HOFFMAN ESTATES, Ill.,
March 9, 2017 /PRNewswire/ -- Sears Holdings Corporation
("Holdings," "we," "us," "our," or the "Company") (NASDAQ: SHLD)
today announced financial results for its fourth quarter and full
year ended January 28, 2017. As a supplement to this
announcement, a presentation, pre-recorded conference call and
audio webcast are available at our
website http://searsholdings.com/invest.
In summary, we reported a net loss attributable to Holdings'
shareholders of $607 million
($5.67 loss per diluted share) for
the fourth quarter of 2016, which included a non-cash accounting
charge of $381 million related to the
impairment of the Sears trade name, compared to a net loss of
$580 million ($5.44 loss per diluted share) for the prior year
fourth quarter, which also included a non-cash accounting charge of
$180 million related to the
impairment of the Sears trade name. Adjusted for significant items
noted in our Adjusted Earnings Per Share Reconciliation tables, we
would have reported a net loss attributable to Holdings'
shareholders of $137 million
($1.28 loss per diluted share) for
the fourth quarter of 2016 compared to a net loss of $181 million ($1.70
loss per diluted share) in the prior year quarter. Adjusted EBITDA
was $(61) million in the fourth
quarter of 2016 compared to $(137)
million in the prior year fourth quarter.
Operational highlights for the fourth quarter include:
- Launched the new Sears MasterCard with an industry-leading
5-3-2-1 Shop Your Way® rewards offer that allows members
to earn Shop Your Way® points everywhere;
- Launched a strategic partnership with Activehours to integrate
the Shop Your Way® rewards program into the Activehours
mobile application, enabling Shop Your Way® members to
access their paychecks on demand;
- Expanded Uber Technologies partnership rider rewards program to
a total of 25 markets, building on the successful launch in
New York City and Chicago;
- Sears Auto Center business introduced DieHard® Edge
Maintenance Plans and DieHard® 360° Vehicle Assessment
services designed to provide peace of mind and protect drivers'
investments in their vehicles, and also launched the pilot of the
"Digital Tire Journey," an innovative web app-based service helping
drivers identify the appropriate tires to fit their preferences;
and
- Sears Home Services continued to deliver solid performance and
enhanced its capabilities with a GoToAssist Seeit mobile solution
that will enable technicians to provide faster and better
services.
Edward S. Lampert, Chairman and
Chief Executive Officer of Sears Holdings, said, "We delivered
significant Adjusted EBITDA improvement in the fourth quarter,
reflecting our firm focus on profitability to offset ongoing
revenue pressures. Building on this positive momentum, we are
taking decisive actions to become a more agile and competitive
retailer with a clear path toward profitability."
Jason M. Hollar, Holdings' Chief
Financial Officer, said, "While the challenging holiday selling
season pressured margins and comparable store sales, we were able
to successfully improve profitability through disciplined inventory
and costs management. We will continue to take actions to drive
profitability, generate liquidity and adjust our overall capital
structure while continuing to meet all of our financial
obligations."
Financial Results
Revenues were $6.1 billion for the
fourth quarter of 2016, compared to $7.3
billion for the prior year fourth quarter. The
year-over-year decline in revenues was primarily attributable to
having fewer Kmart and Sears Full-line stores in operation, which
accounted for $596 million of the
revenue decline, as well as a 10.3% decline in comparable store
sales for the quarter, which accounted for $555 million of the revenue decline.
At Kmart, comparable store sales decreased 8.0% during the
fourth quarter primarily driven by declines in the consumer
electronics, grocery & household, apparel and toys categories.
Sears Domestic comparable store sales decreased 12.3% during the
quarter, primarily driven by declines in the home appliances,
apparel, consumer electronics and tools categories.
For the full year, revenues were $22.1
billion in 2016 as compared to revenues of $25.1 billion in the prior year. The decline in
revenues included a decrease of $1.3
billion as a result of having fewer Kmart and Sears
Full-line stores in operation. For the full year, comparable store
sales declined 7.4%, which contributed to $1.4 billion of the revenue decline relative to
the prior year.
Kmart comparable store sales declined 5.3% for the full year,
primarily driven by declines in the grocery & household,
consumer electronics and pharmacy categories. Sears Domestic
comparable store sales for the year declined 9.3%, primarily driven
by decreases in the home appliances, apparel and consumer
electronics categories.
During the fourth quarter, gross margin decreased $308 million compared to the prior year fourth
quarter due to the above noted decline in sales, as well as a 50
basis point decline in our gross margin rate. For the full year
2016, our gross margin decreased $1.1
billion to $4.7 billion due to
both the above noted decline in sales and a 190 basis point decline
in our gross margin rate. The decline in gross margin rate for the
quarter and the full year was primarily attributed to lower margins
in our apparel business, as well as an overall increase in
promotional activities, including an increase in Shop Your
Way® expense.
Selling and administrative expenses decreased by $273 million in the fourth quarter of 2016
compared to the prior year quarter and $748
million for full year 2016 compared to the prior year,
primarily due to a decrease in payroll expense. In addition,
advertising expense declined as we shift away from traditional
advertising to the use of Shop Your Way® points awarded
to members, the expense for which is included in gross margin.
Financial Position
The Company's cash balances were $286
million at January 28, 2017 compared to $238 million at January 30, 2016.
Merchandise inventories at January 28, 2017 were
$4.0 billion, compared to
$5.2 billion at January 30,
2016, while merchandise payables were $1.0
billion and $1.6 billion at
January 28, 2017 and January 30, 2016, respectively.
