Sears Holdings Announces December Comparable Store Sales and Fourth Quarter Outlook
Sears Holdings Corporation (the "Company", "we", "us", or "our") (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 3, 2009 for its Kmart and Sears stores as follows:
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 our layaway program. Sears Domestic December comparable store sales reflect reduced sales across most hardlines and apparel categories. We believe 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. We currently expect that net income for the quarter ending January 31, 2009 will be between $300 million and $380 million, or between $2.44 and $3.09 per fully diluted share. Our expectation of fourth quarter net income and earnings per share excludes 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, we repaid all borrowings under our revolving credit facility as working capital needs declined as expected (although we do expect to borrow under the revolver again in January 2009 due to the seasonal increase in working capital). We currently expect 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, we currently expect 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.
Forward-Looking Statements
Results are unaudited. This press release contains forward-looking statements about our expectations regarding our performance, resources and financial position. 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; the impact of seasonal buying patterns, including seasonal fluctuations due to weather conditions, which are difficult to forecast with certainty; general economic conditions and normal business uncertainty, changes in consumer confidence, tastes, preferences and spending, including the impact of fuel costs and spending patterns, the availability and level of consumer debt, and unanticipated increases in our costs; 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; our ability to properly implement and realize the expected benefits from our new organizational structure and operating model; our ability to attract, motivate and retain key executives and other associates; 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; and our ability to successfully invest available capital. 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 over $50 billion in annual revenues, and 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. We also have Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. We are the nation's largest provider of home services, with more than 13 million service calls made annually. For more information, visit Sears Holdings' website at .
During the fourth quarter of fiscal 2007, Sears Canada changed its fiscal year end from the Saturday nearest December 31st to the Saturday nearest January 31st. Prior to this change, Sears Canada's results were consolidated into Holdings' results on a one-month lag. With the change, Sears Canada's fiscal year end is now aligned with the fiscal year end of Holdings.
First Call Analyst:
FCMN Contact: kfreely@searshc.com
SOURCE: Sears Holdings Corporation
CONTACT: Sears Holdings Public Relations, +1-847-286-8371
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