Sears Holdings Reports Fourth Quarter And Full Year 2015 Results

HOFFMAN ESTATES, Ill., Feb. 25, 2016 /PRNewswire/ -- Sears Holdings Corporation ("Holdings," "we," "us," "our," or the "Company") (NASDAQ: SHLD) today announced financial results for its fourth quarter and full year ended January 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:

  • Domestic Adjusted EBITDA of $(82) million, excluding Seritage Growth Properties and joint venture rent, in the fourth quarter of 2015 compared to $125 million in the prior year fourth quarter;
  • Full year Domestic Adjusted EBITDA, excluding Seritage Growth Properties and joint venture rent, of $(703) million in 2015 compared to $(647) million in the prior year;
  • Net loss attributable to Holdings' shareholders of $580 million ($5.44 loss per diluted share) for the fourth quarter of 2015, which included a non-cash accounting charge of $180 million related to the impairment of the Sears trade name, compared to a net loss of $159 million ($1.50 loss per diluted share) for the prior year fourth quarter. Adjusted for significant items, we would have reported a net loss attributable to Holdings' shareholders of $181 million ($1.70 loss per diluted share) for the fourth quarter of 2015 compared to a net loss of $36 million ($0.34 loss per diluted share) in the prior year quarter;
  • Kmart and Sears Domestic comparable store sales declined 7.2% and 6.9%, respectively, in the fourth quarter of 2015, which was an improvement from the trend in the first three quarters of 2015;
  • Kmart's gross margin rate for the fourth quarter declined 250 basis points from the prior year fourth quarter, while Sears Domestic's gross margin rate declined 270 basis points, in each case driven by our apparel and related softlines businesses. Our gross margin rate for the year was 23.1%, a slight improvement over the prior year;
  • The Company reduced expenses by approximately $150 million in the fourth quarter of 2015 as compared to the prior year fourth quarter. Looking toward 2016, we plan to take actions that will further reduce our costs by between $550 million and $650 million, depending on the overall volume of sales; and
  • The Company reduced its net debt position, including pension and postretirement liabilities, by approximately $1.0 billion from the prior year fourth quarter as we continue to demonstrate the Company's financial flexibility to fund its transformation and meet its obligations.

Edward S. Lampert, Holdings' Chairman and Chief Executive Officer, said, "While our fourth quarter comparable store sales were improved over the prior three quarters and January 2016 was our best monthly comparable store sales performance of the year (-4.5%), the unseasonably warm weather and the associated competitive promotional environment resulted in higher than expected markdowns and significantly lower gross margin in our key apparel categories. The impact on our margin rate from the highly promotional environment had a greater impact than the comparable store sales improvements. As we head into 2016, we remain committed to restoring Sears Holdings to profitability. Generating positive Adjusted EBITDA is our most important area of focus, and to that end, we plan to accelerate our transformation into a leading member-centric integrated retailer and take action, where necessary, to optimize our cost structure and improve our gross margin realization."

Rob Schriesheim, Holdings' Chief Financial Officer, said, "During 2015, we reduced our net debt position by approximately $1.0 billion as compared to year-end 2014, driven by the successful completion of various strategic actions, including the rights offering and sale-leaseback transaction with Seritage Growth Properties and the amendment and extension of our domestic credit facility. We believe we have substantially enhanced our financial flexibility and achieved our objective of further reducing our reliance on inventory as a source of financing as we execute on our transformation. We continue to have many alternatives to access capital through our existing financing arrangements and we continue to hold an asset-rich portfolio, including substantial unencumbered real estate, which affords us flexibility to fund our transformation and meet our financial obligations. We intend to continue taking significant actions to alter our capital structure, as circumstances allow, to better position Sears Holdings for success and profitability, which could include further reductions in debt or changes in the composition of our debt."

Financial Results

Revenues decreased $796 million to $7.3 billion for the fourth quarter of 2015, compared to revenues of $8.1 billion for the prior year fourth quarter. Comparable store sales declined 7.1% during the quarter, comprised of decreases of 7.2% and 6.9% at Kmart and Sears Domestic, respectively, and accounted for $458 million of the year-over-year revenue decline, while $291 million of the revenue decline was due to having fewer Kmart and Sears Full-line stores.