We had no short-term borrowings outstanding at January 28,
2017 as compared to $797 million at
January 30, 2016, consisting of borrowings under our domestic
credit facility. At January 28, 2017, we had utilized
approximately $464 million of our
$1.971 billion revolving credit
facility consisting of letters of credit outstanding. The amount
available to borrow under our credit facility was approximately
$165 million as of January 28,
2017, which reflects the effect of our springing fixed charge
coverage ratio covenant and the borrowing base limitation in our
revolving credit facility, which varies primarily based on our
overall inventory and receivables balances. After the application
of cash proceeds received from the Craftsman sale to pay down
outstanding borrowings under our Domestic Credit Agreement, our
excess cash on hand and availability under our credit facility will
be approximately $740 million on
March 9, 2017, an increase of
$575 million as compared to
January 28, 2017. See below for
further discussion of the recently completed Craftsman
transaction.
As previously announced, in February
2017, the Company entered into an amendment to our existing
asset-based credit facility. The amendment reduced the aggregate
revolver commitments from $1.971 billion to $1.5 billion, but also implemented other
modifications to covenants and reserves against the credit facility
borrowing base that improved net liquidity. The amended credit
facility is smaller in size, reflecting the Company's reduced needs
consistent with lower inventory levels from fewer physical stores
and a greater online presence, in line with our transforming
business model. The amendment also provided additional flexibility
in the form of a $250 million increase in
the general debt basket from $750
million to $1.0 billion.
Total long-term debt (long-term debt and capital lease
obligations) was $4.2 billion and
$2.2 billion at January 28, 2017
and January 30, 2016, respectively.
Update on Strategic Initiatives
Holdings recently completed the previously-announced sale of the
Craftsman brand to Stanley Black
& Decker. The transaction provides Stanley Black & Decker with the right to
develop, manufacture and sell Craftsman-branded products outside of
Holdings and Sears Hometown & Outlet Stores, Inc. distribution
channels. As part of the agreement, Holdings will continue to offer
Craftsman-branded products, sourced from existing suppliers,
through its current retail channels via a perpetual license from
Stanley Black & Decker, which
will be royalty-free for the first 15 years after closing and
royalty-bearing thereafter.
The Company received an initial upfront cash payment of
$525 million, subject to closing
costs and an adjustment for working capital changes, at closing. In
addition, Stanley Black & Decker
will pay a further $250 million in
cash in three years and Holdings will receive payments of between
2.5% and 3.5% on new Stanley Black
& Decker sales of Craftsman products for the next 15 years.
In connection with the closing of the Craftsman transaction,
Holdings reached an agreement with the Pension Benefit Guaranty
Corporation ("PBGC") pursuant to which the PBGC has consented to
the sale of the Craftsman-related assets that had been
"ring-fenced" under the March 2016
pension plan protection and forbearance agreement between the PBGC
and Holdings (the "PPPFA") and certain related transactions. As a
condition to obtaining this consent, the Company agreed to grant
the PBGC a lien on, and subsequently contribute to the Company's
pension plans, the value of the $250
million cash payment payable to the Company on the third
anniversary of the Craftsman closing with the value of such payment
being fully credited against certain of the Company's minimum
pension funding obligations in 2017, 2018 and 2019. The Company
also granted a lien to the PBGC on the 15-year income stream
relating to new Stanley Black &
Decker sales of Craftsman products, and agreed to contribute the
payments from Stanley Black &
Decker under such income stream to the Company's pension plans,
with such payments to be credited against the Company's minimum
pension funding obligations starting no later than five years from
the closing date. The Company also agreed to grant the
PBGC a lien on $100 million of real
estate assets to secure the Company's minimum pension funding
obligations through the end of 2019, and agreed to certain other
amendments to the PPPFA.
Other strategic initiatives announced during the fourth quarter
of 2016 included:
- Generated up to $1.0 billion in
liquidity through both a $500 million
real estate backed loan; and a standby letter of credit facility of
up to $500 million from certain
affiliates of ESL Investments, Inc., each subject to the terms
thereof; and
- Established a Special Committee of the Board of Directors to
market certain real estate properties with the goal of raising at
least $1.0 billion. In addition, we
received gross proceeds of $72.5
million in January 2017 from a
sale-leaseback transaction for five Sears Full-line stores and two
Sears Auto Centers and we received an additional $105 million of gross proceeds in February 2017 from the sale of three Sears
Full-line stores (one owned and two leased), which we will continue
to operate as Sears locations for a period of up to one year.
Additionally, in February 2017,
the Company initiated a restructuring program targeted to deliver
at least $1.0 billion in annualized
cost savings. These savings include cost reductions from the
previously announced closure of 108 Kmart and 42 Sears stores.
Under the restructuring program, we intend to:
- Simplify Holdings' organizational structure, including greater
consolidation of the Sears and Kmart corporate and support
functions, as well as the implementation of a streamlined operating
model;
- Transition to an integrated value chain model to drive greater
efficiencies in pricing, sourcing, supply chain and inventory
management;
- Optimize product assortment at Sears and Kmart stores, using
data analytics to better align with preferences of our Best Members
focusing on profitable, high-return Best Categories; and
- Actively manage our real estate portfolio to identify
additional opportunities for reconfiguration and reduction of
capital obligations.
We expect these actions will significantly enhance our liquidity
and financial flexibility. We continue to unlock value across a
range of assets. In addition to the above items, we continue to
explore ways to maximize the value of our Home Services and Sears
Auto Centers businesses, as well as our Kenmore® and DieHard®
brands through partnerships or other means of externalization.
