
27,810
|
|
29,893
|
Operating
loss
|
|
(428)
|
|
(447)
|
|
(216)
|
|
(810)
|
Interest
expense
|
|
(68)
|
|
(70)
|
|
(199)
|
|
(216)
|
Interest
and investment income
|
|
7
|
|
6
|
|
28
|
|
31
|
Other
income (loss)
|
|
2
|
|
6
|
|
3
|
|
(2)
|
Loss from
continuing operations before income taxes
|
|
(487)
|
|
(505)
|
|
(384)
|
|
(997)
|
Income tax
(expense) benefit
|
|
(11)
|
|
91
|
|
(53)
|
|
264
|
Loss from
continuing operations
|
|
(498)
|
|
(414)
|
|
(437)
|
|
(733)
|
Loss from
discontinued operations, net of tax
|
|
—
|
|
(11)
|
|
—
|
|
(10)
|
Net
loss
|
|
(498)
|
|
(425)
|
|
(437)
|
|
(743)
|
(Income)
loss attributable to noncontrolling interest
|
|
—
|
|
4
|
|
(4)
|
|
6
|
NET
LOSS ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
(498)
|
|
$
|
(421)
|
|
(441)
|
|
$
|
(737)
|
Amounts
attributable to Holdings' shareholders:
|
|
|
|
|
|
|
|
|
Loss from
continuing operations, net of tax
|
|
(498)
|
|
$
|
(410)
|
|
(441)
|
|
$
|
(727)
|
Loss from
discontinued operations, net of tax
|
|
—
|
|
(11)
|
|
—
|
|
(10)
|
Net
loss
|
|
(498)
|
|
$
|
(421)
|
|
(441)
|
|
$
|
(737)
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(4.70)
|
|
$
|
(3.85)
|
|
$
|
(4.16)
|
|
$
|
(6.80)
|
|
Discontinued operations
|
|
—
|
|
(0.10)
|
|
—
|
|
(0.09)
|
|
|
|
$
|
(4.70)
|
|
$
|
(3.95)
|
|
$
|
(4.16)
|
|
$
|
(6.89)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average common shares outstanding
|
|
105.9
|
|
106.5
|
|
105.9
|
|
107.0
|
|
|
|
|
Sears
Holdings Corporation
|
Condensed Consolidated Balance
Sheets
|
|
|
|
|
|
|
|
Amounts
are Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
millions
|
|
October 27,
2012
|
|
October 29,
2011
|
|
January 28,
2012
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
622
|
|
$
|
591
|
|
$
|
747
|
Restricted
cash
|
|
11
|
|
8
|
|
7
|
Accounts
receivable
|
|
665
|
|
653
|
|
695
|
Merchandise inventories
|
|
9,567
|
|
10,941
|
|
8,407
|
Prepaid
expenses and other current assets
|
|
413
|
|
617
|
|
388
|
Current
assets of discontinued operations
|
|
—
|
|
226
|
|
—
|
Total
current assets
|
|
11,278
|
|
13,036
|
|
10,244
|
Property
and equipment, net
|
|
6,174
|
|
6,796
|
|
6,577
|
Goodwill
|
|
674
|
|
1,392
|
|
841
|
Trade
names and other intangible assets
|
|
2,894
|
|
2,950
|
|
2,937
|
Other
assets
|
|
782
|
|
1,056
|
|
782
|
Non-current assets of discontinued
operations
|
|
—
|
|
376
|
|
—
|
TOTAL
ASSETS
|
|
$
|
21,802
|
|
$
|
25,606
|
|
$
|
21,381
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
1,890
|
|
$
|
2,002
|
|
$
|
1,175
|
Current
portion of long-term debt and capitalized lease
obligations
|
