HOFFMAN ESTATES, Ill.,
Aug. 25, 2016 /PRNewswire/ -- Sears
Holdings Corporation ("Holdings," "we," "us," "our," or the
"Company")(NASDAQ: SHLD) today announced financial results for its
second quarter ended July 30, 2016. As a supplement to this
announcement, a presentation, pre-recorded conference and audio
webcast are available at our
website http://searsholdings.com/invest.
In summary, we reported:
- Net loss attributable to Holdings' shareholders of $395 million ($3.70
loss per diluted share) for the second quarter of 2016 compared to
net income attributable to Holdings' shareholders of $208 million ($1.84
per diluted share) for the prior year second quarter;
- Adjusted for significant items, we would have reported a net
loss attributable to Holdings' shareholders of $217 million ($2.03
loss per diluted share) for the second quarter of 2016 compared to
a net loss attributable to Holdings' shareholders of $256 million ($2.40
loss per diluted share) in the prior year second quarter;
- Adjusted EBITDA of $(191) million
in the second quarter of 2016, improved from $(226) million in the prior year second
quarter;
- Kmart and Sears Domestic comparable store sales declined 3.3%
and 7.0%, respectively, in the second quarter of 2016;
- During the second quarter of 2016, the Company generated cash
proceeds of $176 million from the
sale of real estate properties and other asset sales; and
- We received an offer from ESL Investments, Inc. ("the ESL
proposal") to provide $300 million of
additional debt financing secured by a junior lien against our
inventory, receivables and other working capital, which offer has
been accepted.
Edward S. Lampert, Holdings'
Chairman and Chief Executive Officer, said, "We continue to face a
challenging competitive environment and while we continue to focus
on our overall profitability, including managing expenses, we
reported a net loss for the second quarter. We are encouraged by
the year-over-year improvement in our Adjusted EBITDA and feel we
are making progress in our transformation as we remain focused on
our best stores, our best members and our best categories to drive
our business and enhance the member experience."
Rob Schriesheim, Holdings' Chief
Financial Officer, said, "During the first half of 2016, we have
demonstrated our ability to finance our transformation strategy
with the levers available to us through our portfolio of assets and
businesses. The sale of assets, combined with the previous closing
of the $750 million Term Loan, together with
the $500 million Secured Loan Facility, provided us with
over $1.4 billion of financing during the first half of
2016. We have continued to demonstrate our flexibility in the third
quarter of 2016 with the announcement of the recently received
offer to provide $300 million of
additional debt financing. As we move into the second half of 2016,
we continue to explore alternatives for our Kenmore®,
Craftsman® and DieHard® and Sears Home
Services businesses by evaluating potential partnerships or other
transactions. As we navigate through the current challenging retail
environment and executing our transformation, we will continue to
take actions to adjust our capital structure and manage our
business to enable us to execute on our transformation while
meeting all of our financial obligations."
Financial Results
Revenues decreased approximately $548
million to $5.7 billion for the quarter ended July 30,
2016, compared to revenues of $6.2
billion for the quarter ended August 1, 2015. The
decrease in revenue was primarily driven by a 5.2% decline in
comparable store sales during the quarter, which accounted for
$240 million of the revenue decline,
and by having fewer Kmart and Sears Full-line stores in operation,
which accounted for $199 million of
the decline. In addition, we also experienced a decline in revenues
from Sears Hometown and Outlet Stores, Inc. of approximately
$75 million during the second quarter
of 2016.
At Kmart, comparable store sales decreased 3.3%. We experienced
comparable store sales increases in several categories this
quarter, including toys, jewelry, mattresses and apparel, which
were more than offset by declines in the pharmacy, grocery &
household and consumer electronics categories. Sears Domestic
comparable store sales decreased 7.0%, primarily driven by
decreases in home appliances, apparel, consumer electronics,
footwear, lawn & garden and tools.
During the quarter, gross margin decreased $175 million due to the above noted decline in
sales, as well as a decline in our gross margin rate. As a result
of the Seritage and JV transactions, the second quarter of 2016
included additional rent expense of approximately $48 million and the second quarter of 2015
included additional rent expense and assigned sub-tenant rental
income of approximately $26
million.
Kmart's gross margin rate for the second quarter improved 10
basis points compared to the prior year second quarter, while Sears
Domestic's gross margin rate declined 150 basis points. Excluding
the impact of significant items noted in our Adjusted Earnings Per
Share tables, Kmart's gross margin rate would have declined 10
basis points, while Sears Domestic's gross margin rate would have
declined 100 basis points compared to the prior year second
quarter. While we experienced improvement in several categories in
our Kmart format, the overall decline in Kmart's gross margin rate
was primarily due to declines in the grocery & household and
apparel categories. The decline in Sears Domestic's gross margin
rate was primarily driven by a decline in the apparel category. The
margin rate in both segments was negatively impacted by increased
promotional markdowns, including an increase in Shop Your
Way® expense.
Selling and administrative expenses decreased $210 million in the second quarter of 2016
compared to the prior year quarter. Excluding significant items
noted in our Adjusted Earnings Per Share tables, selling and
administrative expenses declined $193
million primarily due to a decrease in payroll expense. In
addition, advertising expense declined as we shifted away from
traditional advertising to the use of Shop Your Way®
points expense, which is included within gross margin.