Non-GAAP Financial Measures
In addition to our net loss attributable to Sears Holdings'
shareholders determined in accordance with Generally Accepted
Accounting Principles ("GAAP"), for purposes of evaluating
operating performance, we use Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization ("Adjusted EBITDA") and
Adjusted Loss Per Share ("Adjusted EPS"), which are non-GAAP
measures. The tables attached to this press release provide a
reconciliation of GAAP to the as adjusted amounts. We believe that
our use of Adjusted EBITDA and Adjusted EPS provides an appropriate
measure for investors to use in assessing our performance across
periods, given that these measures provide adjustments for certain
significant items which may vary significantly from period to
period, improving the comparability of year-to-year results and is
therefore representative of our ongoing performance. Therefore, we
have adjusted our results for them to make our statements more
useful and comparable. However, we do not, and do not recommend
that you, solely use Adjusted EBITDA or Adjusted EPS to assess our
financial and earnings performance. We also use, and recommend that
you use, diluted loss per share in addition to Adjusted EPS in
assessing our earnings performance.
As a result of the Seritage and JV transactions, Adjusted EBITDA
for the fourth quarter of 2016 and 2015 included additional rent
expense of approximately $47 million
and $55 million, respectively, while
the full year of 2016 and 2015 included additional rent expense of
approximately $197 million and
$133 million, respectively. Due to
the structure of the leases, we expect that our cash rent
obligations to Seritage and the joint venture partners will
decline, over time, as space in these stores is recaptured. From
the inception of the Seritage transaction to date, we have received
recapture notices on 25 properties, which is estimated to reduce
the rent expense by approximately $14
million on an annual basis. We have also exercised our right
to terminate the lease on 36 properties, which is estimated to
reduce rent expense by approximately $12
million on an annual basis.
Forward-Looking Statements
This press release contains forward-looking statements intended
to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995, including, but
not limited to, statements about our transformation through our
integrated retail strategy, our plans to redeploy and reconfigure
our assets, our liquidity, our ability to exercise financial
flexibility as we meet our obligations and pursue possible
strategic initiatives and other transactions, and other statements
that describe the Company's plans. Whenever used, words such as
"believe," "estimate," "intend," "will," "expect," and other terms
of similar meaning or expression are intended to identify such
forward-looking statements. Forward-looking statements, including
these, are based on the current beliefs and expectations of our
management and are subject to significant risks, assumptions and
uncertainties, many of which are beyond the Company's control, 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. Detailed descriptions of other risks relating to Sears
Holdings are discussed in our Annual Report on Form 10-K for the
fiscal year ended January 30, 2016,
and other filings with the Securities and Exchange Commission.
While we believe that our forecasts and assumptions are reasonable,
we caution that actual results may differ materially. 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, except as required by law. Results presented herein are
unaudited. The unaudited and estimated financial results for the
fourth quarter and full-year 2016 contained in this press release
reflect a number of complex and subjective judgments and estimates
about the appropriateness of certain reported amounts and
disclosures. Our financial statements for the 2016 fiscal year are
not finalized. We are required to consider all available
information through the finalization of our financial statements
and their possible impact on our financial conditions and results
of operations for the period, including the impact of such
information on the complex judgments and estimates referred to
above. As a result, subsequent information or events may lead to
material differences between the information about the results of
operations described herein and the results of operations described
in our subsequent annual report. You should consider this
possibility in reviewing the financial information for the period
described above.
About Sears Holdings Corporation
Sears Holdings Corporation (NASDAQ: SHLD) is a leading
integrated retailer focused on seamlessly connecting the digital
and physical shopping experiences to serve our members - wherever,
whenever and however they want to shop. Sears Holdings is home
to Shop Your Way®, a social shopping platform offering
members rewards for shopping at Sears and Kmart, as well as with
other retail partners across categories important to them. The
Company operates through its subsidiaries, including Sears, Roebuck
and Co. and Kmart Corporation, with full-line and specialty retail
stores across the United States.
For more information, visit www.searsholdings.com.
