Sears Holdings Reports Third Quarter 2015 Results

HOFFMAN ESTATES, Ill., Dec. 3, 2015 /PRNewswire/ -- Sears Holdings Corporation ("Holdings," "we," "us," "our," or the "Company")(NASDAQ: SHLD) today announced financial results for its third quarter ended October 31, 2015. 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:

  • Domestic Adjusted EBITDA of $(280) million, excluding Seritage Growth Properties and joint venture rent, in the third quarter of 2015 compared to $(296) million in the prior year third quarter, which is the fifth consecutive quarter of improved Adjusted EBITDA performance on a year-over-year basis;
  • Net loss attributable to Holdings' shareholders of $454 million ($4.26 loss per diluted share) for the third quarter of 2015 compared to a net loss attributable to Holdings' shareholders of $548 million ($5.15 loss per diluted share) for the prior year third quarter. Adjusted for significant items, we would have reported a net loss attributable to Holdings' shareholders of $305 million ($2.86 loss per diluted share) for the quarter compared to a net loss attributable to Holdings' shareholders of $288 million ($2.71 loss per diluted share) in the prior year quarter;
  • Sales to Shop Your Way® members in Sears Full-line and Kmart stores were 75% of eligible sales for the third quarter;
  • Kmart and Sears Domestic comparable store sales declined 7.5% and 9.6%, respectively, in the third quarter of 2015 with more than half of the decline coming from declines in apparel and consumer electronics, a lower margin category;
  • Kmart's gross margin rate for the third quarter improved 40 basis points over the prior year third quarter, while Sears Domestic's gross margin rate declined 30 basis points from the prior year third quarter;
  • The Company continues to demonstrate its financial flexibility to fund its continuing transformation and meet our obligations. The Company reduced its net debt position, excluding pension liabilities, by more than $2.0 billion from the prior year third quarter; and
  • At October 31, 2015, the Company had approximately $1.3 billion of immediately available liquid assets consisting of $294 million in cash and $963 million of availability under its credit facility.

Edward S. Lampert, Holdings' Chairman and Chief Executive Officer, said, "We remain focused on restoring Sears Holdings to profitability by concentrating on our best stores, rewarding our best members and pursuing our best categories through innovative solutions to product and service offerings. Through deliberate strategic actions, notably with respect to our promotional design and marketing spend, we have made meaningful progress in our transformation and reported a fifth consecutive quarter of improved year-over-year results.  As expected, the results of these actions have led to comparable store sales declines despite an increase in profitability.  At the same time, we recognize a lot of work remains and we have brought in a number of experienced leaders to drive our business forward with a plan to win as a member-centric integrated retailer. As we head into the fourth quarter, we have intensified our focus on our product offerings and promotions in order to enhance member engagement and provide our members with the best experience possible throughout the holiday shopping season."

Rob Schriesheim, Holdings' Chief Financial Officer, said, "During 2015, we have enhanced Sears Holdings' financial flexibility and achieved our objective of reducing our reliance on inventory as a source of financing with the completion of the rights offering and sale-leaseback transaction with Seritage Growth Properties which generated $2.7 billion in cash and the amendment and extension of the Company's $3.275 billion asset-based credit facility. These actions helped us reduce our total domestic net debt level by $2.0 billion from the prior year third quarter. The completion of the tender offer earlier this quarter for $936 million of our 6 5/8% Senior Secured Notes will reduce our annualized cash interest expense by $62 million. We intend to continue taking significant actions to alter our capital structure, as circumstances allow, to position Sears Holdings for success and profitability, which could include further reductions in debt or changes in the composition of our debt."

Financial Results

We had Domestic Adjusted EBITDA of $(280) million, excluding Seritage Growth Properties and joint venture rent, in the third quarter of 2015 compared to $(296) million in the prior year third quarter. The terms of our leases with Seritage and the joint venture partners provide us with the ability to accelerate the transformation of our physical stores. We expect that our cash rent obligations will decrease significantly as space in these stores is recaptured.

