Sears Holdings Doubles Fourth Quarter Profits

February 23, 2010
SGB Executive SGB Update
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Sears Holdings Corp. reported a surge in fourth-quarter profit, reflecting improved gross margins and the absence of last year’s costs related to store closings and severance. Revenues declined year-on-year, but exceeded analysts expectations, as comparable store sales at Kmart grew 1.7%.

For the fourth quarter, Sears net income attributable to shareholders increased to $430 million or $3.74 per share, from $190 million or $1.55 per share in the previous year.

Adjusted earnings per share were $3.69, up from $2.94 per share in the year-ago quarter. On average, Wall Street was looking for $3.54.

For the sequential third quarter, the company’s net loss attributable to shareholders was $127 million or $1.09 per share.

Revenues for the recent quarter marginally decreased to $13.25 billion from $13.28 billion in the same quarter last year. Five analysts estimated revenues of $12.9 billion for the quarter. According to the company, the decrease in revenues were mainly due to lower comparable store sales and 62 fewer Kmart and Sears full-line stores.

The company operates through three business segments: Kmart, Sears Domestic and Sears Canada.

Merchandise sales and services revenues from Kmart decreased to $4.92 billion from $4.95 billion a year ago. Comparable store sales at Kmart increased 1.7% from last year, mainly due to the increases in toys and home categories, partially offset by a decline in the apparel category.
Sears Domestic reported revenues of $6.89 billion, down from $7.02 billion last year. Sears Canada generated revenues of $1.44 billion, up from $1.31 billion in the preceding year.

For the third quarter, the company’s total revenues decreased to $10.19 billion from $10.66 billion a year ago.

Gross margin rate for the fourth quarter was 28.5%, compared to 27.5% in the year earlier. Operating income grew to $749 million from $325 million a year ago. Operating income for the fourth quarter of last year included a charge of $336 million related to asset impairments and costs associated with store closings and severance.

Bruce Johnson, interim chief executive officer and president said, “We continued to make progress in improving our performance in the fourth quarter, as Kmart comparable store sales increased for the second straight quarter and domestic Adjusted EBITDA increased over last year. Our improved performance is especially encouraging given the challenging economic environment, particularly related to big-ticket items.” 

Sears Holdings Doubles Fourth Quarter Profits

SGB Update

Sears Holdings Corp. reported a surge in fourth-quarter profit, reflecting improved gross margins and the absence of last year’s costs related to store closings and severance. Revenues declined year-on-year, but exceeded analysts expectations, as comparable store sales at Kmart grew 1.7%.

For the fourth quarter, Sears net income attributable to shareholders increased to $430 million or $3.74 per share, from $190 million or $1.55 per share in the previous year.

Adjusted earnings per share were $3.69, up from $2.94 per share in the year-ago quarter. On average, Wall Street was looking for $3.54.

For the sequential third quarter, the company’s net loss attributable to shareholders was $127 million or $1.09 per share.

Revenues for the recent quarter marginally decreased to $13.25 billion from $13.28 billion in the same quarter last year. Five analysts estimated revenues of $12.9 billion for the quarter. According to the company, the decrease in revenues were mainly due to lower comparable store sales and 62 fewer Kmart and Sears full-line stores.

The company operates through three business segments: Kmart, Sears Domestic and Sears Canada.

Merchandise sales and services revenues from Kmart decreased to $4.92 billion from $4.95 billion a year ago. Comparable store sales at Kmart increased 1.7% from last year, mainly due to the increases in toys and home categories, partially offset by a decline in the apparel category.

Sears Domestic reported revenues of $6.89 billion, down from $7.02 billion last year. Sears Canada generated revenues of $1.44 billion, up from $1.31 billion in the preceding year.

For the third quarter, the company’s total revenues decreased to $10.19 billion from $10.66 billion a year ago.

Gross margin rate for the fourth quarter was 28.5%, compared to 27.5% in the year earlier. Operating income grew to $749 million from $325 million a year ago. Operating income for the fourth quarter of last year included a charge of $336 million related to asset impairments and costs associated with store closings and severance.

Bruce Johnson, interim chief executive officer and president said, “We continued to make progress in improving our performance in the fourth quarter, as Kmart comparable store sales increased for the second straight quarter and domestic Adjusted EBITDA increased over last year. Our improved performance is especially encouraging given the challenging economic environment, particularly related to big-ticket items.” 

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