Kmart’s December comparable store sales benefited from increases in the toys, home and apparel categories, as well as the impact of assuming the operations of its footwear business from a third party effective January 2009.
Sears Domestic’s December comparable store sales reflect reduced sales of higher ticket hardline items, partially offset by increases in the tools and automotive categories.
Sears Holdings Corporation (Nasdaq: SHLD) today announced domestic comparable store sales for the five-week (“December”), quarter-to-date (“QTD”) and year-to-date (“YTD”) periods ended Jan. 2, 2010 for its Kmart and Sears stores as follows:
December QTD YTD
-------- --- ---
Kmart 5.3% 2.6% -0.7%
Sears Domestic -4.3% -6.0% -8.8%
---- ---- ----
Total 0.4% -2.0% -5.2%
=== ==== ====
We currently expect net income attributable to Holdings’ shareholders for the quarter ending January 30, 2010 will be between $385 million and $465 million, or between $3.36 and $4.06 per diluted share.
Our expectation of fourth quarter net income attributable to Holdings’ shareholders and earnings per share attributable to Holdings’ shareholders excludes the potential impact, if any, related to store closings and impairment charges, restructuring activities including severance, and mark-to-market gains and losses on hedge transactions executed by Sears Canada.
We expect the fourth quarter effective tax rate to be approximately 32%, due to the favorable resolution of certain federal and state income tax matters.
In the fourth quarter of the prior year, the Company reported net income attributable to Holdings’ shareholders of $190 million, or $1.55 per diluted share.
For the full year ending January 30, 2010, the Company expects net income attributable to Holdings’ shareholders to be between $190 million and $270 million, or between $1.61 and $2.29 per diluted share, which also excludes the potential fourth quarter impact, if any, related to store closings and impairment charges, restructuring activities including severance, and mark-to-market gains and losses on hedge transactions executed by Sears Canada.
For the full year ended January 31, 2009, the Company reported net income attributable to Holdings’ shareholders of $53 million, or $0.42 per diluted share.
Financial Position
We currently expect to end the fiscal year with approximately $1.7 billion in cash balances (of which approximately $500 million will be domestic and $1.2 billion will be Sears Canada).
During December 2009, we repaid all borrowings under our revolving credit facility as working capital needs declined as expected.
Short-term borrowings (consisting of commercial paper and borrowings under our revolving credit facility) are projected to be approximately $200 million at Jan. 30, 2010, down from last year’s balance of $442 million. Further, letters of credit issued are expected to be $684 million at Jan. 30, 2010, down from $968 million last year.
Accordingly, we expect to have approximately $3.2 billion of availability on the credit facility at year end. As previously disclosed, the facility will reduce in size by $1.7 billion to $2.4 billion on March 24, 2010. The expected short-term borrowing balance indicated does not give effect to any share repurchase activity after January 6, 2010.
During the fourth quarter through January 6, 2010, we repurchased 0.9 million common shares at a total cost of $66 million (or $71.68 per share) under our share repurchase program. As of Jan. 6, 2010, we had remaining authorization to repurchase $582 million of common shares under the previously approved programs.
Adjusted EBITDA
The Company expects to report total Adjusted EBITDA (consisting of Kmart, Sears Domestic and Sears Canada segments) of $1.720 to $1.830 billion in the current year, which is computed as follows:
- expected operating income of $665 to $755 million;
- plus expected depreciation expense of $900 to $920 million;
- less gains on sales of assets through January 2, 2010 of $71 million;
- less gain realized from Visa/MasterCard settlement of $32 million;
- plus expected domestic pension expense of $170 million;
- plus expected closed store / severance costs of $88 million.
Our expectation of fourth quarter operating income excludes the potential impact, if any, related to store closings and impairment charges and restructuring activities including severance.
About Sears Holdings Corporation
Sears Holdings Corporation is the nation’s fourth largest broadline retailer with 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. It also has the Country Living collection, which is offered exclusively by Sears and Kmart.
We are the nation’s largest provider of home services, with more than 12 million service calls made annually. Sears Holdings Corporation operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation.
For more information, visit Sears Holdings’ Web site at searsholdings.com.
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