Revenues decreased approximately $1.5 billion to $5.8 billion for the quarter ended October 31, 2015, compared to revenues of $7.2 billion for the quarter ended November 1, 2014, with a significant portion of the decline related to actions taken by the Company to streamline our operations and focus on our transformation into a member-centric retailer. The decrease in revenue included a decrease of $611 million associated with Sears Canada, which was de-consolidated in October 2014, and $358 million as a result of fewer Kmart and Sears Full-line stores. In addition, comparable store sales declined 8.6% during the quarter, comprised of decreases of 7.5% and 9.6% at Kmart and Sears Domestic, respectively, which accounted for $417 million of the revenue decline.

At Kmart, comparable store sales increased in the home appliances and mattresses categories, but were offset by declines in apparel, consumer electronics, grocery & household and drugstore. Excluding the impact of the consumer electronics business, which is a business we continue to alter to meet our members' needs, Kmart comparable store sales would have decreased 6.4%. Sears Domestic was also negatively impacted by the consumer electronics business. Excluding the impact of consumer electronics, Sears Domestic comparable store sales would have decreased 8.2%, primarily driven by decreases in apparel, lawn & garden, tools, footwear and Sears Auto Centers, which were partially offset by an increase in the mattresses category.

During the quarter, gross margin decreased $339 million due to the above noted decline in sales, as well as a decline in our gross margin rate. The decline in margin rate is primarily attributed to a decrease in occupancy leverage, partially offset by an improvement in overall product margin. Gross margin for the third quarter of 2015 included additional rent expense and assigned sub-tenant rental income of approximately $52 million as a result of the Seritage and JV transactions. The third quarter of 2015 also included a credit of $23 million related to the amortization of the deferred gain on sale of assets associated with the Seritage transaction, as well as charges of $6 million related to store closures. The third quarter of 2014 included gross margin of $154 million from Sears Canada, as well as charges of $41 million related to store closures.

Kmart's gross margin rate for the third quarter improved 40 basis points, with increases experienced in several categories, particularly drugstore, toys, electronics and apparel, driven by less clearance and promotional activity. Sears Domestic's gross margin rate decreased 30 basis points for the quarter with decreases experienced in home appliances and apparel primarily as a result of increased promotional activity, including an increase in Shop Your Way expense.

Selling and administrative expenses decreased $381 million in the third quarter of 2015 compared to the prior year quarter. Excluding significant items noted in our Adjusted Earnings Per Share tables, domestic selling and administrative expenses declined $207 million primarily due to decreases in payroll and advertising expenses.

Our effective tax rate for the third quarter of 2015 was an expense of 3.2%, compared to an expense of 33.9% in the prior year quarter. 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. The third quarters of 2015 and 2014 were negatively impacted by foreign branch taxes and state income taxes. In addition, 2014 was negatively impacted by a valuation allowance established on Sears Canada's deferred tax assets in the third quarter, prior to de-consolidation.

The Company reported a net loss attributable to Holdings' shareholders of $454 million for the third quarter of 2015 compared to a net loss attributable to Holdings' shareholders of $548 million for the prior year period. Net loss attributable to Holdings' shareholders for the third quarter of 2015 and 2014 included significant items, which aggregated to expense of $149 million and $260 million, respectively. Adjusting for these significant items, we would have reported a net loss attributable to Holdings' shareholders of $305 million and $288 million in the third quarter of 2015 and 2014, respectively.

Financial Position

The Company's cash balances were $294 million at October 31, 2015 compared with $250 million at January 31, 2015.

Domestic merchandise inventories at October 31, 2015 were $6.2 billion, compared to $6.5 billion at November 1, 2014, with the decline primarily being driven by store closures.

Since the first quarter of 2012, we have reduced our net inventory investment by approximately $1.6 billion. By reducing our inventory investment and our payables, we have decreased the level of vendor support needed to run our business, de-risking our business model in a way that benefits both us and our vendor partners.