Sears Holdings
Corporation
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Years
Ended
|
|
millions, except
per share data
|
|
January 28,
2017
|
|
January 30,
2016
|
|
January 28,
2017
|
|
January 30,
2016
|
REVENUES
|
|
|
|
|
|
|
|
|
|
Merchandise sales and
services
|
|
$
|
6,052
|
|
|
$
|
7,303
|
|
|
$
|
22,138
|
|
|
$
|
25,146
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES
|
|
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
|
4,765
|
|
|
5,708
|
|
|
17,452
|
|
|
19,336
|
|
|
Gross margin
dollars
|
|
1,287
|
|
|
1,595
|
|
|
4,686
|
|
|
5,810
|
|
|
Gross margin
rate
|
|
21.3%
|
|
|
21.8%
|
|
|
21.2%
|
|
|
23.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
administrative
|
|
1,579
|
|
|
1,852
|
|
|
6,109
|
|
|
6,857
|
|
|
Selling and
administrative expense as a percentage of
total revenues
|
|
26.1%
|
|
|
25.4%
|
|
|
27.6%
|
|
|
27.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
97
|
|
|
92
|
|
|
375
|
|
|
422
|
|
|
Impairment
charges
|
|
409
|
|
|
203
|
|
|
427
|
|
|
274
|
|
|
Gain on sales of
assets
|
|
(81)
|
|
|
(13)
|
|
|
(247)
|
|
|
(743)
|
|
|
Total costs and expenses
|
|
6,769
|
|
|
7,842
|
|
|
24,116
|
|
|
26,146
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(717)
|
|
|
(539)
|
|
|
(1,978)
|
|
|
(1,000)
|
|
Interest
expense
|
|
(115)
|
|
|
(74)
|
|
|
(404)
|
|
|
(323)
|
|
Interest and
investment loss
|
|
(1)
|
|
|
(35)
|
|
|
(26)
|
|
|
(62)
|
|
Other
income
|
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(820)
|
|
|
(648)
|
|
|
(2,395)
|
|
|
(1,385)
|
|
Income tax
benefit
|
|
213
|
|
|
68
|
|
|
174
|
|
|
257
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(607)
|
|
|
(580)
|
|
|
(2,221)
|
|
|
(1,128)
|
|
Income attributable
to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
ATTRIBUTABLE TO HOLDINGS'
SHAREHOLDERS
|
|
$
|
(607)
|
|
|
$
|
(580)
|
|
|
$
|
(2,221)
|
|
|
$
|
(1,129)
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER
COMMON SHARE
ATTRIBUTABLE TO HOLDINGS'
SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
Diluted loss per
share
|
|
$
|
(5.67)
|
|
|
$
|
(5.44)
|
|
|
$
|
(20.78)
|
|
|
$
|
(10.59)
|
|
|
Diluted weighted
average common shares outstanding
|
|
107.0
|
|
|
106.6
|
|
|
106.9
|
|
|
106.6
|
|
Sears Holdings
Corporation
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
millions
|
|
January 28,
2017
|
|
January 30,
2016
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
286
|
|
|
$
|
238
|
|
Accounts
receivable
|
|
466
|
|
|
419
|
|
Merchandise inventories
|
|
3,959
|
|
|
5,172
|
|
Prepaid
expenses and other current assets
|
|
285
|
|
|
216
|
|
Total
current assets
|
|
4,996
|
|
|
6,045
|
|
|
|
|
|
|
Property and
equipment (net of accumulated depreciation and amortization of
$2,841
and $2,960)
|
|
2,240
|
|
|
2,631
|
|
Goodwill
|
|
269
|
|
|
269
|
|
Trade names and other
intangible assets
|
|
1,521
|
|
|
1,909
|
|
Other
assets
|
|
336
|
|
|
483
|
|
TOTAL
ASSETS
|
|
$
|
9,362
|
|
|
$
|
11,337
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Short-term borrowings
|
|
$
|
—
|
|
|
$
|
797
|
|
Current
portion of long-term debt and capitalized lease
obligations
|
|
590
|
|
|
71
|
|
Merchandise payables
|
|
1,048
|
|
|
1,574
|
|
Unearned
revenues
|
|
748
|
|
|
787
|
|
Other
taxes
|
|
339
|
|
|
284
|
|
Other
current liabilities
|
|
1,956
|
|
|
1,925
|
|
Total
current liabilities
|
|
4,681
|
|
|
5,438
|
|
|
|
|
|
|
Long-term debt and
capitalized lease obligations
|
|
3,573
|
|
|
2,108
|
|
Pension and
postretirement benefits
|
|
1,750
|
|
|
2,206
|
|
Deferred gain on
sale-leaseback
|
|
563
|
|
|
753
|
|
Sale-leaseback
financing obligation
|
|
235
|
|
|
164
|
|
Other long-term
liabilities
|
|
1,641
|
|
|
1,731
|
|
Long-term deferred
tax liabilities
|
|
743
|
|
|
893
|
|
Total
Liabilities
|
|
13,186
|
|
|
13,293
|
|
Total
Deficit
|
|
(3,824)
|
|
|
(1,956)
|
|
TOTAL
LIABILITIES AND DEFICIT
|
|
$
|
9,362
|
|
|
$
|
11,337
|
|
|
|
|
|
|
Total common shares
outstanding
|
|
107.1
|
|
|
106.7
|
|
Sears Holdings
Corporation
|
Segment
Results
|
(Unaudited)
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
January 28, 2017
|
millions, except
store data
|
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Holdings
|
Merchandise sales and
services
|
|
$
|
2,402
|
|
|
$
|
3,650
|
|
|
$
|
6,052
|
