Sears Holdings Corporation Earnings: A Swing Down to a Loss, Falling Below Estimates

The Cheat Sheet

S&P 500 component Sears Holdings Corporation reported its results for the fourth quarter. Sears Holdings is a retail conglomerate with full-line and specialty retail stores in the United States and Canada. It is the holding company of Kmart Holding Corporation and Sears, Roebuck and Co. Its three reportable segments are Kmart, Sears Domestic and Sears Canada.

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Sears Holdings Earnings Cheat Sheet for the Fourth Quarter

Results: Reported a loss of $2.4 billion ($22.63 per diluted share) in the quarter. Sears Holdings Corporation had a net income of $374 million or $3.43 per share in the year-earlier quarter.

Revenue: Fell 4% to $12.48 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Sears Holdings Corporation reported adjusted net income of 54 cents per share. By that measure, the company fell short of mean estimate of 68 cents per share. Analysts were expecting revenue of $12.44 billion.

Quoting Management: Lou D’Ambrosio, Sears Holdings’ Chief Executive Officer and President, said, “We are taking immediate actions to address our fourth quarter performance including cost and inventory reductions, honed and targeted marketing, margin actions, and bringing in new talent to strengthen our merchandising and leadership team, like Ron Boire, who was recently named Chief Merchant and President, Sears and Kmart Formats.” D’Ambrosio continued, “It’s also important to distinguish between our earnings issue and the strength of our balance sheet, where we have significant assets and liquidity. We are further strengthening the balance sheet by approximately $1 billion through the actions we are announcing today regarding Hometown, Outlet, and Hardware stores, a real estate transaction, and inventory reductions. As we operationally improve the business, we are also accelerating our actions to lead in Integrated Retail. We are combining our massive retail assets with a set of technology platforms we are building to reshape and deepen our relationships with Shop Your Way Reward members – at the store, online, and in the home.”

Key Stats:

The company has missed analyst estiamtes for four quarters in a row. It fell short by 57 cents in the third quarter, by 49 cents in the second quarter, and by 17 cents in the first quarter.

Looking Forward: The outlook for the company’s next-quarter performance in increasingly unfavorable. Over the past sixty days, the average estimate for the first quarter of the next fiscal year has dipped to a loss of $2.58 per share from a loss of $1.32. For the fiscal year, the average estimate has moved from a loss of $4.30 a share to a loss of $5.70 over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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