Short-term borrowings totaled $686 million at the end of the third quarter of 2015 consisting of $677 million outstanding on our domestic credit facility and $9 million of commercial paper outstanding, as compared to $615 million at January 31, 2015, consisting of $213 million outstanding on our domestic credit facility, a $400 million secured short-term loan and $2 million of commercial paper outstanding.

At October 31, 2015, the amount available to borrow under our credit facility was approximately $963 million, which reflects the effect of our springing fixed charge coverage ratio covenant and the borrowing base limitation in our revolving credit facility.

Total long-term debt (long-term debt and capital lease obligations) was $2.2 billion and $3.2 billion at October 31, 2015 and January 31, 2015, respectively.

Adjusted EBITDA

In addition to our net 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"), Domestic Adjusted EBITDA, Domestic Adjusted EBITDA excluding Seritage/JV rent and Adjusted Earnings Per Share. The tables attached to this press release provide a reconciliation of GAAP to as adjusted amounts. We believe that our use of Adjusted EBITDA, Domestic Adjusted EBITDA, Domestic Adjusted EBITDA excluding Seritage/JV rent 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, Domestic Adjusted EBITDA, Domestic Adjusted EBITDA excluding Seritage/JV rent or Adjusted EPS to assess our financial and earnings performance. We also use, and recommend that you use, diluted earnings per share in addition to Adjusted EPS in assessing our earnings performance.

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, our ability to exercise financial flexibility as we meet our obligations and pursue possible strategic transactions 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. These include, but are not limited to, risks and uncertainties relating to the domestic credit facility transaction and the Seritage transaction, such as the impact of the evaluation of any such transaction on our other businesses. Detailed descriptions of other 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.

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


39 Weeks Ended

millions, except per share data

October 31,
2015


November 1,
 2014


October 31,
 2015


November 1,
 2014

REVENUES








Merchandise sales and services

$

5,750



$

7,207



$

17,843



$

23,099


COSTS AND EXPENSES








Cost of sales, buying and occupancy

4,488



5,606



13,628



17,928


Gross margin dollars

1,262



1,601



4,215



5,171


Gross margin rate

21.9

%


22.2

%


23.6

%


22.4

%

Selling and administrative

1,630



2,011



5,005



6,218


Selling and administrative expense as a percentage of total revenues

28.3

%


27.9

%


28.1

%


26.9

%

Depreciation and amortization

94



148



330



455


Impairment charges

17





71



25


Gain on sales of assets

(97)



(68)



(730)



(148)


Total costs and expenses

6,132



7,697



18,304



24,478


Operating loss

(382)



(490)



(461)



(1,379)


Interest expense

(74)



(78)



(249)



(221)


Interest and investment income (loss)

17



97



(27)



133


Other income



2





4


Loss before income taxes

(439)



(469)



(737)



(1,463)


Income tax (expense) benefit

(14)



(159)



189



(188)


Net loss

(453)



(628)



(548)



(1,651)


(Income) loss attributable to noncontrolling interests

(1)



80



(1)



128


NET LOSS ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS

$

(454)



$

(548)



$

(549)



$

(1,523)


NET LOSS PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS








Diluted loss per share

$

(4.26)



$

(5.15)



$

(5.15)



$

(14.33)


Diluted weighted average common shares outstanding

106.6



106.4



106.5



106.3


 

Sears Holdings Corporation

 Condensed Consolidated Balance Sheets

(Unaudited)








Amounts are Preliminary and Subject to Change














millions


October 31,
 2015


November 1,
 2014


January 31,
 2015

ASSETS







Current assets







Cash and cash equivalents


$

294



$

326



$

250


Accounts receivable


475



546



429


Merchandise inventories


6,208



6,464



4,943


Prepaid expenses and other current assets


242



255



241


Total current assets


7,219



7,591



5,863


Property and equipment (net of accumulated depreciation and amortization of $2,925, $4,001 and $3,864)