At Kmart, comparable store sales decreases were experienced in several categories during the fourth quarter, most notably in the consumer electronics, apparel, grocery & household and home categories. These decreases were partially offset by positive comparable store sales in the seasonal, mattresses and home appliances categories. Excluding the impact of consumer electronics, which is a business we continue to alter to meet our members' needs, Kmart comparable store sales would have decreased 5.0%. Sears Domestic comparable store sales for the quarter were also negatively impacted by the consumer electronics. Excluding the impact of consumer electronics, Sears Domestic comparable store sales would have decreased 4.8%, primarily driven by decreases in apparel, footwear, home, tools and sporting goods, which were partially offset by increases in the mattresses and home appliances categories.

For the full year, revenues decreased approximately $6.1 billion to $25.1 billion in 2015 as compared to revenues of $31.2 billion in the prior year, with a majority of the decline related to actions taken by the Company to streamline operations and focus on our transformation into a member-centric retailer. The decrease in revenue included a decrease of $2.1 billion associated with Sears Canada, which was de-consolidated in October 2014, $222 million from the separation of the Lands' End business, which was completed in the first quarter of 2014, and $1.5 billion less revenue as a result of fewer Kmart and Sears Full-line stores. For the full year, domestic comparable store sales declined 9.2%, comprised of a decrease of 7.3% at Kmart and a decrease of 11.1% at Sears Domestic, which contributed to $2.0 billion of the revenue decrease relative to the prior year.

For the full year, Kmart experienced positive comparable store sales performance in the home appliances, mattresses and seasonal categories, which were more than offset by declines in the consumer electronics, apparel, grocery & household and drugstore categories. Excluding the impact of consumer electronics, Kmart comparable store sales would have decreased 5.5%. Sears Domestic comparable store sales for the year were also negatively impacted by consumer electronics. Excluding the impact of consumer electronics, Sears Domestic comparable store sales would have decreased 9.5%, primarily driven by decreases in apparel, home appliances, lawn & garden and Sears Auto Centers, which were partially offset by an increase in the mattress category.

During the quarter, gross margin decreased $383 million due to the above noted decline in sales, as well as a decline in our gross margin rate. Kmart's gross margin rate for the fourth quarter declined 250 basis points as compared to the prior year fourth quarter, while Sears Domestic's gross margin rate decreased 270 basis points from the prior year quarter. The decline in gross margin rate is primarily attributed to significantly lower margins in our apparel business driven by an increase in promotional activities.

For the full year of 2015, our gross margin decreased $1.3 billion to $5.8 billion as the above noted decline in sales was partially offset by an improvement in gross margin rate, which included one-time vendor credits of $146 million in 2015. Full year 2014 included gross margin of $502 million from Sears Canada and $87 million from the Lands' End business.

Selling and administrative expenses decreased by $150 million in the fourth quarter of 2015 compared to the prior year quarter and $1.4 billion for full year 2015 compared to 2014. Excluding significant items noted in our Adjusted Earnings Per Share tables, selling and administrative expenses declined by $146 million compared to the prior year fourth quarter and $783 million compared to the full year 2014, primarily due to a decrease in payroll and advertising expenses. 

During 2015, the Company realized a significant tax benefit on the deferred taxes related to indefinite-life assets associated with the property sold in the transaction with Seritage. In addition, 2015 also benefited from the reversal of a deferred tax liability related to indefinite-life assets associated with the impairment of the Sears trade name, which was partially offset by foreign branch taxes and state income taxes. As a result, our effective tax rate for 2015 was a benefit of 18.6% compared to expense of 7.4% in 2014.

Financial Position

The Company's cash balances were $238 million at January 30, 2016 compared with $250 million at January 31, 2015.

Merchandise inventories at January 30, 2016 were $5.2 billion, compared to $4.9 billion at January 31, 2015, with the increase primarily being driven by an increase in apparel inventory.

Short-term borrowings totaled $797 million at January 30, 2016, consisting of amounts outstanding under our domestic credit facility, as compared to $615 million at January 31, 2015, consisting of $213 million outstanding under our domestic credit facility, a $400 million secured short-term loan and $2 million of commercial paper outstanding.