|
154
|
|
157
|
|
230
|
Merchandise payables
|
|
3,851
|
|
4,471
|
|
2,912
|
Other
current liabilities
|
|
2,818
|
|
2,927
|
|
2,892
|
Unearned
revenues
|
|
940
|
|
948
|
|
964
|
Other
taxes
|
|
516
|
|
502
|
|
523
|
Short-term
deferred tax liabilities
|
|
506
|
|
214
|
|
516
|
Current
liabilities of discontinued operations
|
|
—
|
|
148
|
|
—
|
Total
current liabilities
|
|
10,675
|
|
11,369
|
|
9,212
|
|
|
|
|
|
|
|
Long-term
debt and capitalized lease obligations
|
|
1,960
|
|
2,073
|
|
2,088
|
Pension
and post-retirement benefits
|
|
2,260
|
|
1,859
|
|
2,738
|
Other
long-term liabilities
|
|
2,137
|
|
2,227
|
|
2,186
|
Long-term
deferred tax liabilities
|
|
869
|
|
—
|
|
816
|
Non-current liabilities of discontinued
operations
|
|
—
|
|
362
|
|
—
|
Total
Liabilities
|
|
17,901
|
|
17,890
|
|
17,040
|
|
|
|
|
|
|
|
Total
Equity
|
|
3,901
|
|
7,716
|
|
4,341
|
TOTAL
LIABILITIES AND EQUITY
|
|
$
|
21,802
|
|
$
|
25,606
|
|
$
|
21,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
common shares outstanding
|
|
106.4
|
|
106.9
|
|
106.3
|
|
|
|
|
|
Sears
Holdings Corporation
|
Segment
Results
|
(Unaudited)
|
|
|
|
Amounts
are Preliminary and Subject to Change
|
|
|
|
|
|
|
13 Weeks
Ended October 27, 2012
|
millions, except store data
|
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Canada
|
|
Sears
Holdings
|
Merchandise sales and services
|
|
$
|
3,081
|
|
$
|
4,724
|
|
$
|
1,052
|
|
$
|
8,857
|
|
|
|
|
|
|
|
|
|
Cost of
sales, buying and occupancy
|
|
2,409
|
|
3,448
|
|
747
|
|
6,604
|
Gross
margin dollars
|
|
672
|
|
1,276
|
|
305
|
|
2,253
|
Gross
margin rate
|
|
21.8%
|
|
27.0%
|
|
29.0%
|
|
25.4%
|
|
|
|
|
|
|
|
|
|
Selling
and administrative
|
|
800
|
|
1,393
|
|
303
|
|
2,496
|
Selling
and administrative expense as a percentage
of total revenues
|
|
26.0%
|
|
29.5%
|
|
28.8%
|
|
28.2%
|
Depreciation and amortization
|
|
39
|
|
145
|
|
27
|
|
211
|
Gain on
sales of assets
|
|
(3)
|
|
(17)
|
|
(6)
|
|
(26)
|
Total
costs and expenses
|
|
3,245
|
|
4,969
|
|
1,071
|
|
9,285
|
Operating
loss
|
|
$
|
(164)
|
|
$
|
(245)
|
|
$
|
(19)
|
|
$
|
(428)
|
|
|
|
|
|
|
|
|
|
Number
of:
|
|
|
|
|
|
|
|
|
Kmart
Stores
|
|
1,252
|
|
—
|
|
—
|
|
1,252
|
Full-Line
Stores
|
|
—
|
|
814
|
|
118
|
|
932
|
Specialty
Stores
|
|
—
|
|
52
|
|
365
|
|
417
|
Total
Stores
|
|
1,252
|
|
866
|
|
483
|
|
2,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks
Ended October 29, 2011
|
millions, except store data
|
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Canada
|
|
Sears
Holdings
|
Merchandise sales and services
|
|
$
|
3,343
|
|
$
|
4,954