2,668



4,561



4,449


Goodwill


269



269



269


Trade names and other intangible assets


2,090



2,104



2,097


Other assets


523



644



531


TOTAL ASSETS


$

12,769



$

15,169



$

13,209


LIABILITIES







Current liabilities







Short-term borrowings


$

686



$

2,096



$

615


Current portion of long-term debt and capitalized lease obligations


71



75



75


Merchandise payables


2,295



2,431



1,621


Other current liabilities


1,927



2,100



2,087


Unearned revenues


793



825



818


Other taxes


324



406



380


Short-term deferred tax liabilities


422



481



480


Total current liabilities


6,518



8,414



6,076


Long-term debt and capitalized lease obligations


2,124



2,769



3,110


Pension and postretirement benefits


2,133



1,320



2,404


Deferred gain on sale-leaseback


775






Sale-leaseback financing obligation


164






Other long-term liabilities


1,811



1,830



1,849


Long-term deferred tax liabilities


537



710



715


Total Liabilities


14,062



15,043



14,154


EQUITY (DEFICIT)







   Total Equity (Deficit)


(1,293)



126



(945)


   TOTAL LIABILITIES AND EQUITY (DEFICIT)


$

12,769



$

15,169



$

13,209









Total common shares outstanding


106.7



106.5



106.5


 

Sears Holdings Corporation

Segment Results

(Unaudited)









Amounts are Preliminary and Subject to Change

















13 Weeks Ended October 31, 2015



millions, except store data

Kmart


Sears Domestic


Sears Holdings



Merchandise sales and services

$

2,247



$

3,503



$

5,750












Cost of sales, buying and occupancy

1,774



2,714



4,488




Gross margin dollars

473



789



1,262




Gross margin rate

21.1

%


22.5

%


21.9

%











Selling and administrative

585



1,045



1,630




Selling and administrative expense as a percentage of total revenues

26.0

%


29.8

%


28.3

%



Depreciation and amortization

17



77



94




Impairment charges

10



7



17




Gain on sales of assets

(12)



(85)



(97)




           Total costs and expenses

2,374



3,758



6,132




Operating loss

$

(127)



$

(255)



$

(382)












Number of:








  Kmart Stores

952





952




  Full-Line Stores



708



708




  Specialty Stores



27



27




  Total Stores

952



735



1,687





















13 Weeks Ended November 1, 2014

millions, except store data

 Kmart


Sears Domestic


Sears Canada


Sears Holdings

Merchandise sales and services

$

2,707



$

3,889



$

611



$

7,207










Cost of sales, buying and occupancy

2,147



3,002



457



5,606


Gross margin dollars

560



887



154



1,601


Gross margin rate

20.7

%


22.8

%


25.2

%


22.2

%









Selling and administrative

708



1,131



172



2,011


Selling and administrative expense as a percentage of total revenues

26.2

%


29.1

%


28.2

%


27.9

%

Depreciation and amortization

25



110



13



148


Gain on sales of assets

(24)



(44)





(68)


           Total costs and expenses

2,856



4,199



642



7,697


Operating loss

$

(149)



$

(310)



$

(31)



$

(490)










Number of:








  Kmart Stores

1,050







1,050


  Full-Line Stores



751



113



864


  Specialty Stores



30



305



335


  Total Stores

1,050



781



418



2,249


 

Sears Holdings Corporation

Segment Results

(Unaudited)









Amounts are Preliminary and Subject to Change

















39 Weeks Ended October 31, 2015



millions, except store data

Kmart


Sears Domestic


Sears Holdings



Merchandise sales and services

$

7,062



$

10,781



$

17,843












Cost of sales, buying and occupancy

5,562



8,066



13,628




Gross margin dollars

1,500



2,715



4,215




Gross margin rate

21.2

%


25.2

%


23.6

%











Selling and administrative

1,802



3,203



5,005




Selling and administrative expense as a percentage of total revenues

25.5

%


29.7

%


28.1

%



Depreciation and amortization

56



274



330




Impairment charges

12



59



71




Gain on sales of assets

(173)



(557)



(730)




           Total costs and expenses

7,259



11,045



18,304




Operating loss

$

(197)