At January 30, 2016, the amount available to borrow under our credit facility was approximately $316 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 January 30, 2016 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 ("EPS"), which are non-GAAP measures. The tables attached to this press release provide a reconciliation of GAAP to as adjusted amounts. Domestic Adjusted EBITDA, excluding Seritage/JV rent, reflects the impact of the additional rent expense and assigned sub-tenant rental income as a result of the Seritage and JV transactions. The terms of our leases with Seritage and the JVs 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. 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

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. Detailed descriptions of other risks 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. Results presented herein are unaudited. The unaudited and estimated financial results for the fourth quarter and full-year 2015 contained in this press release reflect a number of complex and subjective judgments and estimates about the appropriateness of certain reported amounts and disclosures. Our financial statements for the 2015 fiscal year are not finalized. We are required to consider all available information through the finalization of our financial statements and their possible impact on our financial conditions and results of operations for the period, including the impact of such information on the complex judgments and estimates referred to above. As a result, subsequent information or events may lead to material differences between the information about the results of operations described herein and the results of operations described in our subsequent annual report. You should consider this possibility in reviewing the financial information for the period described above.

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

Consolidated Statements of Operations

(Unaudited)












Amounts are Preliminary and Subject to Change












Quarters  Ended


Years Ended


millions, except per share data


January 30,
 2016


January 31,
 2015


January 30,
 2016


January 31,
 2015

REVENUES










Merchandise sales and services


$

7,303



$

8,099



$

25,146



$

31,198












COSTS AND EXPENSES










Cost of sales, buying and occupancy


5,708



6,121



19,336



24,049



Gross margin dollars


1,595



1,978



5,810



7,149



Gross margin rate


21.8

%


24.4

%


23.1

%


22.9

%












Selling and administrative


1,852



2,002



6,857



8,220



Selling and administrative expense as a percentage of total revenues


25.4

%


24.7

%


27.3

%


26.3

%












Depreciation and amortization


92



126



422



581



Impairment charges


203



38



274



63



Gain on sales of assets


(13)



(59)



(743)



(207)



    Total costs and expenses


7,842



8,228



26,146



32,706












Operating loss


(539)



(129)



(1,000)



(1,508)


Interest expense


(74)



(92)



(323)



(313)


Interest and investment income (loss)


(35)



(1)



(62)



132


Other income








4












Loss before income taxes


(648)



(222)



(1,385)



(1,685)


Income tax (expense) benefit


68



63



257



(125)












Net loss


(580)



(159)



(1,128)



(1,810)


(Income) loss attributable to noncontrolling interests






(1)



128












NET LOSS ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS


$

(580)



$

(159)



$

(1,129)



$

(1,682)












NET LOSS PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS:










Diluted loss per share


$

(5.44)



$

(1.50)



$

(10.59)



$

(15.82)



Diluted weighted average common shares outstanding


106.6



106.3



106.6



106.3


 

 


Sears Holdings Corporation

 Condensed Consolidated Balance Sheets

(Unaudited)






Amounts are Preliminary and Subject to Change










millions


January 30,
 2016


January 31,
 2015

ASSETS





Current assets





   Cash and cash equivalents


$

238



$

250


   Accounts receivable


419



429


   Merchandise inventories


5,172



4,943


   Prepaid expenses and other current assets


216



241


   Total current assets


6,045



5,863







Property and equipment (net of accumulated depreciation and amortization of $2,960 and $3,864)


2,631



4,449


Goodwill


269



269


Trade names and other intangible assets


1,909



2,097


Other assets


483



507


   TOTAL ASSETS


$

11,337



$

13,185







LIABILITIES





Current liabilities





   Short-term borrowings


$

797



$

614


   Current portion of long-term debt and capitalized lease obligations


71



75


   Merchandise payables


1,574



1,621


   Unearned revenues


787



818


   Other taxes


284



380


   Other current liabilities


1,925



2,087


   Total current liabilities


5,438



5,595







Long-term debt and capitalized lease obligations


2,108



3,087


Pension and postretirement benefits


2,206



2,404


Deferred gain on sale-leaseback


753




Sale-leaseback financing obligation


164




Other long-term liabilities


1,731



1,849


Long-term deferred tax liabilities


893



1,195


   Total Liabilities


13,293



14,130


   Total Equity (Deficit)