Our effective tax rate for the second quarter of 2016 was an
expense of 3.4%. The application of the requirements for accounting
for income taxes in interim periods, after consideration of our
valuation allowance, causes a significant variation in the typical
relationship between income tax expense and pretax income. During
the prior year quarter, the Company realized a significant tax
benefit on the deferred taxes related to indefinite-life assets
associated with the properties sold in the transaction with
Seritage. As such, our effective tax rate for the second quarter of
2015 was a benefit of 1,700.0%.
The Company reported a net loss attributable to Holdings'
shareholders of $395 million for the
second quarter of 2016 compared to net income attributable to
Holdings' shareholders of $208
million for the prior year period. Net loss attributable to
Holdings' shareholders for the second quarter of 2016 and net
income attributable to Holdings' shareholders for the second
quarter of 2015 included significant items noted in our Adjusted
Earnings Per Share tables, which aggregated to expense of
$178 million and income of
$464 million, respectively. Adjusting
for these significant items, we would have reported a net loss
attributable to Holdings' shareholders of $217 million and $256
million in the second quarter of 2016 and 2015,
respectively.
Financial Position
The Company's cash balances were $276
million at July 30, 2016 compared with $238 million at January 30, 2016. Short-term
borrowings totaled $164 million at
the end of the second quarter of 2016 compared to $797 million at January 30, 2016.
Merchandise inventories were $4.7
billion at July 30, 2016, compared to $5.0 billion at August 1, 2015, while
merchandise payables were $1.3
billion and $1.7 billion at
July 30, 2016 and August 1, 2015, respectively.
At July 30, 2016, we had utilized approximately
$719 million of our $1.971 billion revolving credit facility due in
2020 (consisting of $63 million of
borrowings and $656 million of
letters of credit outstanding). The amount available to borrow
under our credit facility was approximately $191 million, which reflects the effect of our
springing fixed charge coverage ratio covenant and the borrowing
base limitation in our revolving credit facility, which varies
primarily based on our overall inventory and receivables balances.
Under the credit facility agreement, the fixed charge coverage
ratio changed in August 2016, which
increases our availability to borrow under the credit agreement by
approximately $175 million.
Total long-term debt (including current portion of long-term
debt and capital lease obligations) was $3.4
billion and $2.2 billion at
July 30, 2016 and January 30, 2016, respectively.
In August 2016, we
received the ESL proposal to provide $300 million of additional debt financing secured
by a junior lien against our inventory, receivables and other
working capital, which offer has been accepted. Under the ESL
proposal, the Company may, in its discretion, offer to third party
investors the right to participate in up to an additional
$200 million of debt financing on the
same terms and conditions. The financing is subject to customary
conditions and is expected to close in the next 7 to 10 business
days. The terms of the debt financing were approved by the
Related Party Transactions Subcommittee of the Board of Directors
of the Company, with advice from Centerview Partners and Weil
Gotshal & Manges, the Subcommittee's outside financial and
legal advisors.
Update on Strategic Initiatives
On May 26, 2016, we announced our
intention to explore alternatives for our Kenmore®,
Craftsman® and DieHard® brands and our Sears
Home Services business by evaluating potential partnerships or
other transactions that could expand distribution of our brands and
service offerings to realize significant growth. We initiated a
formal process and have received interest from a variety of
potential partners, both domestic and international, and including
retailers, original equipment manufacturers, financial investors
and others. Citigroup Global Markets and LionTree Advisors are
assisting us in these efforts as we continue our assessment over
the next few months. There can be no assurance that we will
complete one or more transactions, but we intend to aggressively
evaluate all of the potential alternatives available to these
businesses.
Adjusted EBITDA
In addition to our net income (loss) attributable to Sears
Holdings' shareholders determined in accordance with Generally
Accepted Accounting Principles ("GAAP"), for purposes of evaluating
operating performance, we use Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization ("Adjusted EBITDA") and
Adjusted Earnings Per Share ("Adjusted EPS"), which are non-GAAP
measures. The tables attached to this press release provide a
reconciliation of GAAP to as adjusted amounts. We believe that our
use of Adjusted EBITDA and Adjusted EPS provides an appropriate
measure for investors to use in assessing our performance across
periods, given that these measures provide adjustments for certain
significant items which may vary significantly from period to
period, improving the comparability of year-to-year results and is
therefore representative of our ongoing performance. Therefore, we
have adjusted our results for them to make our statements more
useful and comparable. However, we do not, and do not recommend
that you, solely use Adjusted EBITDA or Adjusted EPS to assess our
financial and earnings performance. We also use, and recommend that
you use, diluted earnings (loss) per share in addition to Adjusted
EPS in assessing our earnings performance.
As a result of the Seritage and JV transactions, Adjusted EBITDA
for the second quarter of 2016 and 2015 included additional rent
expense of approximately $48 million
and $26 million, respectively, while
the first half of 2016 and 2015 included additional rent expense of
approximately $102 million and
$26 million, respectively. Due to the
structure of the leases, we expect that our cash rent obligations
to Seritage and the joint venture partners will decline, over time,
as space in these stores is recaptured. From the inception of
Seritage to date, we have received recapture notices on 15
properties, which is estimated to reduce the rent expense by
approximately $8 million on an annual
basis.
