Sears Posts Losses for Fourth Quarter and Fiscal Year
February 23, 2012,
HOFFMAN ESTATES, Ill.-Sears Holdings reported a net loss of $2.4 billion for the fourth quarter and $3.1 billion for the fiscal year ending on Jan. 28.
The red ink for both periods contrasted with fourth-quarter net income of $374 million and fiscal-year net income of $133 million last year. A company statement attributed its poor performance to reduced sales at both Sears and Kmart stores, lower gross margin and increased selling and administrative expenses.
Net sales for the company as a whole dropped 4 percent in the quarter to $12.5 billion, and was down 2.6 percent for the fiscal year to $41.6 billion. Fourth-quarter same-store sales at Sears domestic stores were off 4.1 percent, while at Kmart stores they fell 2.7 percent. For the year, Sears domestic stores saw same-store sales decline 3 percent, and Kmart's same-store sales were down 1.4 percent.
Gross margin for the quarter plummeted 340 basis points to 24.5 percent. Selling and administrative expenses rose 6.3 percent in dollars for the quarter, and were up 230 basis points as a percentage of sales, to 23.4 percent.
Lou D'Ambrosio, Sears Holdings president and CEO, said the company is taking "immediate actions" to improve on its fourth-quarter performance. These include cost and inventory reductions, "honed and targeted marketing," actions to boost margins and executive hires to bolster its merchandising and leadership team. D'Ambrosio cited the recent hiring of Ron Boire, former president and CEO of Brookstone, as chief merchandising officer and president of both Sears and Kmart formats.
D'Ambrosio also said the company is taking actions to improve its balance sheet. These include the separation of the Sears Hometown and Outlets businesses from certain hardware stores through a proposed rights offering, which is expected to raise from $400 million to $500 million. The company has also made a deal to sell 11 Sears stores to General Growth Properties for $270 million. The stores are located in Hawaii, Iowa, Texas, Washington State, Florida, Minnesota, Illinois, Utah and Oklahoma.