Sears Holdings Corporation reported that total company comparable store sales declined 7.3% for fiscal December as a 1.1% slip at Kmart stores was exacerbated by a 12.8% drop at Sears Domestic stores.

                             December      QTD           YTD

    Kmart                     -1.1%       -4.6%         -6.0%

    Sears Domestic           -12.8%      -10.7%         -9.4%

    Total                     -7.3%       -7.9%         -7.9%

Kmart's December comparable store sales benefited from a year over year increase in sales made through the company's layaway program. Sears Domestic December comparable store sales reflect reduced sales across most hardlines and apparel categories. In its press release, Sears stated it felt that comparable store sales were affected by unfavorable economic conditions, including the weak housing market and consumer credit issues.

Gross margin rates for the quarter-to-date period improved slightly from last year as higher margin rates at Kmart were somewhat offset by lower margin rates at Sears Domestic. Net income for the quarter ending January 31, 2009 is expected to be between $300 million and $380 million, or between $2.44 and $3.09 per fully diluted share.


Those expectations exclude the potential impact, if any, related to store closings, restructuring activities including severance, mark-to-market gains and losses on hedge transactions executed by Sears Canada and impairment of goodwill and other intangible assets as prescribed in Statement of Financial Accounting Standards No. 142. In the fourth quarter of the prior year, the company reported net income of $426 million, or $3.17 per fully diluted share.

For the full year ending January 31, 2009, the company expects net income to be between $163 million and $243 million, or between $1.27 and $1.90 per fully diluted share, which also excludes the potential fourth quarter impact, if any, related to store closings, restructuring activities including severance, mark-to-market gains and losses on hedge transactions executed by Sears Canada and impairment of goodwill and other intangible assets as prescribed in Statement of Financial Accounting Standards No. 142.


During the month of December 2008, SHLD repaid all borrowings under its revolving credit facility as working capital needs declined as expected. The company currently expects to end the fiscal year with approximately $1.3 billion in cash and cash equivalents (of which approximately $600 million will be domestic and $740 million will be Sears Canada). The expected cash and cash equivalents balance indicated does not give effect to any share repurchase activity after January 7, 2009. In addition, SHLD currently expects to end the fiscal year with approximately $8.5 billion of domestic inventory, down from $9.1 billion last year, despite the addition of approximately $135 million of Kmart footwear inventory. Kmart began operating its footwear department on January 1, 2009. Prior to that time, Kmart's footwear department was operated as a licensed business by another party.


Also during the fourth quarter, we repurchased 2.9 million common shares at a total cost of $119 million (or $40.82 per share) under our share repurchase program. As of January 7, 2009 we had remaining authorization to repurchase $506 million of common shares under the previously approved programs.