|
|
$
|
1,108
|
|
$
|
9,405
|
|
|
|
|
|
|
|
|
|
Cost of
sales, buying and occupancy
|
|
2,578
|
|
3,622
|
|
811
|
|
7,011
|
Gross
margin dollars
|
|
765
|
|
1,332
|
|
297
|
|
2,394
|
Gross
margin rate
|
|
22.9%
|
|
26.9%
|
|
26.8%
|
|
25.5%
|
|
|
|
|
|
|
|
|
|
Selling
and administrative
|
|
838
|
|
1,487
|
|
310
|
|
2,635
|
Selling
and administrative expense as a percentage
of total revenues
|
|
25.1%
|
|
30.0%
|
|
28.0%
|
|
28.0%
|
Depreciation and amortization
|
|
37
|
|
146
|
|
27
|
|
210
|
Gain on
sales of assets
|
|
(2)
|
|
(2)
|
|
—
|
|
(4)
|
Total
costs and expenses
|
|
3,451
|
|
5,253
|
|
1,148
|
|
9,852
|
Operating
loss
|
|
$
|
(108)
|
|
$
|
(299)
|
|
$
|
(40)
|
|
$
|
(447)
|
|
|
|
|
|
|
|
|
|
Number
of:
|
|
|
|
|
|
|
|
|
Kmart
Stores
|
|
1,309
|
|
—
|
|
—
|
|
1,309
|
Full-Line
Stores
|
|
—
|
|
868
|
|
122
|
|
990
|
Specialty
Stores
|
|
—
|
|
1,295
|
|
378
|
|
1,673
|
Total
Stores
|
|
1,309
|
|
2,163
|
|
500
|
|
3,972
|
|
|
|
|
Sears
Holdings Corporation
|
Segment
Results
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Amounts
are Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 Weeks
Ended October 27, 2012
|
millions, except store data
|
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Canada
|
|
Sears
Holdings
|
Merchandise sales and services
|
|
$
|
9,870
|
|
$
|
14,724
|
|
$
|
3,000
|
|
$
|
27,594
|
|
|
|
|
|
|
|
|
|
Cost of
sales, buying and occupancy
|
|
7,560
|
|
10,546
|
|
2,137
|
|
20,243
|
Gross
margin dollars
|
|
2,310
|
|
4,178
|
|
863
|
|
7,351
|
Gross
margin rate
|
|
23.4%
|
|
28.4%
|
|
28.8%
|
|
26.6%
|
|
|
|
|
|
|
|
|
|
Selling
and administrative
|
|
2,315
|
|
4,197
|
|
866
|
|
7,378
|
Selling
and administrative expense as a percentage
of total revenues
|
|
23.5%
|
|
28.5%
|
|
28.9%
|
|
26.7%
|
Depreciation and amortization
|
|
110
|
|
437
|
|
78
|
|
625
|
Gain on
sales of assets
|
|
(17)
|
|
(250)
|
|
(169)
|
|
(436)
|
Total
costs and expenses
|
|
9,968
|
|
14,930
|
|
2,912
|
|
27,810
|
Operating
income (loss)
|
|
$
|
(98)
|
|
$
|
(206)
|
|
$
|
88
|
|
$
|
(216)
|
|
|
|
|
|
|
|
|
|
Number
of:
|
|
|
|
|
|
|
|
|
Kmart
Stores
|
|
1,252
|
|
—
|
|
—
|
|
1,252
|
Full-Line
Stores
|
|
—
|
|
814
|
|
118
|
|
932
|
Specialty
Stores
|
|
—
|
|
52
|
|
365
|
|
417
|
Total
Stores
|
|
1,252
|
|
866
|
|
483
|
|
2,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 Weeks
Ended October 29, 2011
|
millions, except store data
|
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Canada
|
|
Sears
Holdings
|
Merchandise sales and services
|
|
$
|
10,446
|
|
$
|
15,340
|
|
$
|
3,297
|
|
$
|
29,083
|
|
|
|
|
|
|
|
|
|
Cost of