(1,956)



(945)


   TOTAL LIABILITIES AND EQUITY (DEFICIT)


$

11,337



$

13,185







Total common shares outstanding


106.7



106.5



 

Sears Holdings Corporation

Segment Results

(Unaudited)








Amounts are Preliminary and Subject to Change
















Quarter Ended January 30, 2016

millions, except store data


 Kmart


Sears Domestic


Sears Holdings

Merchandise sales and services


$

3,126



$

4,177



$

7,303









Cost of sales, buying and occupancy


2,480



3,228



5,708


Gross margin dollars


646



949



1,595


Gross margin rate


20.7

%


22.7

%


21.8

%








Selling and administrative


735



1,117



1,852


Selling and administrative expense as a percentage of total revenues


23.5

%


26.7

%


25.4

%

Depreciation and amortization


16



76



92


Impairment charges


2



201



203


Gain on sales of assets


(12)



(1)



(13)


Total costs and expenses


3,221



4,621



7,842


Operating loss


$

(95)



$

(444)



$

(539)









Number of:







  Kmart Stores


941




941


  Full-Line Stores




705


705


  Specialty Stores




26


26


  Total Stores


941


731


1,672


















Quarter Ended January 31, 2015

millions, except store data


 Kmart


Sears Domestic


Sears Holdings

Merchandise sales and services


$

3,547



$

4,552



$

8,099









Cost of sales, buying and occupancy


2,723



3,398



6,121


Gross margin dollars


824



1,154



1,978


Gross margin rate


23.2

%


25.4

%


24.4

%








Selling and administrative


834



1,168



2,002


Selling and administrative expense as a percentage of total revenues


23.5

%


25.7

%


24.7

%

Depreciation and amortization


23



103



126


Impairment charges


27



11



38


Gain on sales of assets


(27)



(32)



(59)


Total costs and expenses


3,580



4,648



8,228


Operating loss


$

(33)



$

(96)



$

(129)









Number of:







  Kmart Stores


979




979

  Full-Line Stores




717


717

  Specialty Stores




29


29

  Total Stores


979


746


1,725








 


Sears Holdings Corporation

Segment Results

(Unaudited)










Amounts are Preliminary and Subject to Change




















Year Ended January 30, 2016



millions, except store data


 Kmart


Sears Domestic


Sears Holdings



Merchandise sales and services


$

10,188



$

14,958



$

25,146













Cost of sales, buying and occupancy


8,042



11,294



19,336




Gross margin dollars


2,146



3,664



5,810




Gross margin rate


21.1

%


24.5

%


23.1

%












Selling and administrative


2,537



4,320



6,857




Selling and administrative expense as a percentage of total revenues


24.9

%


28.9

%


27.3

%



Depreciation and amortization


72



350



422




Impairment charges


14



260



274




Gain on sales of assets


(185)



(558)



(743)




Total costs and expenses


10,480



15,666



26,146




Operating loss


$

(292)



$

(708)



$

(1,000)













Number of:









  Kmart Stores


941




941




  Full-Line Stores




705


705




  Specialty Stores




26


26




  Total Stores


941


731


1,672
























Year Ended January 31, 2015

millions, except store data


 Kmart


Sears Domestic


Sears Canada


Sears Holdings

Merchandise sales and services


$

12,074



$

17,036



$

2,088



$

31,198











Cost of sales, buying and occupancy


9,513



12,950



1,586



24,049


Gross margin dollars


2,561



4,086



502



7,149


Gross margin rate


21.2

%


24.0

%


24.0

%


22.9

%










Selling and administrative


2,962



4,655



603



8,220


Selling and administrative expense as a percentage of total revenues


24.5

%


27.3

%


28.9

%


26.3

%

Depreciation and amortization


95



437



49



581


Impairment charges


29



19



15



63


(Gain) loss on sales of assets


(103)



(105)



1



(207)


Total costs and expenses


12,496



17,956



2,254



32,706


Operating loss


$

(422)



$

(920)



