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Sears Retail Segment Posts 2.8% Q4 Revenue Hike

1/16/2003 12:53:00 PM Eastern

Hoffman Estates, Ill. - Although revenue for big-ticket product categories, such as major appliances and consumer electronics, declined in the fourth quarter, Sears, Roebuck and Co. reported a 2.8 percent overall revenue increase for its Retail and Related Services Segment.

Fourth quarter retail revenue reached $9.7 billion, up from $9.5 billion in the year-ago period.

Operating income for the Retail and Related Services segment, excluding non-comparable items, jumped 9.7 percent in the fourth quarter, to $726 million, compared with $662 million in the same three months in 2001. Sears said the gain was due to improved margin as well as the acquisition of Lands' End.

Gross margin in the retail segment improved by 140 basis points in the fourth quarter, ending Dec. 28, to 29.4 percent, while selling and administrative costs climbed 90 basis points, to 19.9 percent, compared with the same three months a year ago.

For the 12 months, Sears' retail segment, excluding non-comparable items, recorded flat sales of $31.5 billion, compared with $31.3 billion in the previous year. Operating income for the segment hit $1.2 billion for the 12 months, up from $901 million in the same period in 2001.

Consolidated Sears net income, including non-comparable items, was $848 million in the fourth quarter, up from $494 million year over year. 'Despite a challenging retail environment and soft sales, we made strong progress in improving our core retail operations, full-line stores,' said Alan J. Lacy, chairman/CEO. Continued improvement in merchandise assortments and the cost structure of full-line stores contributed to increased profitability, Lacy said.

Total Sears revenue hit $12.5 billion in the fourth quarter, up from $12.2 billion in the year-ago three months.

For the 12 months, consolidated Sears' net income, including non-comparable items, increased to $1.4 billion, up from $735 million in the same quarter n 2001. Total revenue for the period rose to $41.4 billion, compared with $41 billion in the previous 12 months.

Sears' preliminary outlook for 2003 shows comparable earnings per share increasing in the low- to mid-single digits. The retail segment is expected to grow operating income in the mid-teens.