sales, buying and occupancy
|
|
8,011
|
|
11,175
|
|
2,358
|
|
21,544
|
Gross
margin dollars
|
|
2,435
|
|
4,165
|
|
939
|
|
7,539
|
Gross
margin rate
|
|
23.3%
|
|
27.2%
|
|
28.5%
|
|
25.9%
|
|
|
|
|
|
|
|
|
|
Selling
and administrative
|
|
2,436
|
|
4,368
|
|
939
|
|
7,743
|
Selling
and administrative expense as a percentage
of total revenues
|
|
23.3%
|
|
28.5%
|
|
28.5%
|
|
26.6%
|
Depreciation and amortization
|
|
111
|
|
452
|
|
78
|
|
641
|
Gain on
sales of assets
|
|
(9)
|
|
(26)
|
|
—
|
|
(35)
|
Total
costs and expenses
|
|
10,549
|
|
15,969
|
|
3,375
|
|
29,893
|
Operating
loss
|
|
$
|
(103)
|
|
$
|
(629)
|
|
$
|
(78)
|
|
$
|
(810)
|
|
|
|
|
|
|
|
|
|
Number
of:
|
|
|
|
|
|
|
|
|
Kmart
Stores
|
|
1,309
|
|
—
|
|
—
|
|
1,309
|
Full-Line
Stores
|
|
—
|
|
868
|
|
122
|
|
990
|
Specialty
Stores
|
|
—
|
|
1,295
|
|
378
|
|
1,673
|
Total
Stores
|
|
1,309
|
|
2,163
|
|
500
|
|
3,972
|
|
|
|
Sears
Holdings Corporation
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
are Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
millions
|
|
October 27, 2012
|
|
October 29, 2011
|
|
|
Kmart
|
Sears
Domestic
|
Sears
Canada
|
Sears
Holdings
|
|
Kmart
|
Sears
Domestic
|
Sears
Canada
|
Sears
Holdings
|
Operating
loss per statement of operations
|
|
$
|
(164)
|
$
|
(245)
|
$
|
(19)
|
$
|
(428)
|
|
$
|
(108)
|
$
|
(299)
|
$
|
(40)
|
$
|
(447)
|
Depreciation and amortization
|
|
39
|
145
|
27
|
211
|
|
37
|
146
|
27
|
210
|
Gain on
sales of assets
|
|
(3)
|
(17)
|
(6)
|
(26)
|
|
(2)
|
(2)
|
—
|
(4)
|
Before
excluded items
|
|
(128)
|
(117)
|
2
|
(243)
|
|
(73)
|
(155)
|
(13)
|
(241)
|
|
|
|
|
|
|
|
|
|
|
|
Closed
store reserve and severance
|
|
27
|
8
|
3
|
38
|
|
5
|
13
|
5
|
23
|
Domestic
pension expense
|
|
—
|
42
|
—
|
42
|
|
—
|
19
|
—
|
19
|
Transaction costs
|
|
—
|
4
|
3
|
7
|
|
—
|
—
|
—
|
—
|
Hurricane
losses
|
|
—
|
—
|
—
|
—
|
|
—
|
9
|
—
|
9
|
Adjusted
EBITDA as defined
|
|
$
|
(101)
|
$
|
(63)
|
$
|
8
|
$
|
(156)
|
|
$
|
(68)
|
$
|
(114)
|
$
|
(8)
|
$
|
(190)
|
%
to revenues
|
|
(3.3)%
|
(1.3)%
|
0.8%
|
(1.8)%
|
|
(2.0)%
|
(2.3)%
|
(0.7)%
|
(2.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 Weeks
Ended
|
millions
|
|
October 27, 2012
|
|
October 29, 2011
|
|
|
Kmart
|
Sears
Domestic
|
Sears
Canada
|
Sears
Holdings
|
|
Kmart
|
Sears
Domestic
|
Sears
Canada
|
Sears
Holdings
|
Operating
income (loss) per statement of operations
|
|
$
|
(98)
|
$
|
(206)
|
$
|
88
|
$
|
(216)
|
|
$
|
(103)
|
$
|
(629)
|
$
|
(78)
|
$
|
(810)
|
Depreciation and amortization
|
|
110
|
437
|
78
|
625
|
|
111
|
452
|
78
|
641
|
Gain on
sales of assets