Forward-Looking Statements
Results are unaudited. This press release contains
forward-looking statements intended to qualify for the safe harbor
from liability established by the Private Securities Litigation
Reform Act of 1995, including, but not limited to, statements about
our transformation through our integrated retail strategy, our
plans to redeploy and reconfigure our assets, our liquidity,
including our expectation to close the $300
million of additional debt financing from ESL Investments
Inc., our ability to exercise financial flexibility as we meet our
obligations and pursue possible strategic transactions, our
intention to explore potential partnerships or other transactions
involving our Kenmore®, Craftsman® and
DieHard® brands and our Sears Home Services business,
and other statements that describe the Company's plans. Whenever
used, words such as "will," "expect," and other terms of similar
meaning are intended to identify such forward-looking statements.
Forward-looking statements, including these, are based on the
current beliefs and expectations of our management and are subject
to significant risks, assumptions and uncertainties, many of which
are beyond the Company's control, 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. Detailed descriptions
of risks, uncertainties and factors relating to Sears Holdings are
discussed in our most recent Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission. While we
believe that our forecasts and assumptions are reasonable, we
caution that actual results may differ materially. 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, except as required by law.
Pre-Recorded Conference Call and Audio Webcast
Sears Holdings, in conjunction with today's financial results
announcement, will simultaneously post a pre-recorded conference
call and audio webcast on its corporate website. It will feature
prepared remarks from Robert A.
Schriesheim, executive vice president and chief financial
officer, who will focus his comments to provide additional context
around the quarter. The pre-recorded conference call may be
accessed by telephone at 844.826.0613 or 973.200.3092 (conference
ID: 67300953), and on Sears Holdings' website at
http://www.searsholdings.com/invest/ under "Events &
Presentations." The accompanying presentation and transcript will
be posted online in conjunction.
About Sears Holdings Corporation
Sears Holdings Corporation (NASDAQ: SHLD) is a leading
integrated retailer focused on seamlessly connecting the digital
and physical shopping experiences to serve our members - wherever,
whenever and however they want to shop. Sears Holdings is home
to Shop Your Way®, a social shopping platform offering
members rewards for shopping at Sears and Kmart, as well as with
other retail partners across categories important to them. The
Company operates through its subsidiaries, including Sears, Roebuck
and Co. and Kmart Corporation, with full-line and specialty retail
stores across the United States.
For more information, visit www.searsholdings.com.
NEWS MEDIA CONTACT:
Sears Holdings Public
Relations
(847) 286-8371
Sears Holdings
Corporation
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
26 Weeks
Ended
|
millions, except
per share data
|
July 30,
2016
|
|
August 1,
2015
|
|
July 30,
2016
|
|
August 1,
2015
|
REVENUES
|
|
|
|
|
|
|
|
Merchandise sales and
services
|
$
|
5,663
|
|
|
$
|
6,211
|
|
|
$
|
11,057
|
|
|
$
|
12,093
|
|
COSTS AND
EXPENSES
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
4,403
|
|
|
4,776
|
|
|
8,620
|
|
|
9,140
|
|
Gross margin
dollars
|
1,260
|
|
|
1,435
|
|
|
2,437
|
|
|
2,953
|
|
Gross margin
rate
|
22.2
|
%
|
|
23.1
|
%
|
|
22.0
|
%
|
|
24.4
|
%
|
Selling and
administrative
|
1,484
|
|
|
1,694
|
|
|
2,987
|
|
|
3,375
|
|
Selling and
administrative expense as a percentage of total
revenues
|
26.2
|
%
|
|
27.3
|
%
|
|
27.0
|
%
|
|
27.9
|
%
|
Depreciation and
amortization
|
92
|
|
|
114
|
|
|
187
|
|
|
236
|
|
Impairment
charges
