Sears Holdings Corporation issued its financial statements for the quarter ended Oct. 29, 2005. Sears Holdings Corporation was formed in connection with the business combination of Kmart Holding Corporation and Sears, Roebuck and Co., which was completed on March 24, 2005. Sears Holdings is the nation's third largest broadline retailer with approximately 2,300 full-line and 1,200 specialty retail stores in the U.S. operating through Kmart and Sears and 370 full-line and specialty stores in Canada operating through Sears Canada Inc., a 54 percent-owned subsidiary. For accounting purposes, the business combination was treated as a purchase of Sears by Kmart. As such, the historical financial statements of Kmart became the historical financial statements of Holdings.
The condensed consolidated statements of operations for the 13 and 39 weeks ended Oct. 29, 2005 are not comparable to the prior year periods because the prior year periods do not include Sears' results. Additionally, the results for the 39 weeks ended Oct. 29, 2005 are not representative of the company's ongoing operations as they only include the results of Sears from March 25, 2005 forward. In order to provide information on the trends and on-going performance of the combined company, pro forma results are presented as though Kmart and Sears had been combined as of the beginning of fiscal 2004. The company has also provided its calculation of pro forma adjusted EBITDA for Holdings, including a breakdown of pro forma adjusted EBITDA between its domestic and Canadian operations. Pro forma adjusted EBITDA, while a non-GAAP measure, is used by management for purposes of evaluating ongoing operating performance of the company. Reconciliation of the pro forma results of operations to the GAAP results of operations has also been included.
Total revenues increased U.S. $7.8 billion to $12.2 billion for the quarter ended Oct. 29, 2005, as compared to total revenues of $4.4 billion for the quarter ended Oct. 27, 2004. The increase was primarily attributable to the addition of Sears revenues of $8.0 billion in 2005, partially offset by a $0.3 billion decline in Kmart's revenues, due to a reduction in the total number of Kmart stores in operation and a decline in comparable store sales of 2.8 percent. While Kmart's overall comparable store sales declined as a result of lower transaction volumes across most businesses, most notably home products and electronics.
Sears domestic sales declined 6.3 percent for the quarter ended Oct. 29, 2005, as compared to the quarter ended Oct. 27, 2004. The decline was due to a 10.8 percent decrease in domestic comparable store sales partially offset by an increase in the total number of Sears stores combined with strong home services sales.
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