|
|
(17)
|
(250)
|
(169)
|
(436)
|
|
(9)
|
(26)
|
—
|
(35)
|
Before
excluded items
|
|
(5)
|
(19)
|
(3)
|
(27)
|
|
(1)
|
(203)
|
—
|
(204)
|
|
|
|
|
|
|
|
|
|
|
|
Closed
store reserve and severance
|
|
38
|
47
|
5
|
90
|
|
15
|
45
|
5
|
65
|
Domestic
pension expense
|
|
—
|
124
|
—
|
124
|
|
—
|
56
|
—
|
56
|
Transaction costs
|
|
—
|
7
|
3
|
10
|
|
—
|
—
|
—
|
—
|
Hurricane
losses
|
|
—
|
—
|
—
|
—
|
|
—
|
9
|
—
|
9
|
Adjusted
EBITDA as defined
|
|
$
|
33
|
$
|
159
|
$
|
5
|
$
|
197
|
|
$
|
14
|
$
|
(93)
|
$
|
5
|
$
|
(74)
|
%
to revenues
|
|
0.3%
|
1.1%
|
0.2%
|
0.7%
|
|
0.1%
|
(0.6)%
|
0.2%
|
(0.3)%
|
|
Sears
Holdings Corporation
|
Adjusted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
are Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks
Ended October 27, 2012
|
|
|
millions, except per share data
|
GAAP
|
Domestic
Pension
Expense
|
Closed Store
Reserve and
Severance
|
Gain on
Sales of Assets
|
Transaction Costs
|
Tax
Matters
|
As
Adjusted
|
|
Cost of
sales, buying and occupancy impact
|
$
|
6,604
|
$
|
—
|
$
|
(32)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
6,572
|
|
Selling
and administrative impact
|
2,496
|
(42)
|
(6)
|
—
|
(7)
|
—
|
2,441
|
|
Depreciation and amortization impact
|
211
|
—
|
(9)
|
—
|
—
|
—
|
202
|
|
Gain on
sales of assets impact
|
(26)
|
—
|
—
|
12
|
—
|
—
|
(14)
|
|
Operating
loss impact
|
(428)
|
42
|
47
|
(12)
|
7
|
—
|
(344)
|
|
Income tax
expense impact
|
(11)
|
(16)
|
(18)
|
5
|
(3)
|
235
|
192
|
|
After tax
and noncontrolling interest impact
|
(498)
|
26
|
29
|
(7)
|
4
|
235
|
(211)
|
|
Diluted
loss per share impact
|
$
|
(4.70)
|
$
|
0.25
|
$
|
0.27
|
$
|
(0.07)
|
$
|
0.04
|
$
|
2.22
|
$
|
(1.99)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks
Ended October 29, 2011
|
millions, except per share data
|
GAAP
|
Domestic
Pension
Expense
|
Closed Store
Reserve and
Severance
|
Mark-to-Market
Gains
|
Hurricane
Losses
|
Tax
Matters
|
Discontinued
Operations
|
As
Adjusted
|
Cost of
sales, buying and occupancy impact
|
$
|
7,011
|
$
|
—
|
$
|
(14)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
6,997
|
Selling
and administrative impact
|
2,635
|
(19)
|
(9)
|
—
|
(9)
|
—
|
—
|
2,598
|
Operating
loss impact
|
(447)
|
19
|
23
|
—
|
9
|
—
|
—
|
(396)
|
Other
income impact
|
6
|
—
|
—
|
(4)
|
—
|
—
|
—
|
2
|
Income tax
benefit impact
|
91
|
(4)
|
(4)
|
1
|
(2)
|
100
|
—
|
182
|
Loss from
discontinued operations, net of tax impact
|
(11)
|
—
|
—
|
—
|
—
|
—
|
11
|
—
|
After tax
and noncontrolling interest impact
|
(421)
|
15
|
19
|
(3)
|
7
|
100
|
11
|
(272)
|
Diluted
loss per share impact