|
7
|
|
|
54
|
|
|
15
|
|
|
54
|
|
Gain on sales of
assets
|
(54)
|
|
|
(526)
|
|
|
(115)
|
|
|
(633)
|
|
Total costs and
expenses
|
5,932
|
|
|
6,112
|
|
|
11,694
|
|
|
12,172
|
|
Operating income
(loss)
|
(269)
|
|
|
99
|
|
|
(637)
|
|
|
(79)
|
|
Interest
expense
|
(99)
|
|
|
(85)
|
|
|
(184)
|
|
|
(175)
|
|
Interest and
investment loss
|
(13)
|
|
|
(26)
|
|
|
(17)
|
|
|
(44)
|
|
Other loss
|
(1)
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
Loss before income
taxes
|
(382)
|
|
|
(13)
|
|
|
(838)
|
|
|
(298)
|
|
Income tax (expense)
benefit
|
(13)
|
|
|
221
|
|
|
(28)
|
|
|
203
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
$
|
(395)
|
|
|
$
|
208
|
|
|
$
|
(866)
|
|
|
$
|
(95)
|
|
NET INCOME (LOSS)
PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS'
SHAREHOLDERS
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
(3.70)
|
|
|
$
|
1.84
|
|
|
$
|
(8.11)
|
|
|
$
|
(0.89)
|
|
Diluted weighted
average common shares outstanding
|
106.9
|
|
|
113.3
|
|
|
106.8
|
|
|
106.5
|
|
Sears Holdings
Corporation
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions
|
|
July 30,
2016
|
|
August 1,
2015
|
|
January 30,
2016
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
276
|
|
|
$
|
1,819
|
|
|
$
|
238
|
|
Accounts
receivable
|
|
390
|
|
|
460
|
|
|
419
|
|
Merchandise
inventories
|
|
4,684
|
|
|
5,028
|
|
|
5,172
|
|
Prepaid expenses and
other current assets
|
|
275
|
|
|
270
|
|
|
216
|
|
Total current
assets
|
|
5,625
|
|
|
7,577
|
|
|
6,045
|
|
Property and
equipment (net of accumulated depreciation and amortization of
$3,032, $3,097 and $2,960)
|
|
2,465
|
|
|
2,732
|
|
|
2,631
|
|
Goodwill
|
|
269
|
|
|
269
|
|
|
269
|
|
Trade names and other
intangible assets
|
|
1,906
|
|
|
2,091
|
|
|
1,909
|
|
Other
assets
|
|
349
|
|
|
498
|
|
|
483
|
|
TOTAL
ASSETS
|
|
$
|
10,614
|
|
|
$
|
13,167
|
|
|
$
|
11,337
|
|
LIABILITIES
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
164
|
|
|
$
|
6
|
|
|
$
|
797
|
|
Current portion of
long-term debt and capitalized lease obligations
|
|
550
|
|
|
70
|
|
|
71
|
|
Merchandise
payables
|
|
1,345
|
|
|
1,704
|
|
|
1,574
|
|
Other current
liabilities
|
|
1,802
|
|
|
2,068
|
|
|
1,925
|
|
Unearned
revenues
|
|
775
|
|
|
802
|
|
|
787
|
|
Other
taxes
|
|
317
|
|
|
363
|
|
|
284
|
|
Total current
liabilities
|
|
4,953
|
|
|
5,013
|
|
|
5,438
|
|
Long-term debt and
capitalized lease obligations
|
|
2,837
|
|
|
3,049
|
|
|
2,108
|
|
Pension and
postretirement benefits
|
|
2,072
|
|
|
2,258
|
|
|
2,206
|
|
Deferred gain on
sale-leaseback
|
|
686
|
|
|
798
|
|
|
753
|
|
Sale-leaseback
financing obligation
|
|
164
|
|
|
164
|
|
|
164
|
|
Other long-term
liabilities
|
|
1,703
|
|
|
1,830
|
|
|
1,731
|
|
Long-term deferred
tax liabilities
|
|
892
|
|
|
961
|
|
|
893
|
|
Total
Liabilities
|
|
13,307
|
|
|
14,073
|
|
|
13,293
|
|
DEFICIT
|
|
|
|
|
|
|
Total
Deficit
|
|
(2,693)
|
|
|
(906)
|
|
|
(1,956)
|
|
TOTAL
LIABILITIES AND DEFICIT
|
|
$
|
10,614
|
|
|
$
|
13,167
|
|
|
$
|
11,337
|
|
|
|
|
|
|
|
|
Total common shares
outstanding
|
|
106.9
|
|
|
106.6
|
|
|
106.7
|
|
Sears Holdings
Corporation
|
|
Segment
Results
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
July 30, 2016
|
millions, except
store data
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Holdings
|
Merchandise sales and
services
|
$
|
2,221
|
|
|
$
|
3,442
|
|
|
$
|
5,663
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
1,760
|
|
|
2,643
|
|
|
4,403
|
|
Gross margin
dollars
|
461
|
|
|
799
|
|
|
1,260
|
|
Gross margin
rate
|
20.8
|
%
|
|
23.2
|
%
|
|
22.2
|
%
|
|
|
|
|
|
|
Selling and
administrative
|
498
|
|
|
986
|
|
|
1,484
|
|
Selling and
administrative expense as a percentage of total revenues
|
22.4
|
%
|
|
28.6
|
%
|
|
26.2
|
%
|
Depreciation and
amortization
|
15
|
|
|
77
|
|
|
92
|
|
Impairment
charges
|
1
|
|
|
6
|
|
|
7
|
|
Gain on sales of
assets
|
(44)
|
|
|
(10)
|
|
|
(54)
|
|
Total costs and expenses
|
2,230
|
|
|
3,702
|
|
|
5,932
|
|
Operating
loss
|
$
|
(9)
|
|
|
$
|
(260)
|