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
|
1,993
|
|
|
2,772
|
|
|
4,765
|
|
Gross margin
dollars
|
|
409
|
|
|
878
|
|
|
1,287
|
|
Gross margin
rate
|
|
17.0%
|
|
|
24.1%
|
|
|
21.3%
|
|
|
|
|
|
|
|
|
Selling and
administrative
|
|
578
|
|
|
1,001
|
|
|
1,579
|
|
Selling and
administrative expense as a percentage of total
revenues
|
|
24.1%
|
|
|
27.4%
|
|
|
26.1%
|
|
Depreciation and
amortization
|
|
20
|
|
|
77
|
|
|
97
|
|
Impairment
charges
|
|
15
|
|
|
394
|
|
|
409
|
|
Gain on sales of
assets
|
|
(61)
|
|
|
(20)
|
|
|
(81)
|
|
Total costs and
expenses
|
|
2,545
|
|
|
4,224
|
|
|
6,769
|
|
Operating
loss
|
|
$
|
(143)
|
|
|
$
|
(574)
|
|
|
$
|
(717)
|
|
|
|
|
|
|
|
|
Number of:
|
|
|
|
|
|
|
Kmart
Stores
|
|
735
|
|
|
—
|
|
|
735
|
|
Full-Line
Stores
|
|
—
|
|
|
670
|
|
|
670
|
|
Specialty
Stores
|
|
—
|
|
|
25
|
|
|
25
|
|
Total
Stores
|
|
735
|
|
|
695
|
|
|
1,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
January 30, 2016
|
millions, except
store data
|
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Holdings
|
Merchandise sales and
services
|
|
$
|
3,126
|
|
|
$
|
4,177
|
|
|
$
|
7,303
|
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
|
2,480
|
|
|
3,228
|
|
|
5,708
|
|
Gross margin
dollars
|
|
646
|
|
|
949
|
|
|
1,595
|
|
Gross margin
rate
|
|
20.7%
|
|
|
22.7%
|
|
|
21.8%
|
|
|
|
|
|
|
|
|
Selling and
administrative
|
|
735
|
|
|
1,117
|
|
|
1,852
|
|
Selling and
administrative expense as a percentage of total
revenues
|
|
23.5%
|
|
|
26.7%
|
|
|
25.4%
|
|
Depreciation and
amortization
|
|
16
|
|
|
76
|
|
|
92
|
|
Impairment
charges
|
|
2
|
|
|
201
|
|
|
203
|
|
Gain on sales of
assets
|
|
(12)
|
|
|
(1)
|
|
|
(13)
|
|
Total costs and
expenses
|
|
3,221
|
|
|
4,621
|
|
|
7,842
|
|
Operating
loss
|
|
$
|
(95)
|
|
|
$
|
(444)
|
|
|
$
|
(539)
|
|
|
|
|
|
|
|
|
Number of:
|
|
|
|
|
|
|
Kmart
Stores
|
|
941
|
|
|
—
|
|
|
941
|
|
Full-Line
Stores
|
|
—
|
|
|
705
|
|
|
705
|
|
Specialty
Stores
|
|
—
|
|
|
26
|
|
|
26
|
|
Total
Stores
|
|
941
|
|
|
731
|
|
|
1,672
|
|
|
|
|
|
|
|
|
Sears Holdings
Corporation
|
Segment
Results
|
(Unaudited)
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended January
28, 2017
|
millions, except
store data
|
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Holdings
|
Merchandise sales and
services
|
|
$
|
8,650
|
|
|
$
|
13,488
|
|
|
$
|
22,138
|
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
|
7,093
|
|
|
10,359
|
|
|
17,452
|
|
Gross margin
dollars
|
|
1,557
|
|
|
3,129
|
|
|
4,686
|
|
Gross margin
rate
|
|
18.0%
|
|
|
23.2%
|
|
|
21.2%
|
|
|
|
|
|
|
|
|
Selling and
administrative
|
|
2,175
|
|
|
3,934
|
|
|
6,109
|
|
Selling and
administrative expense as a percentage of total
revenues
|
|
25.1%
|
|
|
29.2%
|
|
|
27.6%
|
|
Depreciation and
amortization
|
|
71
|
|
|
304
|
|
|
375
|
|
Impairment
charges
|
|
22
|
|
|
405
|
|
|
427
|
|
Gain on sales of
assets
|
|
(181)
|
|
|
(66)
|
|
|
(247)
|
|
Total costs and
expenses
|
|
9,180
|
|
|
14,936
|
|
|
24,116
|
|
Operating
loss
|
|
$
|
(530)
|
|
|
$
|
(1,448)
|
|
|
$
|
(1,978)
|
|
|
|
|
|
|
|
|
Number of:
|
|
|
|
|
|
|
Kmart
Stores
|
|
735
|
|
|
—
|
|
|
735
|
|
Full-Line
Stores
|
|
—
|
|
|
670
|
|
|
670
|
|
Specialty
Stores
|
|
—
|
|
|
25
|
|
|
25
|
|
Total
Stores
|
|
735
|
|
|
695
|
|
|
1,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended January
30, 2016
|
millions, except
store data
|
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Holdings
|
Merchandise sales and
services
|
|
$
|
10,188
|
|
|
$
|
14,958
|
|
|
$
|
25,146
|
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
|
8,042
|
|
|
11,294
|
|
|
19,336
|
|
Gross margin
dollars
|
|
2,146
|
|
|
3,664
|
|
|
5,810
|
|
Gross margin
rate
|
|
21.1%
|
|
|
24.5%
|
|
|
23.1%
|
|
|
|
|
|
|
|
|
Selling and
administrative
|
|
2,537
|
|
|
4,320
|
|
|
6,857
|
|
Selling and
administrative expense as a percentage of total
revenues
|
|
24.9%
|
|
|
28.9%
|
|
|
27.3%
|
|
Depreciation and
amortization
|
|
72
|
|
|
350
|
|
|
422
|
|
Impairment
charges
|
|
14
|
|
|
260
|
|
|
274
|
|
Gain on sales of
assets
|
|
(185)
|
|
|
(558)
|
|
|
(743)
|
|
Total costs and
expenses
|
|
10,480
|
|
|
15,666
|
|
|
26,146
|
|
Operating
loss
|
|
$
|
(292)
|
|
|
$
|
(708)
|
|
|
$
|
(1,000)
|
|
|
|
|
|
|
|
|
Number of:
|
|
|
|
|
|
|
Kmart
Stores