|
$
|
(3.95)
|
$
|
0.14
|
$
|
0.18
|
$
|
(0.03)
|
$
|
0.07
|
$
|
0.94
|
$
|
0.10
|
$
|
(2.55)
|
|
|
|
|
|
|
|
|
|
Sears
Holdings Corporation
|
Adjusted Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
are Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 Weeks
Ended October 27, 2012
|
|
|
millions, except per share data
|
GAAP
|
Domestic
Pension
Expense
|
Closed Store
Reserve and
Severance
|
Gain on
Sales of
Assets
|
Transaction Costs
|
Tax
Matters
|
As
Adjusted
|
|
|
Cost of
sales, buying and occupancy impact
|
$
|
20,243
|
$
|
—
|
$
|
(32)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
20,211
|
|
|
Selling
and administrative impact
|
7,378
|
(124)
|
(58)
|
—
|
(10)
|
—
|
7,186
|
|
|
Depreciation and amortization impact
|
625
|
—
|
(16)
|
—
|
—
|
—
|
609
|
|
|
Gain on
sales of assets impact
|
(436)
|
—
|
—
|
398
|
—
|
—
|
(38)
|
|
|
Operating
loss impact
|
(216)
|
124
|
106
|
(398)
|
10
|
—
|
(374)
|
|
|
Income tax
expense impact
|
(53)
|
(47)
|
(40)
|
149
|
(4)
|
198
|
203
|
|
|
Income
attributable to noncontrolling interest impact
|
(4)
|
—
|
—
|
8
|
—
|
—
|
4
|
|
|
After tax
and noncontrolling interest impact
|
(441)
|
77
|
66
|
(241)
|
6
|
198
|
(335)
|
|
|
Diluted
loss per share impact
|
$
|
(4.16)
|
$
|
0.73
|
$
|
0.62
|
$
|
(2.28)
|
$
|
0.06
|
$
|
1.87
|
$
|
(3.16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 Weeks
Ended October 29, 2011
|
millions, except per share data
|
GAAP
|
Domestic
Pension
Expense
|
Closed Store
Reserve and
Severance
|
Gain on
Sales of
Assets
|
Mark-to-Market
Losses
|
Hurricane
Losses
|
Tax
Matters
|
Discontinued
Operations
|
As
Adjusted
|
Cost of
sales, buying and occupancy impact
|
$
|
21,544
|
$
|
—
|
$
|
(37)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
—
|
$
|
21,507
|
Selling
and administrative impact
|
7,743
|
(56)
|
(28)
|
—
|
—
|
(9)
|
—
|
—
|
7,650
|
Depreciation and amortization impact
|
641
|
—
|
(8)
|
—
|
—
|
—
|
—
|
—
|
633
|
Gain on
sales of assets impact
|
(35)
|
—
|
—
|
21
|
—
|
—
|
—
|
—
|
(14)
|
Operating
loss impact
|
(810)
|
56
|
73
|
(21)
|
—
|
9
|
—
|
—
|
(693)
|
Other loss
impact
|
(2)
|
—
|
—
|
—
|
6
|
—
|
—
|
—
|
4
|
Income tax
benefit impact
|
264
|
(15)
|
(19)
|
7
|
(2)
|
(2)
|
100
|
—
|
333
|
Loss from
discontinued operations, net of tax impact
|
(10)
|
—
|
—
|
—
|
—
|
—
|
—
|
10
|
—
|
After tax
and noncontrolling interest impact
|
(737)
|
41
|
54
|
(14)
|
4
|
7
|
100
|
10
|
(535)
|
Diluted
loss per share impact
|
$
|
(6.89)
|
$
|
0.38
|
$
|
0.51
|
$
|
(0.13)
|
$
|
0.04
|
$
|
0.07
|
$
|
0.93
|
0.09
|
$
|
(5.00)
|
SOURCE Sears Holdings Corporation