|
|
$
|
(269)
|
|
|
|
|
|
|
|
Number of:
|
|
|
|
|
|
Kmart
Stores
|
883
|
|
|
—
|
|
|
883
|
|
Full-Line
Stores
|
—
|
|
|
683
|
|
|
683
|
|
Specialty
Stores
|
—
|
|
|
26
|
|
|
26
|
|
Total
Stores
|
883
|
|
|
709
|
|
|
1,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks Ended
August 1, 2015
|
millions, except
store data
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Holdings
|
Merchandise sales and
services
|
$
|
2,459
|
|
|
$
|
3,752
|
|
|
$
|
6,211
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
1,950
|
|
|
2,826
|
|
|
4,776
|
|
Gross margin
dollars
|
509
|
|
|
926
|
|
|
1,435
|
|
Gross margin
rate
|
20.7
|
%
|
|
24.7
|
%
|
|
23.1
|
%
|
|
|
|
|
|
|
Selling and
administrative
|
594
|
|
|
1,100
|
|
|
1,694
|
|
Selling and
administrative expense as a percentage of total revenues
|
24.2
|
%
|
|
29.3
|
%
|
|
27.3
|
%
|
Depreciation and
amortization
|
19
|
|
|
95
|
|
|
114
|
|
Impairment
charges
|
2
|
|
|
52
|
|
|
54
|
|
Gain on sales of
assets
|
(143)
|
|
|
(383)
|
|
|
(526)
|
|
Total costs and expenses
|
2,422
|
|
|
3,690
|
|
|
6,112
|
|
Operating
income
|
$
|
37
|
|
|
$
|
62
|
|
|
$
|
99
|
|
|
|
|
|
|
|
Number of:
|
|
|
|
|
|
Kmart
Stores
|
963
|
|
|
—
|
|
|
963
|
|
Full-Line
Stores
|
—
|
|
|
711
|
|
|
711
|
|
Specialty
Stores
|
—
|
|
|
28
|
|
|
28
|
|
Total
Stores
|
963
|
|
|
739
|
|
|
1,702
|
|
Sears Holdings
Corporation
|
Segment
Results
|
(Unaudited)
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended
July 30, 2016
|
millions, except
store data
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Holdings
|
Merchandise sales and
services
|
$
|
4,360
|
|
|
$
|
6,697
|
|
|
$
|
11,057
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
3,495
|
|
|
5,125
|
|
|
8,620
|
|
Gross margin
dollars
|
865
|
|
|
1,572
|
|
|
2,437
|
|
Gross margin
rate
|
19.8
|
%
|
|
23.5
|
%
|
|
22.0
|
%
|
|
|
|
|
|
|
Selling and
administrative
|
1,042
|
|
|
1,945
|
|
|
2,987
|
|
Selling and
administrative expense as a percentage of total
revenues
|
23.9
|
%
|
|
29.0
|
%
|
|
27.0
|
%
|
Depreciation and
amortization
|
34
|
|
|
153
|
|
|
187
|
|
Impairment
charges
|
4
|
|
|
11
|
|
|
15
|
|
Gain on sales of
assets
|
(90)
|
|
|
(25)
|
|
|
(115)
|
|
Total costs and expenses
|
4,485
|
|
|
7,209
|
|
|
11,694
|
|
Operating
loss
|
$
|
(125)
|
|
|
$
|
(512)
|
|
|
$
|
(637)
|
|
|
|
|
|
|
|
Number of:
|
|
|
|
|
|
Kmart
Stores
|
883
|
|
|
—
|
|
|
883
|
|
Full-Line
Stores
|
—
|
|
|
683
|
|
|
683
|
|
Specialty
Stores
|
—
|
|
|
26
|
|
|
26
|
|
Total
Stores
|
883
|
|
|
709
|
|
|
1,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26 Weeks Ended
August 1, 2015
|
millions, except
store data
|
Kmart
|
|
Sears
Domestic
|
|
Sears
Holdings
|
Merchandise sales and
services
|
$
|
4,815
|
|
|
$
|
7,278
|
|
|
$
|
12,093
|
|
|
|
|
|
|
|
Cost of sales, buying
and occupancy
|
3,788
|
|
|
5,352
|
|
|
9,140
|
|
Gross margin
dollars
|
1,027
|
|
|
1,926
|
|
|
2,953
|
|
Gross margin
rate
|
21.3
|
%
|
|
26.5
|
%
|
|
24.4
|
%
|
|
|
|
|
|
|
Selling and
administrative
|
1,217
|
|
|
2,158
|
|
|
3,375
|
|
Selling and
administrative expense as a percentage of total
revenues
|
25.3
|
%
|
|
29.7
|
%
|
|
27.9
|
%
|
Depreciation and
amortization
|
39
|
|
|
197
|
|
|
236
|
|
Impairment
charges
|
2
|
|
|
52
|
|
|
54
|
|
Gain on sales of
assets
|
(161)
|
|
|
(472)
|
|
|
(633)
|
|
Total costs and expenses
|
4,885
|
|
|
7,287
|
|
|
12,172
|
|
Operating
loss
|
$
|
(70)
|
|
|
$
|
(9)
|
|
|
$
|
(79)
|
|
|
|
|
|
|
|
Number of:
|
|
|
|
|
|
Full-Line
Stores
|
963
|
|
|
—
|
|
|
963
|
|
Specialty
Stores
|
—
|
|
|
711
|
|
|
711
|
|
Total
Stores
|
—
|
|
|
28
|
|
|
28
|
|
Total
Stores
|
963
|
|
|
739
|
|
|
1,702
|
|
Sears Holdings
Corporation
|
Adjusted
EBITDA
|
(Unaudited)
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
26 Weeks
Ended
|
millions
|
July 30,
2016
|
|
August 1,
2015
|
|
July 30,
2016
|
|
August 1,
2015
|
Net income (loss)
attributable to Holdings per statement of operations
|
$
|
(395)
|
|
|
$
|
208
|
|
|
$
|
(866)
|
|
|
$
|
(95)
|
|
Income tax expense
(benefit)