|
|
941
|
|
|
—
|
|
|
941
|
|
Full-Line
Stores
|
|
—
|
|
|
705
|
|
|
705
|
|
Specialty
Stores
|
|
—
|
|
|
26
|
|
|
26
|
|
Total
Stores
|
|
941
|
|
|
731
|
|
|
1,672
|
|
|
|
|
|
|
|
|
Sears Holdings
Corporation
|
Adjusted EBITDA
Reconciliation
|
(Unaudited)
|
|
|
|
|
|
Quarters
Ended
|
|
Years
Ended
|
millions
|
January 28,
2017
|
|
January 30,
2016
|
|
January 28,
2017
|
|
January 30,
2016
|
Net loss attributable
to Holdings per statement of operations
|
$
|
(607)
|
|
|
$
|
(580)
|
|
|
$
|
(2,221)
|
|
|
$
|
(1,129)
|
|
Income attributable
to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Income tax
benefit
|
(213)
|
|
|
(68)
|
|
|
(174)
|
|
|
(257)
|
|
Interest
expense
|
115
|
|
|
74
|
|
|
404
|
|
|
323
|
|
Interest and
investment loss
|
1
|
|
|
35
|
|
|
26
|
|
|
62
|
|
Other
income
|
(13)
|
|
|
—
|
|
|
(13)
|
|
|
—
|
|
Operating
loss
|
(717)
|
|
|
(539)
|
|
|
(1,978)
|
|
|
(1,000)
|
|
Depreciation and
amortization
|
97
|
|
|
92
|
|
|
375
|
|
|
422
|
|
Gain on sales of
assets
|
(81)
|
|
|
(13)
|
|
|
(247)
|
|
|
(743)
|
|
Before excluded
items
|
(701)
|
|
|
(460)
|
|
|
(1,850)
|
|
|
(1,321)
|
|
|
|
|
|
|
|
|
|
Closed store reserve
and severance
|
202
|
|
|
62
|
|
|
384
|
|
|
98
|
|
Pension
expense
|
72
|
|
|
57
|
|
|
288
|
|
|
229
|
|
Other
(1)
|
(21)
|
|
|
23
|
|
|
31
|
|
|
(64)
|
|
Amortization of
deferred Seritage gain
|
(22)
|
|
|
(22)
|
|
|
(88)
|
|
|
(52)
|
|
Impairment
charges
|
409
|
|
|
203
|
|
|
427
|
|
|
274
|
|
Adjusted
EBITDA
|
$
|
(61)
|
|
|
$
|
(137)
|
|
|
$
|
(808)
|
|
|
$
|
(836)
|
|
|
(1)
Consists of one-time credits from vendors, expenses associated with
legal matters, transaction costs associated with
strategic initiatives and other
expenses.
|
Sears Holdings
Corporation
|
Adjusted EBITDA
Reconciliation
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
Quarters
Ended
|
millions
|
January 28,
2017
|
|
January 30,
2016
|
|
Kmart
|
Sears
Domestic
|
Sears Holdings
|
|
Kmart
|
Sears
Domestic
|
Sears
Holdings
|
Operating loss per
statement of operations
|
$
|
(143)
|
|
$
|
(574)
|
|
$
|
(717)
|
|
|
$
|
(95)
|
|
$
|
(444)
|
|
$
|
(539)
|
|
Depreciation and
amortization
|
20
|
|
77
|
|
97
|
|
|
16
|
|
76
|
|
92
|
|
Gain on sales of
assets
|
(61)
|
|
(20)
|
|
(81)
|
|
|
(12)
|
|
(1)
|
|
(13)
|
|
Before excluded
items
|
(184)
|
|
(517)
|
|
(701)
|
|
|
(91)
|
|
(369)
|
|
(460)
|
|
|
|
|
|
|
|
|
|
Closed store reserve
and severance
|
159
|
|
43
|
|
202
|
|
|
44
|
|
18
|
|
62
|
|
Pension
expense
|
—
|
|
72
|
|
72
|
|
|
—
|
|
57
|
|
57
|
|
Other
(1)
|
7
|
|
(28)
|
|
(21)
|
|
|
34
|
|
(11)
|
|
23
|
|
Amortization of
deferred Seritage gain
|
(4)
|
|
(18)
|
|
(22)
|
|
|
(5)
|
|
(17)
|
|
(22)
|
|
Impairment
charges
|
15
|
|
394
|
|
409
|
|
|
2
|
|
201
|
|
203
|
|
Adjusted
EBITDA
|
$
|
(7)
|
|
$
|
(54)
|
|
$
|
(61)
|
|
|
$
|
(16)
|
|
$
|
(121)
|
|
$
|
(137)
|
|
|
|
|
|
|
|
|
|
% to
revenues
|
(0.3)%
|
|
(1.5)%
|
|
(1.0)%
|
|
|
(0.5)%
|
|
(2.9)%
|
|
(1.9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended
|
millions
|
January 28,
2017
|
|
January 30,
2016
|
|
Kmart
|
Sears
Domestic
|
Sears
Holdings
|
|
Kmart
|
Sears
Domestic
|
Sears
Holdings
|
Operating loss per
statement of operations
|
$
|
(530)
|
|
$
|
(1,448)
|
|
$
|
(1,978)
|
|
|
$
|
(292)
|
|
$
|
(708)
|
|
$
|
(1,000)
|
|
Depreciation and
amortization
|
71
|
|
304
|
|
375
|
|
|
72
|
|
350
|
|
422
|
|
Gain on sales of
assets
|
(181)
|
|
(66)
|
|
(247)
|
|
|
(185)
|
|
(558)
|
|
(743)
|
|
Before excluded
items
|
(640)
|
|
(1,210)
|
|
(1,850)
|
|
|
(405)
|
|
(916)
|
|
(1,321)
|
|
|
|
|
|
|
|
|
|
Closed store reserve
and severance
|
318
|
|
66
|
|
384
|
|
|
86
|
|
12
|
|
98
|
|
Pension
expense
|
—
|
|
288
|
|
288
|
|
|
—
|
|
229
|
|
229
|
|
Other
(1)
|
15
|
|
16
|
|
31
|
|
|
43
|
|
(107)
|
|
(64)
|
|
Amortization of
deferred Seritage gain
|
(17)
|
|
(71)
|
|
(88)
|
|
|
(11)
|
|
(41)
|
|
(52)
|
|
Impairment
charges
|
22
|
|
405
|
|
427
|
|
|
14
|
|
260
|
|
274
|
|
Adjusted
EBITDA
|
$
|
(302)
|
|
$
|
(506)
|
|
$
|
(808)
|
|
|
$
|
(273)
|
|
$
|
(563)
|
|
$
|
(836)
|
|
|
|
|
|
|
|
|
|
% to
revenues
|
(3.5)%
|
|
(3.8)%
|
|
(3.6)%
|
|
|
(2.7)%
|
|
(3.8)%
|
|
(3.3)%
|
|
|
(1)
Consists of one-time credits from vendors, expenses associated with
legal matters, transaction costs associated with
strategic
initiatives and other
expenses.