$

(264)



$

(461)












Number of:








  Kmart Stores

952





952




  Full-Line Stores



708



708




  Specialty Stores



27



27




  Total Stores

952



735



1,687





















39 Weeks Ended November 1, 2014

millions, except store data

Kmart


Sears Domestic


Sears Canada


Sears Holdings

Merchandise sales and services

$

8,527



$

12,484



$

2,088



$

23,099










Cost of sales, buying and occupancy

6,790



9,552



1,586



17,928


Gross margin dollars

1,737



2,932



502



5,171


Gross margin rate

20.4

%


23.5

%


24.0

%


22.4

%









Selling and administrative

2,128



3,487



603



6,218


Selling and administrative expense as a percentage of total revenues

25.0

%


27.9

%


28.9

%


26.9

%

Depreciation and amortization

72



334



49



455


Impairment charges

2



8



15



25


(Gain) loss on sales of assets

(76)



(73)



1



(148)


           Total costs and expenses

8,916



13,308



2,254



24,478


Operating loss

$

(389)



$

(824)



$

(166)



$

(1,379)










Number of:








  Kmart Stores

1,050







1,050


  Full-Line Stores



751



113



864


  Specialty Stores



30



305



335


  Total Stores

1,050



781



418



2,249


 

Sears Holdings Corporation

Adjusted EBITDA

(Unaudited)







Amounts are Preliminary and Subject to Change







13 Weeks Ended


39 Weeks Ended

millions

October 31,
 2015


November 1,
 2014


October 31,
 2015


November 1,
 2014

Net loss attributable to Holdings per statement of operations

$

(454)



$

(548)



$

(549)



$

(1,523)


Income (loss) attributable to noncontrolling interests

1



(80)



1



(128)


Income tax expense (benefit)

14



159



(189)



188


Interest expense

74



78



249



221


Interest and investment (income) loss

(17)



(97)



27



(133)


Other income



(2)





(4)


Operating loss

(382)



(490)



(461)



(1,379)


Depreciation and amortization

94



148



330



455


Gain on sales of assets

(97)



(68)



(730)



(148)


Before excluded items

(385)



(410)



(861)



(1,072)










Closed store reserve and severance

(1)



70



36



138


Domestic pension expense

58



22



172



67


Other(1)

2



9



(87)



9


Amortization of deferred Seritage gain

(23)





(30)




Impairment charges

17





71



25


Adjusted EBITDA

(332)



(309)



(699)



(833)










Lands' End separation







(10)


Adjusted EBITDA as defined(2)

$

(332)



$

(309)



$

(699)



$

(843)










Sears Canada segment



13





71


Domestic Adjusted EBITDA as defined(2)

$

(332)



$

(296)



$

(699)



$

(772)










Seritage/JV rent

52





78




Domestic Adjusted EBITDA as defined(2) excluding Seritage/JV rent

$

(280)



$

(296)



$

(621)



$

(772)




(1)

Consists of one-time credits from vendors, expenses associated with legal matters, transaction costs associated with strategic initiatives and other expenses.

(2)

Adjusted to reflect the results of the Lands' End and Sears Canada businesses that were included in our results of operations prior to the separation/disposition.

 

Sears Holdings Corporation

Adjusted EBITDA

(Unaudited)










Amounts are Preliminary and Subject to Change










13 Weeks Ended


October 31, 2015


November 1, 2014

millions

Kmart

Sears Domestic

Sears Holdings


Kmart

Sears Domestic

Sears Canada

Sears Holdings

Operating loss per statement of operations

$

(127)


$

(255)


$

(382)



$

(149)


$

(310)


$

(31)


$

(490)


Depreciation and amortization

17


77


94



25


110


13


148


Gain on sales of assets

(12)


(85)


(97)



(24)


(44)



(68)


Before excluded items

(122)


(263)


(385)



(148)


(244)


(18)


(410)











Domestic pension expense


58


58




22



22


Closed store reserve and severance

1


(2)


(1)



48


20


2


70


Other(1)