|
13
|
|
|
(221)
|
|
|
28
|
|
|
(203)
|
|
Interest
expense
|
99
|
|
|
85
|
|
|
184
|
|
|
175
|
|
Interest and
investment loss
|
13
|
|
|
26
|
|
|
17
|
|
|
44
|
|
Other loss
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Operating income
(loss)
|
(269)
|
|
|
99
|
|
|
(637)
|
|
|
(79)
|
|
Depreciation and
amortization
|
92
|
|
|
114
|
|
|
187
|
|
|
236
|
|
Gain on sales of
assets
|
(54)
|
|
|
(526)
|
|
|
(115)
|
|
|
(633)
|
|
Before excluded
items
|
(231)
|
|
|
(313)
|
|
|
(565)
|
|
|
(476)
|
|
|
|
|
|
|
|
|
|
Closed store reserve
and severance
|
(18)
|
|
|
(2)
|
|
|
69
|
|
|
37
|
|
Pension
expense
|
72
|
|
|
57
|
|
|
144
|
|
|
114
|
|
Other(1)
|
1
|
|
|
(15)
|
|
|
9
|
|
|
(89)
|
|
Amortization of
deferred Seritage gain
|
(22)
|
|
|
(7)
|
|
|
(44)
|
|
|
(7)
|
|
Impairment
charges
|
7
|
|
|
54
|
|
|
15
|
|
|
54
|
|
Adjusted
EBITDA
|
$
|
(191)
|
|
|
$
|
(226)
|
|
|
$
|
(372)
|
|
|
$
|
(367)
|
|
|
|
(1)
|
The 13- and 26- week
periods ended July 30, 2016 consisted of expenses associated with
legal matters, transaction costs associated with strategic
initiatives and other expenses, while the 13- and 26- week periods
ended August 1, 2015 consisted of one-time credits from vendors,
expenses associated with legal matters, transactions costs
associated with strategic initiatives and other
expenses.
|
Sears Holdings
Corporation
|
Adjusted
EBITDA
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
July 30,
2016
|
|
August 1,
2015
|
millions
|
Kmart
|
Sears
Domestic
|
Sears
Holdings
|
|
Kmart
|
Sears
Domestic
|
Sears
Holdings
|
Operating income
(loss) per statement of operations
|
$
|
(9)
|
|
$
|
(260)
|
|
$
|
(269)
|
|
|
$
|
37
|
|
$
|
62
|
|
$
|
99
|
|
Depreciation and
amortization
|
15
|
|
77
|
|
92
|
|
|
19
|
|
95
|
|
114
|
|
Gain on sales of
assets
|
(44)
|
|
(10)
|
|
(54)
|
|
|
(143)
|
|
(383)
|
|
(526)
|
|
Before excluded
items
|
(38)
|
|
(193)
|
|
(231)
|
|
|
(87)
|
|
(226)
|
|
(313)
|
|
|
|
|
|
|
|
|
|
Closed store reserve
and severance
|
(21)
|
|
3
|
|
(18)
|
|
|
5
|
|
(7)
|
|
(2)
|
|
Pension
expense
|
—
|
|
72
|
|
72
|
|
|
—
|
|
57
|
|
57
|
|
Other(1)
|
—
|
|
1
|
|
1
|
|
|
—
|
|
(15)
|
|
(15)
|
|
Amortization of
deferred Seritage gain
|
(5)
|
|
(17)
|
|
(22)
|
|
|
(1)
|
|
(6)
|
|
(7)
|
|
Impairment
charges
|
1
|
|
6
|
|
7
|
|
|
2
|
|
52
|
|
54
|
|
Adjusted
EBITDA
|
$
|
(63)
|
|
$
|
(128)
|
|
$
|
(191)
|
|
|
$
|
(81)
|
|
$
|
(145)
|
|
$
|
(226)
|
|
% to
revenues
|
(2.8)
|
%
|
(3.7)
|
%
|
(3.4)
|
%
|
|
(3.3)
|
%
|
(3.9)
|
%
|
(3.6)
|
%
|
|
|
|
26 Weeks
Ended
|
|
July 30,
2016
|
|
August 1,
2015
|
millions
|
Kmart
|
Sears
Domestic
|
Sears
Holdings
|
|
Kmart
|
Sears
Domestic
|
Sears
Holdings
|
Operating loss per
statement of operations
|
$
|
(125)
|
|
$
|
(512)
|
|
$
|
(637)
|
|
|
$
|
(70)
|
|
$
|
(9)
|
|
$
|
(79)
|
|
Depreciation and
amortization
|
34
|
|
153
|
|
187
|
|
|
39
|
|
197
|
|
236
|
|
Gain on sales of
assets
|
(90)
|
|
(25)
|
|
(115)
|
|
|
(161)
|
|
(472)
|
|
(633)
|
|
Before excluded
items
|
(181)
|
|
(384)
|
|
(565)
|
|
|
(192)
|
|
(284)
|
|
(476)
|
|
|
|
|
|
|
|
|
|
Closed store reserve
and severance
|
52
|
|
17
|
|
69
|
|
|
41
|
|
(4)
|
|
37
|
|
Pension
expense
|
—
|
|
144
|
|
144
|
|
|
—
|
|
114
|
|
114
|
|
Other(1)
|
8
|
|
1
|
|
9
|
|
|
8
|
|
(97)
|
|
(89)
|
|
Amortization of
deferred Seritage gain
|
(9)
|
|
(35)
|
|
(44)
|
|
|
(1)
|
|
(6)
|
|
(7)
|
|
Impairment
charges
|
4
|
|
11
|
|
15
|
|
|
2
|
|
52
|
|
54
|
|
Adjusted
EBITDA
|
$
|
(126)
|
|
$
|
(246)
|
|
$
|
(372)
|
|
|
$
|
(142)
|
|
$
|
(225)
|
|
$
|
(367)
|
|
% to
revenues
|
(2.9)
|
%
|
(3.7)
|
%
|
(3.4)
|
%
|
|
(2.9)
|
%
|
(3.1)
|
%
|
(3.0)
|
%
|
|
|
(1)
|
The 13- and 26- week
periods ended July 30, 2016 consisted of expenses associated with
legal matters, transaction costs associated with strategic
initiatives and other expenses, while the 13- and 26- week periods
ended August 1, 2015 consisted of one-time credits from vendors,
expenses associated with legal matters, transactions costs
associated with strategic initiatives and other
expenses.
