Sears Narrows Losses for Q4 and Fiscal Year
HOFFMAN ESTATES, Ill.-Thanks in part to higher gross margin and the reversal of an income-tax expense into a benefit, Sears Holdings was able to slim down its bottom-line losses for both the fourth quarter and fiscal year ending on Feb. 2.
The fourth-quarter net loss totaled $489 million, compared to a net loss in the previous year's fourth quarter of $2.4 billion. For the fiscal year, the net loss was $930 million, compared to a $3.1 billion net loss from the prior year. "Sears Holdings made progress in 2012 improving the profitability of our business, but we know there's more work to be done in 2013," said Edward Lampert, chairman and CEO.
Total revenues in the quarter dropped 1.8 percent to $12.3 billion. Merchandise sales at Sears domestic stores were down 0.9 percent, although same-store sales edged up 0.8 percent. Kmart posted declines of 3 percent in total sales and 3.7 percent in same-store sales.
Thanks to a boost in gross margin, Kmart's operating income jumped 49.3 percent in the quarter. Sears domestic stores, meanwhile, trimmed its operating loss from $818 million to $450 million.
For the fiscal year, total revenues were $39.9 billion, down 4.1 percent. Sears domestic's and Kmart's sales fell 3.1 percent and 4.7 percent, respectively. Sears domestic's operating loss fell from $1.4 billion to $656 million, while Kmart turned its prior-year operating loss of $34 million into an operating profit of $5 million.
Fourth-quarter gross margin for Sears Holdings as a whole improved by 130 basis points to 25.8 percent. Selling and administrative expenses increased 12.4 percent in dollars and 340 basis points as a percentage of sales, to 26.8 percent.
"Our focus continues to be on our core customers, our members, and finding ways to provide them value and convenience through integrated retail and our Shop Your Way membership platform," Lampert said. "We have invested significantly in our online e-commerce platforms, our membership rewards program and the technology needed to support these initiatives."