1


1


2



3


3


3


9


Amortization of deferred Seritage gain

(5)


(18)


(23)







Impairment charges

10


7


17







Adjusted EBITDA

$

(115)


$

(217)


$

(332)



$

(97)


$

(199)


$

(13)


$

(309)


% to revenues

(5.1)%


(6.2)%


(5.8)%



(3.6)%


(5.1)%


(2.1)%


(4.3)%





39 Weeks Ended


October 31, 2015


November 1, 2014

millions

Kmart

Sears Domestic

Sears Holdings


Kmart

Sears Domestic

Sears Canada

Sears Holdings

Operating loss per statement of operations

$

(197)


$

(264)


$

(461)



$

(389)


$

(824)


$

(166)


$

(1,379)


Depreciation and amortization

56


274


330



72


334


49


455


(Gain) loss on sales of assets

(173)


(557)


(730)



(76)


(73)


1


(148)


Before excluded items

(314)


(547)


(861)



(393)


(563)


(116)


(1,072)











Domestic pension expense


172


172




67



67


Closed store reserve and severance

42


(6)


36



84


27


27


138


Other(1)

9


(96)


(87)



3


3


3


9


Amortization of deferred Seritage gain

(6)


(24)


(30)







Impairment charges

12


59


71



2


8


15


25


Adjusted EBITDA

(257)


(442)


(699)



(304)


(458)


(71)


(833)











Lands' End separation






(10)



(10)


Adjusted EBITDA as defined(2)

$

(257)


$

(442)


$

(699)



$

(304)


$

(468)


$

(71)


$

(843)


% to  revenues(3)

(3.6)%


(4.1)%


(3.9)%



(3.6)%


(3.8)%


(3.4)%


(3.7)%




(1)

Consists of one-time credits from vendors, expenses associated with legal matters, transaction costs associated with strategic initiatives and other expenses.

(2)

Adjusted to reflect the results of the Lands' End business that were included in our results of operations prior to the separation.

(3)

Excludes revenues of the Lands' End business that were included in our results of operations prior to the separation.

 

Sears Holdings Corporation

Adjusted Earnings per Share

(Unaudited)


Amounts are Preliminary and Subject to Change



13 Weeks Ended October 31, 2015



Adjustments


millions, except per share data

GAAP

Domestic Pension Expense

Domestic Closed Store Reserve, Store Impairments and Severance

Domestic Gain on Sales of Assets

Mark-to-Market Adjustments

Amortization of Deferred Seritage Gain

Other(1)

Domestic Tax Matters

As Adjusted

Gross margin impact

$

1,262


$


$

6


$


$


$

(23)


$


$


$

1,245


Selling and administrative impact

1,630


(58)


7





(2)



1,577


Depreciation and amortization impact

94









94


Impairment charges impact

17



(17)








Gain on sales of assets impact

(97)




83






(14)


Operating loss impact

(382)


58


16


(83)



(23)


2



(412)


Interest and investment income impact

17





(17)






Income tax expense impact

(14)


(22)


(6)


31


6


9


(1)


179


182


After tax and noncontrolling interests impact

(454)


36


10


(52)


(11)


(14)


1


179


(305)


Diluted loss per share impact

$

(4.26)


$

0.34


$

0.09


$

(0.49)


$

(0.10)


$

(0.13)


$

0.01


$

1.68


$

(2.86)



























































13 Weeks Ended November 1, 2014



Adjustments


millions, except per share data

GAAP

Domestic Pension Expense

Domestic Closed Store Reserve and Severance

Domestic Gain on Sales of Assets

Other Expenses

Gain on Sears Canada Disposition

Domestic Tax Matters

Sears Canada Segment

As Adjusted(2)

Gross margin impact

$

1,601


$


$

41


$


$


$


$


$

(154)


$

1,488


Selling and administrative impact

2,011


(22)


(27)



(6)




(172)


1,784


Depreciation and amortization impact

148



(6)






(13)


129


Gain on sales of assets impact

(68)