$

(166)



$

(1,508)











Number of:









  Kmart Stores


979







979


  Full-Line Stores




717





717


  Specialty Stores




29





29


  Total Stores


979



746





1,725











 


Sears Holdings Corporation

Adjusted EBITDA

(Unaudited)






Quarters Ended


Years Ended

millions

January 30,
 2016


January 31,
 2015


January 30,
 2016


January 31,
 2015

Net loss attributable to Holdings per statement of operations

$

(580)



$

(159)



$

(1,129)



$

(1,682)


Income (loss) attributable to noncontrolling interests





1



(128)


Income tax expense (benefit)

(68)



(63)



(257)



125


Interest expense

74



92



323



313


Interest and investment (income) loss

35



1



62



(132)


Other income







(4)


Operating loss

(539)



(129)



(1,000)



(1,508)


Depreciation and amortization

92



126



422



581


Gain on sales of assets

(13)



(59)



(743)



(207)


Before excluded items

(460)



(62)



(1,321)



(1,134)










Closed store reserve and severance

62



86



98



224


Domestic pension expense

57



22



229



89


Other (1)

23



41



(64)



50


Amortization of deferred Seritage gain

(22)





(52)




Impairment charges

203



38



274



63


Adjusted EBITDA

(137)



125



(836)



(708)










Lands' End separation







(10)


Adjusted EBITDA as defined (2)

$

(137)



$

125



$

(836)



$

(718)










Sears Canada segment







71


Domestic Adjusted EBITDA as defined (2)

$

(137)



$

125



$

(836)



$

(647)










Seritage/JV rent

55





133




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

$

(82)



$

125



$

(703)



$

(647)





(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








Quarters Ended


millions

January 30, 2016


January 31, 2015



Kmart

Sears Domestic

Sears Holdings


Kmart

Sears Domestic

Sears Holdings


Operating loss per statement of operations

$

(95)


$

(444)


$

(539)



$

(33)


$

(96)


$

(129)



Depreciation and amortization

16


76


92



23


103


126



Gain on sales of assets

(12)


(1)


(13)



(27)


(32)


(59)



Before excluded items

(91)


(369)


(460)



(37)


(25)


(62)












Closed store reserve and severance

44


18


62



58


28


86



Domestic pension expense


57


57




22


22



Other (1)

34


(11)


23



40


1


41



Amortization of deferred Seritage gain

(5)


(17)


(22)







Impairment charges

2


201


203



27


11


38



Adjusted EBITDA

$

(16)


$

(121)


$

(137)



$

88


$

37


$

125












% to  revenues

(0.5)%


(2.9)%


(1.9)%



2.5

%

0.8

%

1.5

%





















Years Ended

millions

January 30, 2016


January 31, 2015


Kmart

Sears Domestic

Sears Holdings


Kmart

Sears Domestic

Sears Canada

Sears Holdings

Operating loss per statement of operations

$

(292)


$

(708)


$

(1,000)



$

(422)


$

(920)


$

(166)


$

(1,508)


Depreciation and amortization

72


350


422



95


437


49


581


(Gain) loss on sales of assets

(185)


(558)


(743)



(103)


(105)


1


(207)


Before excluded items

(405)


(916)


(1,321)



(430)


(588)


(116)


(1,134)











Closed store reserve and severance

86


12


98



142


55


27


224


Domestic pension expense


229


229




89



89


Other (1)

43


(107)


(64)



43


4


3


50


Amortization of deferred Seritage gain

(11)


(41)


(52)







Impairment charges

14


260


274



29


19


15


63


Adjusted EBITDA

(273)


(563)


(836)



(216)


(421)


(71)


(708)











Lands' End separation






(10)



(10)


Adjusted EBITDA as defined (2)

$

(273)


$

(563)


$

(836)



$

(216)


$

(431)


$

(71)


$

(718)


% to  revenues (3)

(2.7)%


(3.8)%


(3.3)%



(1.8)%


(2.6)%


(3.4)%


(2.3)%





(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



















Quarter Ended January 30, 2016



Adjustments


millions, except per share data

GAAP

Domestic Pension Expense

Domestic Closed Store
Reserve, Store
Impairments and
Severance

Tradename Impairment

Mark-to-Market Adjustments

Amortization of Deferred Seritage Gain

Other(1)