|
Sears Holdings
Corporation
|
Adjusted Earnings
Per Share Reconciliation
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
Quarter Ended
January 28, 2017
|
|
|
Adjustments
|
|
millions, except
per share
data
|
GAAP
|
Pension
Expense
|
Closed Store
Reserve, Store Impairments and
Severance
|
Trade name
Impairment
|
Gain on Sales of
Assets
|
Mark-to-Market
Adjustments
|
Amortization of
Deferred Seritage Gain
|
Other(1)
|
Tax
Matters
|
As
Adjusted
|
Gross margin
impact
|
$
|
1,287
|
|
$
|
—
|
|
$
|
124
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(22)
|
|
$
|
(33)
|
|
$
|
—
|
|
$
|
1,356
|
|
Selling and
administrative
impact
|
1,579
|
|
(72)
|
|
(78)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(12)
|
|
—
|
|
1,417
|
|
Depreciation
and
amortization impact
|
97
|
|
—
|
|
(13)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
84
|
|
Impairment charges
impact
|
409
|
|
—
|
|
(28)
|
|
(381)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gain on sales of
assets
impact
|
(81)
|
|
—
|
|
—
|
|
—
|
|
46
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(35)
|
|
Operating loss
impact
|
(717)
|
|
72
|
|
243
|
|
381
|
|
(46)
|
|
—
|
|
(22)
|
|
(21)
|
|
—
|
|
(110)
|
|
Interest and
investment
loss impact
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
—
|
|
—
|
|
—
|
|
5
|
|
Other income
impact
|
13
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(13)
|
|
—
|
|
—
|
|
Income tax benefit
impact
|
213
|
|
(27)
|
|
(91)
|
|
(143)
|
|
17
|
|
(2)
|
|
8
|
|
13
|
|
95
|
|
83
|
|
After tax
and
noncontrolling interests
impact
|
(607)
|
|
45
|
|
152
|
|
238
|
|
(29)
|
|
4
|
|
(14)
|
|
(21)
|
|
95
|
|
(137)
|
|
Diluted loss per
share
impact
|
$
|
(5.67)
|
|
$
|
0.42
|
|
$
|
1.42
|
|
$
|
2.22
|
|
$
|
(0.27)
|
|
$
|
0.04
|
|
$
|
(0.13)
|
|
$
|
(0.20)
|
|
$
|
0.89
|
|
$
|
(1.28)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
January 30, 2016
|
|
|
|
Adjustments
|
|
|
millions, except
per share
data
|
GAAP
|
Pension
Expense
|
Closed Store
Reserve, Store Impairments and
Severance
|
Trade name
Impairment
|
Mark-to-Market
Adjustments
|
Amortization of
Deferred Seritage Gain
|
Other(2)
|
Tax
Matters
|
As
Adjusted
|
|
Gross margin
impact
|
$
|
1,595
|
|
$
|
—
|
|
$
|
27
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(22)
|
|
$
|
(20)
|
|
$
|
—
|
|
$
|
1,580
|
|
|
Selling and
administrative
impact
|
1,852
|
|
(57)
|
|
(35)
|
|
—
|
|
—
|
|
—
|
|
(43)
|
|
—
|
|
1,717
|
|
|
Depreciation
and
amortization impact
|
92
|
|
—
|
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
91
|
|
|
Impairment charges
impact
|
203
|
|
—
|
|
(23)
|
|
(180)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Operating loss
impact
|
(539)
|
|
57
|
|
86
|
|
180
|
|
—
|
|
(22)
|
|
23
|
|
—
|
|
(215)
|
|
|
Interest and
investment
loss impact
|
(35)
|
|
—
|
|
—
|
|
—
|
|
34
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
|
Income tax benefit
impact
|
68
|
|
(21)
|
|
(32)
|
|
(68)
|
|
(13)
|
|
8
|
|
(9)
|
|
176
|
|
109
|
|
|
After tax
and
noncontrolling interests
impact
|
(580)
|
|
36
|
|
54
|
|
112
|
|
21
|
|
(14)
|
|
14
|
|
176
|
|
(181)
|
|
|
Diluted loss per
share
impact
|
$
|
(5.44)
|
|
$
|
0.34
|
|
$
|
0.50
|
|
$
|
1.05
|
|
$
|
0.20
|
|
$
|
(0.13)
|
|
$
|
0.13
|
|
$
|
1.65
|
|
$
|
(1.70)
|
|
|
|
(1)
Consists of one-time credits from vendors, expenses associated with
legal matters, transaction costs associated with strategic
initiatives,
other expenses and other
income.