42






(26)


Operating loss impact

(490)


22


74


(42)


6




31


(399)


Interest expense impact

(78)








1


(77)


Interest and investment income impact

97






(70)



(12)


15


Other income impact

2








(2)



Income tax expense impact

(159)


(8)


(28)


16


(2)


26


180


148


173


Loss attributable to noncontrolling interests impact

80








(80)



After tax and noncontrolling interests impact

(548)


14


46


(26)


4


(44)


180


86


(288)


Diluted loss per share impact

$

(5.15)


$

0.13


$

0.43


$

(0.25)


$

0.04


$

(0.41)


$

1.69


$

0.81


$

(2.71)




(1)

Consists of transaction costs associated with strategic initiatives, expenses associated with legal matters and other expenses.

(2)

Adjusted to reflect the results of the Sears Canada business that were included in our results of operations prior to the disposition.

 

Sears Holdings Corporation

Adjusted Earnings per Share

(Unaudited)


Amounts are Preliminary and Subject to Change



39 Weeks Ended October 31, 2015



Adjustments


millions, except per share data

GAAP

Domestic Pension Expense

Domestic Closed Store Reserve, Store Impairments and Severance

Domestic Gain on Sales of Assets

Mark-to-Market Adjustments

Amortization of Deferred Seritage Gain

Other(1)

Domestic Tax Matters

As Adjusted

Gross margin impact

$

4,215


$


$

17


$


$


$

(30)


$

(126)


$


$

4,076


Selling and administrative impact

5,005


(172)


(19)





(39)



4,775


Depreciation and amortization impact

330



(2)







328


Impairment charges

71



(71)








Gain on sales of assets impact

(730)




687






(43)


Operating loss impact

(461)


172


109


(687)



(30)


(87)



(984)


Interest and investment loss impact

(27)





25





(2)


Income tax benefit impact

189


(65)


(41)


258


(9)


11


33


87


463


After tax and noncontrolling interests impact

(549)


107


68


(429)


16


(19)


(54)


87


(773)


Diluted loss per share impact

$

(5.15)


$

1.00


$

0.64


$

(4.03)


$

0.15


$

(0.18)


$

(0.51)


$

0.82


$

(7.26)



























































39 Weeks Ended November 1, 2014



Adjustments


millions, except per share data

GAAP

Domestic Pension Expense

Domestic Closed Store Reserve, Store Impairments and Severance

Domestic Gain on Sales of Assets

Other Expenses

Gain on Sears Canada Disposition

Domestic Tax Matters

Sears Canada Segment

Lands' End Separation

As Adjusted(2)

Gross margin impact

$

5,171


$


$

58


$


$


$


$


$

(502)


$

(87)


$

4,640


Selling and administrative impact

6,218


(67)


(53)



(6)




(603)


(77)


5,412


Depreciation and amortization impact

455



(7)






(49)


(3)


396


Impairment charges impact

25



(10)






(15)




Gain on sales of assets impact

(148)




65





(1)



(84)


Operating loss impact

(1,379)


67


128


(65)


6




166


(7)


(1,084)


Interest expense impact

(221)








5



(216)


Interest and investment income impact

133






(70)



(38)



25


Other income impact

4








(4)




Income tax expense impact

(188)


(25)


(48)


25


(2)


26


554


136


3


481


Loss attributable to noncontrolling interest impact

128








(128)




After tax and noncontrolling interest impact

(1,523)


42


80


(40)


4


(44)


554


137


(4)


(794)


Diluted loss per share impact

$

(14.33)


$

0.40


$

0.75


$

(0.38)


$

0.04


$

(0.41)


$

5.21


$

1.29


$

(0.04)


$

(7.47)




(1)

Consists of one-time credits from vendors, expenses associated with legal matters, transaction costs associated with strategic initiatives and other expenses.

(2)

Adjusted to reflect the results of the Lands' End and Sears Canada businesses that were included in our results of operations prior to the separation/disposition.

 

 

SOURCE Sears Holdings Corporation








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