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Sears Holdings reported higher net income and sales for its fourth quarter and fiscal year that ended Feb. 3.
But the chain reported lower comp sales for Sears and Kmart, due partially to the housing slowdown and increased competition that hurt major appliance sales.
Net income for the fourth quarter was $820 million compared with the previous year's net income of $648 million. For the fiscal year net income was $1.5 billion compared with net income of $858 million in the previous year.
Net income for the year, ended Jan. 28, 2007, included an after-tax charge of $90 million for the cumulative effect of a change in accounting.
Improved quarterly results reflect increased operating income at both Kmart and Sears Domestic, driven primarily by improved margin rate performance, the company said.
The full-year results also improved as compared to last year on the basis of strong second half margin performance within apparel, as well as improved expense management across all of the company's segments: Kmart, Sears Domestic and Sears Canada.
Aylwin Lewis, Sears Holdings' CEO/president, said, "We believe that actions taken in 2006 to put the right culture and infrastructure in place will provide opportunities for us to expand our successes in 2007 and help us realize our company vision to improve the lives of our customers by providing quality services, products and solutions that earn their trust and build lifetime relationships."
In the fourth quarter, domestic comp-store sales declined 3.1 percent in the aggregate, with Sears Domestic comp-store sales declining 4.9 percent and Kmart comp-store sales declining 0.9 percent. For the year, domestic comp-store sales declined 3.7 percent in the aggregate, with Sears Domestic comp-store sales declining 6.1 percent and Kmart comp-store sales declining 0.6 percent.
The comp-store sales declines at both Kmart and Sears Domestic reflect the impact of increased competition and lower transaction volumes. At Kmart, despite continued pressure from competitor expansion, comp-store sales declined only modestly for both the quarter and year. The decline at Kmart occurred across a number of categories.
At Sears Domestic, comp-store sales declined for both the quarter and year across most categories and formats. During the fourth quarter, the company experienced a sales decline in its home appliance business as a result of the slower U.S. housing market and increased competition.
For the quarter, total revenues increased $200 million, to $16.3 billion, for the 14 weeks, ended Feb. 3, as compared with total revenues of $16.1 billion for the 13 weeks, ended Jan. 28, 2006.
Full-year fiscal 2006 revenues were $53.0 billion compared with $49.1 billion in fiscal 2005. The increase in fiscal 2006 was primarily due to the inclusion of Sears for the entire year in fiscal 2006 and, to a lesser degree, the inclusion of an additional week of sales in fiscal 2006. Fiscal 2006 revenues declined $1.3 billion, or 2.3 percent, to $53.0 billion, compared with fiscal 2005 pro forma revenues of $54.3 billion. The decline versus pro forma revenues for fiscal 2005 primarily reflects lower comp-store sales and the impact of Kmart store closures, partially offset by the added week of sales recorded in fiscal 2006.
Operating income was $1.4 billion for the fourth quarter compared with $1.5 billion in the previous year. Operating income was $2.5 billion for fiscal year 2006 compared with $2.1 billion for fiscal 2005. Excluding the gain on sale of the Sears Canada credit business in 2005, operating income was $1.8 billion, with the increase in fiscal 2006 primarily reflecting improved margin performance within the domestic apparel business and reduced expense across all business segments.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.