|
(2)
Consists of one-time credits from vendors, expenses associated with
legal matters, transaction costs associated with strategic
initiatives
and other expenses.
|
Sears Holdings
Corporation
|
Adjusted Earnings
Per Share Reconciliation
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
Year Ended January
28, 2017
|
|
|
Adjustments
|
|
millions, except
per share
data
|
GAAP
|
Pension
Expense
|
Closed Store
Reserve, Store Impairments and Severance
|
Trade name
Impairment
|
Gain on Sales of
Assets
|
Mark-to-Market
Adjustments
|
Amortization of
Deferred Seritage Gain
|
Other(1)
|
Tax
Matters
|
As
Adjusted
|
Gross margin
impact
|
$
|
4,686
|
|
$
|
—
|
|
$
|
226
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(88)
|
|
$
|
(33)
|
|
$
|
—
|
|
$
|
4,791
|
|
Selling and
administrative
impact
|
6,109
|
|
(288)
|
|
(158)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(64)
|
|
—
|
|
5,599
|
|
Depreciation
and
amortization impact
|
375
|
|
—
|
|
(20)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
355
|
|
Impairment charges
impact
|
427
|
|
—
|
|
(46)
|
|
(381)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gain on sales of
assets impact
|
(247)
|
|
—
|
|
—
|
|
—
|
|
109
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(138)
|
|
Operating loss
impact
|
(1,978)
|
|
288
|
|
450
|
|
381
|
|
(109)
|
|
—
|
|
(88)
|
|
31
|
|
—
|
|
(1,025)
|
|
Interest and
investment loss
impact
|
(26)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
35
|
|
—
|
|
—
|
|
—
|
|
9
|
|
Other income
impact
|
13
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(13)
|
|
—
|
|
—
|
|
Income tax benefit
impact
|
174
|
|
(108)
|
|
(169)
|
|
(143)
|
|
41
|
|
(13)
|
|
33
|
|
(7)
|
|
725
|
|
533
|
|
After tax and
noncontrolling
interests impact
|
(2,221)
|
|
180
|
|
281
|
|
238
|
|
(68)
|
|
22
|
|
(55)
|
|
11
|
|
725
|
|
(887)
|
|
Diluted loss per
share impact
|
$
|
(20.78)
|
|
$
|
1.68
|
|
$
|
2.63
|
|
$
|
2.23
|
|
$
|
(0.64)
|
|
$
|
0.21
|
|
$
|
(0.51)
|
|
$
|
0.10
|
|
$
|
6.78
|
|
$
|
(8.30)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended January
30, 2016
|
|
|
Adjustments
|
|
millions, except
per share
data
|
GAAP
|
Pension
Expense
|
Closed Store
Reserve, Store Impairments and Severance
|
Trade name
Impairment
|
Gain on Sales of
Assets
|
Mark-to-Market
Adjustments
|
Amortization of
Deferred Seritage Gain
|
Other(2)
|
Tax
Matters
|
As
Adjusted
|
Gross margin
impact
|
$
|
5,810
|
|
$
|
—
|
|
$
|
44
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(52)
|
|
$
|
(146)
|
|
$
|
—
|
|
$
|
5,656
|
|
Selling and
administrative
impact
|
6,857
|
|
(229)
|
|
(54)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(82)
|
|
—
|
|
6,492
|
|
Depreciation
and
amortization impact
|
422
|
|
—
|
|
(3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
419
|
|
Impairment charges
impact
|
274
|
|
—
|
|
(94)
|
|
(180)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gain on sales of
assets impact
|
(743)
|
|
—
|
|
—
|
|
—
|
|
687
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(56)
|
|
Operating loss
impact
|
(1,000)
|
|
229
|
|
195
|
|
180
|
|
(687)
|
|
—
|
|
(52)
|
|
(64)
|
|
—
|
|
(1,199)
|
|
Interest and
investment loss
impact
|
(62)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
59
|
|
—
|
|
—
|
|
—
|
|
(3)
|
|
Income tax benefit
impact
|
257
|
|
(86)
|
|
(73)
|
|
(68)
|
|
258
|
|
(22)
|
|
20
|
|
24
|
|
263
|
|
573
|
|
After tax and
noncontrolling
interests impact
|
(1,129)
|
|
143
|
|
122
|
|
112
|
|
(429)
|
|
37
|
|
(32)
|
|
(40)
|
|
263
|
|
(953)
|
|
Diluted loss per
share impact
|
$
|
(10.59)
|
|
$
|
1.34
|
|
$
|
1.14
|
|
$
|
1.05
|
|
$
|
(4.02)
|
|
$
|
0.35
|
|
$
|
(0.30)
|
|
$
|
(0.38)
|
|
$
|
2.47
|
|
$
|
(8.94)
|
|
|
(1)
Consists of one-time credits from vendors, expenses associated with
legal matters, transaction costs associated with strategic
initiatives,
other expenses and other
income.
|
(2)
Consists of one-time credits from vendors, expenses associated with
legal matters, transaction costs associated with strategic
initiatives
and other expenses.
|
NEWS MEDIA CONTACT:
Sears Holdings Public
Relations
(847) 286-8371
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/sears-holdings-reports-fourth-quarter-and-full-year-2016-results-300420803.html
SOURCE Sears Holdings Corporation