|
Sears Holdings
Corporation
|
Adjusted Earnings
per Share
|
(Unaudited)
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
13 Weeks Ended
July 30, 2016
|
|
|
Adjustments
|
|
millions, except
per share data
|
GAAP
|
Pension
Expense
|
Closed Store
Reserve, Store Impairments and Severance
|
Gain on Sales of
Assets
|
Mark-to-Market
Adjustments
|
Amortization of
Deferred Seritage Gain
|
Other(1)
|
Tax
Matters
|
As
Adjusted
|
Gross margin
impact
|
$
|
1,260
|
|
$
|
—
|
|
$
|
4
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(22)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,242
|
|
Selling and
administrative impact
|
1,484
|
|
(72)
|
|
22
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
—
|
|
1,433
|
|
Depreciation and
amortization impact
|
92
|
|
—
|
|
(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
91
|
|
Impairment charges
impact
|
7
|
|
—
|
|
(7)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gain on sales of
assets impact
|
(54)
|
|
—
|
|
—
|
|
21
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(33)
|
|
Operating loss
impact
|
(269)
|
|
72
|
|
(10)
|
|
(21)
|
|
—
|
|
(22)
|
|
1
|
|
—
|
|
(249)
|
|
Interest and
investment loss impact
|
(13)
|
|
—
|
|
—
|
|
—
|
|
14
|
|
—
|
|
—
|
|
—
|
|
1
|
|
Income tax expense
impact
|
(13)
|
|
(27)
|
|
4
|
|
8
|
|
(5)
|
|
8
|
|
—
|
|
156
|
|
131
|
|
After tax and
noncontrolling interests impact
|
(395)
|
|
45
|
|
(6)
|
|
(13)
|
|
9
|
|
(14)
|
|
1
|
|
156
|
|
(217)
|
|
Diluted loss per
share impact
|
$
|
(3.70)
|
|
$
|
0.42
|
|
$
|
(0.05)
|
|
$
|
(0.12)
|
|
$
|
0.08
|
|
$
|
(0.13)
|
|
$
|
0.01
|
|
$
|
1.46
|
|
$
|
(2.03)
|
|
|
|
(1)
|
Consists of
transaction costs associated with strategic initiatives and other
expenses.
|
|
13 Weeks Ended
August 1, 2015
|
|
|
Adjustments
|
|
millions, except
per share data
|
GAAP
|
Pension
Expense
|
Closed Store
Reserve, Store Impairments and Severance
|
Gain on Sales of
Assets
|
Mark-to-Market
Adjustments
|
Amortization of
Deferred Seritage Gain
|
Other(1)
|
Tax
Matters
|
As
Adjusted
|
Gross margin
impact
|
$
|
1,435
|
|
$
|
—
|
|
$
|
5
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(7)
|
|
$
|
(33)
|
|
$
|
—
|
|
$
|
1,400
|
|
Selling and
administrative impact
|
1,694
|
|
(57)
|
|
7
|
|
—
|
|
—
|
|
—
|
|
(18)
|
|
—
|
|
1,626
|
|
Depreciation and
amortization impact
|
114
|
|
—
|
|
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
112
|
|
Impairment charges
impact
|
54
|
|
—
|
|
(54)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gain on sales of
assets impact
|
(526)
|
|
—
|
|
—
|
|
508
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(18)
|
|
Operating income
impact
|
99
|
|
57
|
|
54
|
|
(508)
|
|
—
|
|
(7)
|
|
(15)
|
|
—
|
|
(320)
|
|
Interest and
investment loss impact
|
(26)
|
|
—
|
|
—
|
|
—
|
|
23
|
|
—
|
|
—
|
|
—
|
|
(3)
|
|
Income tax benefit
impact
|
221
|
|
(21)
|
|
(20)
|
|
190
|
|
(9)
|
|
2
|
|
6
|
|
(216)
|
|
153
|
|
After tax and
noncontrolling interests impact
|
208
|
|
36
|
|
34
|
|
(318)
|
|
14
|
|
(5)
|
|
(9)
|
|
(216)
|
|
(256)
|
|
Diluted earnings per
share impact
|
$
|
1.84
|
|
$
|
0.32
|
|
$
|
0.30
|
|
$
|
(2.81)
|
|
$
|
0.12
|
|
$
|
(0.04)
|
|
$
|
(0.08)
|
|
$
|
(1.91)
|
|
$
|
(2.40)
|
|
|
|
(1)
|
Consists of one-time
credits from vendors, expenses associated with legal matters,
transaction costs associated with strategic initiatives and other
expenses.
