Sears Reports Sharp Revenue Declines For Q4, 2013

Sears Holdings Corporation announced financial results for its fourth quarter and full year ended February 1, 2014.

According to Sears, net loss attributable to Holdings’ shareholders was $358 million and $1.4 billion ($3.37 and $12.87 loss per diluted share), respectively, for the fourth quarter and full year of 2013. This compares to net loss attributable to Holdings’ shareholders of $489 million and $930 million ($4.61 and $8.78 loss per diluted share), respectively, for the prior year fourth quarter and full year. Adjusted EBITDA was $12 million and $(337) million, respectively, for the fourth quarter and full year of 2013. Adjusted EBITDA for the prior year fourth quarter and full year was $429 million and $536 million, respectively.

“During 2013, we made progress in our continuing transformation into a member-centric retailer leveraging Shop Your Way and integrated retail, which we believe will position us for enhanced growth and profitability to create long-term shareholder value,” said Edward Lampert, Sears Holdings’ chairman and CEO. “Our full year results are impacted during this transformation as we continue supporting traditional promotional programs and marketing expenditures while we invest in our Shop Your Way program and integrated retail strategy. We have been investing hundreds of millions of dollars annually in our transformation and will continue to invest in the future of the company,” he added.

Lampert continued, “Our focus on serving our members through an integrated platform that is most convenient for them— whether in store, at home, or on the go – is resulting in improved member engagement, which is a key component of our member strategy.”

He noted that for the full year 2013, sales derived from Shop Your Way members grew to 69% of total Sears Full-line and Kmart sales, up from 59% last year. Its online and multi-channel businesses grew 10% over the prior full year.

“The investments we made throughout 2013 are enabling us to learn more about how our members want to shop so that we can develop deeper relationships with them and provide them with access to the widest possible assortment of products and services,” he said.

Looking ahead, we will continue to enhance our financial flexibility to support and drive our transformation. While transformations of this size are challenging, and our financial results do not currently reflect our progress in member engagement, we believe the changes we are making through Shop Your Way and integrated retail will benefit us in the changing retail landscape.”

Revenues decreased $1.7 billion to $10.6 billion for the quarter ended February 1, 2014, as compared to revenues of $12.3 billion for the quarter ended February 2, 2013. The revenue decrease was primarily due to lower domestic comparable store sales, which accounted for approximately $600 million of the decline, as well as the effect of having fewer Kmart and Sears Full-line stores in operation, which accounted for approximately $320 million of the decline, the company reported. The fourth quarter of 2012 also benefited from revenues of approximately $500 million due to the 53rd week. Sears Canada had a 6.4% decline in comparable store sales during the fourth quarter of 2013, which accounted for approximately $60 million of the decline, and revenues included a decrease of $85 million due to foreign currency exchange rates.

Revenues decreased $3.7 billion to $36.2 billion for the year ended February 1, 2014, as compared to revenues of $39.9 billion last year, the company reported. The revenue decrease was primarily due to the effect of having fewer Kmart and Sears Full-line stores in operation, which accounted for approximately $1.1 billion of the decline, as well as lower domestic comparable store sales, which accounted for approximately $1 billion of the decline. Revenues for the year were also impacted by approximately $490 million attributable to the separation of Sears Hometown and Outlet Stores, Inc., which occurred in the third quarter of 2012. The full year of 2012 also benefited from the above noted revenue attributable to the 53rd week. Sears Canada had a 2.7% decline in comparable store sales during the full year of 2013, which accounted for approximately $85 million of the decline, and revenues included a decrease of $157 million due to foreign currency exchange rates.

For the quarter, domestic comparable store sales declined 6.4%, comprised of decreases of 5.1% at Kmart and 7.8% at Sears Domestic, the company reported. The decline at Kmart reflects declines in a majority of categories, most notably consumer electronics, grocery and household, toys and drugstore. The decline at Sears Domestic reflects decreases in most categories including the consumer electronics, tools and home appliances categories. These declines were partially offset by an increase experienced in the lawn and garden category.

For the year, domestic comparable store sales declined 3.8%, comprised of decreases of 3.6% at Kmart and 4.1% at Sears Domestic, the company reported. The decline at Kmart reflects declines in a majority of categories, most notably grocery & household, consumer electronics, drugstore and toys. The decline at Sears Domestic reflects decreases in most categories including the home appliances, consumer electronics, tools and lawn & garden categories, as well as declines at Sears Auto Centers, partially offset by increases in the home and footwear categories.

 


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