Sears Holdings Corporation (the "Company", "we", "us", or "our") (NASDAQ: SHLD) today announced domestic comparable store sales for the nine-week period ended January 5, 2008 for its Kmart and Sears stores. Sears Domestic's comparable store sales declined by 2.8% during the nine-week period, while Kmart's comparable store sales declined by 4.2%. Total domestic comparable stores sales declined 3.5% for the nine-week period. We experienced lower sales across most categories, with notable declines in the Sears apparel and tools categories and the Kmart seasonal categories. These decreases were partially offset by increased sales within home electronics at both store formats. We believe that comparable store sales results reflect increased competition and the negative impact of unfavorable economic conditions, such as a weak housing market and consumer credit concerns.
Gross margin rates for this nine-week period declined approximately 200 basis points due to the highly promotional nature of this holiday selling season, markdowns taken to clear seasonal products and the relatively high proportion of sales attributable to the home electronics category, which has a lower margin rate. As a result of the lower sales and gross margin rates, we currently expect that net income for the fourth quarter ending February 2, 2008 will be between $350 million and $470 million, or between $2.59 and $3.48 per fully diluted share. In the fourth quarter of the prior year, the Company reported net income of $820 million, or $5.33 per fully diluted share.
For the full year ending February 2, 2008, the Company expects net income to be between $744 million and $864 million, or between $5.13 and $5.96 per fully diluted share.
During the ten weeks ended January 11, 2008, we repurchased 4.9 million common shares at a total cost of $513 million (or $105.46 per share) under our share repurchase program. As of January 11, 2008 we had remaining authorization to repurchase $223 million of common shares under the previously approved programs.
We currently expect to end the fiscal year with approximately $1 billion in cash and cash equivalents, excluding Sears Canada. The expected cash and cash equivalents balance indicated does not give effect to any share repurchase activity after January 11, 2008. In addition, we expect year-end domestic merchandise inventory will be below the prior year-end level of $9.2 billion, even after including an increase of approximately $160 million from the conversion of previously consigned inventory to owned inventory in Kmart's pharmacy business.
Results are unaudited. This press release contains forward-looking statements about our expectations. Forward-looking statements are subject to risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. Risks and uncertainties include the possibility that we fail to offer products and services that satisfy the desires of our customers, whose preferences may change in the future, or other factors outside the control of Holdings. Actual results may differ materially from those set forth in the forward-looking statements. We intend the forward-looking statements to speak only as of the time made and does not undertake to update or revise them as more information becomes available.
About Sears Holdings Corporation
Sears Holdings Corporation is the nation's fourth largest broadline retailer, with over $50 billion in annual revenues, and approximately 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. We also have Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. We are the nation's largest provider of home services, with more than 13 million service calls made annually. For more information, visit Sears Holdings' website at http://www.searsholdings.com/.
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SOURCE: Sears Holdings Corporation
CONTACT: Sears Holdings Public Relations, +1-847-286-8371
Web site: http://www.searsholdings.com/