|
Sears Holdings
Corporation
|
Adjusted Earnings
per Share
|
(Unaudited)
|
|
|
Amounts are
Preliminary and Subject to Change
|
|
|
|
26 Weeks Ended
July 30, 2016
|
|
|
Adjustments
|
|
millions, except
per share data
|
GAAP
|
Pension
Expense
|
Closed Store
Reserve, Store Impairments and Severance
|
Gain on Sales of
Assets
|
Mark-to-Market
Adjustments
|
Amortization of
Deferred Seritage Gain
|
Other(1)
|
Tax
Matters
|
As
Adjusted
|
Gross margin
impact
|
$
|
2,437
|
|
$
|
—
|
|
$
|
64
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(44)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,457
|
|
Selling and
administrative impact
|
2,987
|
|
(144)
|
|
(5)
|
|
—
|
|
—
|
|
—
|
|
(9)
|
|
—
|
|
2,829
|
|
Depreciation and
amortization impact
|
187
|
|
—
|
|
(5)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
182
|
|
Impairment
charges
|
15
|
|
—
|
|
(15)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gain on sales of
assets impact
|
(115)
|
|
—
|
|
—
|
|
47
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(68)
|
|
Operating loss
impact
|
(637)
|
|
144
|
|
89
|
|
(47)
|
|
—
|
|
(44)
|
|
9
|
|
—
|
|
(486)
|
|
Interest and
investment loss impact
|
(17)
|
|
—
|
|
—
|
|
—
|
|
20
|
|
—
|
|
—
|
|
—
|
|
3
|
|
Income tax expense
impact
|
(28)
|
|
(54)
|
|
(33)
|
|
18
|
|
(8)
|
|
16
|
|
(3)
|
|
342
|
|
250
|
|
After tax and
noncontrolling interests impact
|
(866)
|
|
90
|
|
56
|
|
(29)
|
|
12
|
|
(28)
|
|
6
|
|
342
|
|
(417)
|
|
Diluted loss per
share impact
|
$
|
(8.11)
|
|
$
|
0.85
|
|
$
|
0.52
|
|
$
|
(0.27)
|
|
$
|
0.11
|
|
$
|
(0.26)
|
|
$
|
0.06
|
|
$
|
3.20
|
|
$
|
(3.90)
|
|
|
|
(1)
|
Consists of expenses
associated with legal matters.
|
|
26 Weeks Ended
August 1, 2015
|
|
|
Adjustments
|
|
millions, except
per share data
|
GAAP
|
Pension
Expense
|
Closed Store
Reserve, Store Impairments and Severance
|
Gain on Sales of
Assets
|
Mark-to-Market
Adjustments
|
Amortization of
Deferred Seritage Gain
|
Other(1)
|
Tax
Matters
|
As
Adjusted
|
Gross margin
impact
|
$
|
2,953
|
|
$
|
—
|
|
$
|
11
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(7)
|
|
$
|
(126)
|
|
$
|
—
|
|
$
|
2,831
|
|
Selling and
administrative impact
|
3,375
|
|
(114)
|
|
(26)
|
|
—
|
|
—
|
|
—
|
|
(37)
|
|
—
|
|
3,198
|
|
Depreciation and
amortization impact
|
236
|
|
—
|
|
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
234
|
|
Impairment charges
impact
|
54
|
|
—
|
|
(54)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Gain on sales of
assets impact
|
(633)
|
|
—
|
|
—
|
|
604
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(29)
|
|
Operating loss
impact
|
(79)
|
|
114
|
|
93
|
|
(604)
|
|
—
|
|
(7)
|
|
(89)
|
|
—
|
|
(572)
|
|
Interest and
investment loss impact
|
(44)
|
|
—
|
|
—
|
|
—
|
|
42
|
|
—
|
|
—
|
|
—
|
|
(2)
|
|
Income tax benefit
impact
|
203
|
|
(43)
|
|
(35)
|
|
226
|
|
(16)
|
|
2
|
|
33
|
|
(89)
|
|
281
|
|
After tax and
noncontrolling interests impact
|
(95)
|
|
71
|
|
58
|
|
(378)
|
|
26
|
|
(5)
|
|
(56)
|
|
(89)
|
|
(468)
|
|
Diluted loss per
share impact
|
$
|
(0.89)
|
|
$
|
0.67
|
|
$
|
0.55
|
|
$
|
(3.55)
|
|
$
|
0.24
|
|
$
|
(0.05)
|
|
$
|
(0.52)
|
|
$
|
(0.84)
|
|
$
|
(4.39)
|
|
|
|
(1)
|
Consists of one-time
credits from vendors, expenses associated with legal matters,
transaction costs associated with strategic initiatives and other
expenses.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/sears-holdings-reports-second-quarter-2016-results-300318081.html
SOURCE Sears Holdings Corporation