Home
Global Supplier Directory
APPLIANCE Engineer
Supplier Solutions
APPLIANCE Line
Whitepaper Library
Calendar of Events
Association Locator
Contents Pages
Market Research
Subscription Center


 
Daily News

Sears Reports Q1 2004 Results
Apr 26, 2004
 Printable format
 Email this Article
 Search

Sears, Roebuck and Co. (Hoffman Estates, IL, U.S.) has reported a net loss before the cumulative effect of a change in accounting principle of U.S. $20 million, or $0.09 per share on an average base of 220.4 million common equivalent shares, for the first quarter ended April 3, 2004. This is compared with net income of $192 million, or $0.60 per share on an average base of 318.1 million common equivalent shares in the first quarter of 2003. The prior year quarterly results include the results of the domestic Credit and Financial Products and National Tire & Battery businesses divested in the fourth quarter of 2003.

The company's first quarter 2004 results include a previously announced one-time, non-cash, after-tax charge of $839 million, or $3.81 per share, for the cumulative effect of a change in accounting principle related to its pension and post-retirement medical benefit plans. Effective Jan. 4, 2004, the company began recognizing experience gains and losses related to its domestic pension and post-retirement plans on a more current basis. The charge represents the recognition of unamortized experience losses at the beginning of 2004 in accordance with the new accounting method. Net loss after the effect of the cumulative effect of this accounting change was $859 million, or $3.90 per share for the first quarter of 2004.

"Overall, the quarter met our expectations with both revenues and earnings within our previously communicated guidance," Alan J. Lacy, chairman and CEO, said in a written statement.

The domestic segment, which includes all domestic retail formats as well as the company's corporate functions, reported an operating loss of $39 million for the first quarter of 2004, compared with operating income of $299 million in the first quarter of 2003. The prior year results included operating income of $399 million and $6 million, respectively, from the divested domestic Credit and Financial Products and National Tire & Battery businesses.

Merchandise sales and services revenues for the first quarter were $6.8 billion, as compared to $6.7 billion in the prior year period. Prior year revenues include $100 million attributable to the National Tire & Battery business. Increases in several key full-line store home group categories coupled with approximately $33 million earned under the company's long-term alliance with Citigroup contributed to this overall increase. Overall, domestic comparable store sales increased 1.6 percent in the first quarter of 2004. In the home group, strong growth in lawn and garden and tool businesses as well as growth in home electronics were somewhat offset by comparable store sales declines in apparel.

"Our sales performance in the first quarter was mixed," Mr. Lacy said. "Our strong assortment and value proposition drove improved home group comparable store sales, while we were disappointed not to fully participate in the industry-wide improvement in apparel sales."

The gross margin rate for the quarter increased to 26.8 percent in the current year from 26.4 percent in the prior year primarily due to the income from revenues earned under the long-term alliance with Citigroup.

Selling and administrative expenses for the first quarter were $1.6 billion, which included a $30 million curtailment gain related to previously announced changes to the company's retiree medical benefits offered to employees under the age of forty. The prior year selling and administrative expenses of $1.8 billion include approximately $240 million related to divested businesses.

Interest of $49 million for the first quarter included $38 million attributable to interest related to the legacy debt of the former Credit and Financial Products business and debt retirement costs.

Sears Canada reported an operating loss of $2 million for the first quarter of 2004, compared with operating income of $10 million in the first quarter of 2003, primarily due to a $12 million charge recorded within selling and administrative expenses in the first quarter of 2004 related to the company's decision to license Sears Canada's Auto Centers to three tire retailers and other restructuring activities.

Revenues for the first quarter increased to $1.0 billion, compared with $843 million in the prior year quarter due to the effects of foreign exchange as well as increased sales across most formats.

The gross margin rate declined to 28.8 percent in the current year quarter from 30.1 percent in the prior year, due to a number of factors including a change in sales mix and increased promotional activity. Selling and administrative expenses as percentage of revenues increased to 28.2 percent in the current year quarter from 27.3 percent.

During the first quarter of 2004, the company repurchased 18.6 million common shares at a total cost of approximately $852 million, or an average price of $45.69 per share. As of April 3, 2004, the company had remaining authorization to repurchase approximately $726 million of common shares by Dec. 31, 2006, under its existing share repurchase program approved by the Sears board of directors in October 2003. The remaining shares may be purchased in the open market, through self-tender offers or through privately negotiated transactions. Timing will depend on prevailing market conditions, alternative uses of capital and other factors.

As a result of the sale of the domestic Credit and Financial Products business in November 2003 and related liability management actions, the company's domestic term debt position has been reduced to $3.5 billion as of the end of the current fiscal year quarter, down from $23.7 billion at the prior year quarter end and $5.3 billion at year end. The company retired $1.8 billion of domestic term debt in the first quarter of 2004 and expects to retire an additional $800 million by year-end 2004. The company paid $1.3 billion for income taxes in the first quarter of 2004 associated with the sale of its domestic Credit and Financial Products business.

Sears anticipates second quarter earnings per share to be between $0.78 and $0.83. The outlook assumes second quarter comparable store sales to be flat or up slightly. For the full year, the company remains on track with its expectation of earnings per share, before the cumulative effect of change in accounting principle, between $3.60 and $3.80. This includes the negative carrying cost of approximately $0.20 to $0.25 per share on the company's remaining legacy debt related to its former Credit and Financial Products business. The second quarter and full year earnings per share exclude any effects that may result from our ongoing efforts to streamline the organization to improve efficiency and effectiveness.

Back to Daily News

 

Daily News

...........................................................

Dec 17, 2014: Bosch names Kenny head of marketing

Dec 17, 2014: Multifamily Production Index off its peak, but still positive

Dec 17, 2014: AHRI launches two new certification programs

Dec 16, 2014: Ar├želik awarded for fridge with integrated ice-cream bowl

Dec 16, 2014: Report: appliance segment at the top of 2014 reshoring list

More Daily News>>

RSS Feeds
.........................................................
Appliance Industry
Market Research

...........................................................

November 2014: Appliance Magazine Market Insight Annual Subscriptions
November 2014: U.S. Appliance Industry: Market Value, Life Expectancy & Replacement Picture 2014
October 2014: Portrait of the European Appliance Industry
September 2014: Appliance Industry Focus: HVAC




 
Contact Us | About Us | Subscriptions | Advertising | Home
UBM Canon © 2014  

Please visit these other UBM Canon sites

UBM Canon Corporate | Design News | Test & Measurement World | Packaging Digest | EDN | Qmed | Plastics Today | Powder Bulk Solids | Canon Trade Shows