Domestic Tax Matters

As
Adjusted

Gross margin impact

$

1,595


$


$

27


$


$


$

(22)


$

(20)


$


$

1,580


Selling and administrative impact

1,852


(57)


(35)





(43)



1,717


Depreciation and amortization impact

92



(1)







91


Impairment charges impact

203



(23)


(180)







Operating loss impact

(539)


57


86


180



(22)


23



(215)


Interest and investment loss impact

(35)





34





(1)


Income tax benefit impact

68


(21)


(32)


(68)


(13)


8


(9)


176


109


After tax and noncontrolling interests impact

(580)


36


54


112


21


(14)


14


176


(181)


Diluted loss per share impact

$

(5.44)


$

0.34


$

0.50


$

1.05


$

0.20


$

(0.13)


$

0.13


$

1.65


$

(1.70)













Quarter Ended January 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

Other Expenses(2)

Domestic Tax Matters

As Adjusted



Gross margin impact

$

1,978


$


$

10


$


$


$


$

1,988




Selling and administrative impact

2,002


(22)


(76)



(41)



1,863




Depreciation and amortization impact

126



(1)





125




Impairment charges impact

38



(38)








Gain on sales of assets impact

(59)




22




(37)




Operating loss impact

(129)


22


125


(22)


41



37




Income tax benefit impact

63


(8)


(47)


8


(15)


19


20




After tax and noncontrolling interests impact

(159)


14


78


(14)


26


19


(36)




Diluted loss per share impact

$

(1.50)


$

0.13


$

0.73


$

(0.13)


$

0.25


$

0.18


$

(0.34)







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




(2) Consists of 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










Year Ended January 30, 2016



Adjustments


millions, except per share data

GAAP

Domestic
Pension
Expense

Domestic Closed Store Reserve, Store
 Impairments and Severance

Tradename Impairment

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

$

5,810


$


$

44


$

 


$


$


$

(52)


$

(146)


$


$

5,656


Selling and administrative impact

6,857


(229)


(54)


 





(82)



6,492


Depreciation and amortization impact

422



(3)


 







419


Impairment charges impact

274



(94)


(180)








Gain on sales of assets impact

(743)





687






(56)


Operating loss impact

(1,000)


229


195


180


(687)



(52)


(64)



(1,199)


Interest and investment loss impact

(62)






59





(3)


Income tax benefit impact

257


(86)


(73)


(68)


258


(22)


20


24


263


573


After tax and noncontrolling interests impact

(1,129)


143


122


112


(429)


37


(32)


(40)


263


(953)


Diluted loss per share impact

$

(10.59)


$

1.34


$

1.14


$

1.05


$

(4.02)


$

0.35


$

(0.30)


$

(0.38)


$

2.47


$

(8.94)














Year Ended January 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

Other Expenses

Gain on Sears Canada Disposition

Domestic Tax Matters

Sears Canada Segment

Lands' End Separation

As Adjusted(2)

Gross margin impact

$

7,149


$


$

68


$


$


$


$


$

(502)


$

(87)


$

6,628


Selling and administrative impact

8,220


(89)


(129)



(47)




(603)


(77)


7,275


Depreciation and amortization impact

581



(8)






(49)


(3)


521


Impairment charges impact

63



(48)






(15)




Gain on sales of assets impact

(207)




87





(1)



(121)


Operating loss impact

(1,508)


89


253


(87)


47




166


(7)


(1,047)


Interest expense impact

(313)








5



(308)


Interest and investment income impact

132






(70)



(38)



24


Other income impact

4








(4)




Income tax expense impact

(125)


(33)


(95)


33


(18)


26


574


136


3


501


Loss attributable to noncontrolling interests impact

128








(128)




After tax and noncontrolling interests impact

(1,682)


56


158


(54)


29


(44)


574


137


(4)


(830)


Diluted loss per share impact

$

(15.82)


$

0.53


$

1.48


$

(0.51)


$

0.27


$

(0.41)


$

5.40


$

1.29


$

(0.04)


$

(7.81)





(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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