SHLD » Topics » Fiscal 2007 Compared to Fiscal 2006

These excerpts taken from the SHLD 10-K filed Mar 17, 2009.

Fiscal 2007 Compared to Fiscal 2006

STYLE="margin-top:6px;margin-bottom:0px">Total Revenues and Comparable Store Sales

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%;padding-bottom:3px;line-height:95%; vertical-align:top">Comparable store sales and total sales decreased 4.7% and 7.5%, respectively, during fiscal 2007.
Total sales for the 52 weeks in fiscal 2007 decreased 7.5%, or $1.4 billion, compared to the 53 weeks in fiscal 2006, mainly due to the macroeconomic factors discussed previously. The decrease includes a decline related to the impact of sales
recorded during the 53
rd week of fiscal year 2006 in the amount of $301 million. The remaining decline in sales in fiscal 2007 was due to lower
comparable store sales.

The 4.7% decline in Kmart comparable store sales during fiscal 2007 compares to a 0.6% decline in comparable store
sales recorded for fiscal 2006. The decline in comparable store sales during fiscal 2007 was recorded across most categories, with more pronounced declines within the lawn and garden, home appliance, apparel, drug store and general merchandise
categories. Sales within lawn and garden, as well as home appliances, were weaker throughout fiscal 2007, reflecting the impact of a weakening residential construction and housing market. Apparel and general merchandise was affected by the decline
in general economic conditions, which affected sales of basic wear, including jeans, t-shirts and other everyday items. The decline in apparel sales in 2007 also reflects the impact of weather on sales of our seasonal apparel, which resulted in a
mid single digit decline in sales related to fall apparel. Drug store sales were impacted by increased competition.

Fiscal 2007 Compared to Fiscal 2006

FACE="Times New Roman" SIZE="2">Total Revenues and Comparable Store Sales

SIZE="2">Merchandise sales and services revenues declined $1.4 billion, or 4.6%, to $27.8 billion for fiscal 2007, as compared to total revenues of $29.2 billion for fiscal 2006. Total fiscal 2006 revenues benefited from $410 million
in sales recorded during the 53
rd week of the fiscal year. Excluding the impact of the 53rd
week on sales in fiscal 2006, total revenues declined $1.0 billion in fiscal 2007, with the decline primarily reflecting an aggregate decrease in comparable store sales.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The 4.0% decline in comparable store sales during fiscal 2007 was due to declines across most categories and formats, with more pronounced declines in
the home appliance, lawn and garden, tools and apparel categories, partially offset by increases within home electronics. We believe the sales increase in home electronics reflected our gain in market share in this category, as well as increased
market demand for flat-panel televisions in 2007. Sales within the home appliance, lawn and garden and tools categories were weaker throughout fiscal 2007, reflecting the impact of a weakening residential construction and housing market, as well as
decreased sales of weather-driven products, such as air conditioners, due to cooler than normal temperatures in the first half of the year. With regard to apparel, we believe the decline in sales in 2007 reflects both the impact of cooler
temperatures in the spring and unseasonably warm weather during the fall on sales of our seasonal apparel. As a result we had a low double digit decline in sales related to spring and fall apparel and double digit increase in markdowns. We believe
apparel was also affected by the decline in general economic conditions, which affected sales of basic wear, including jeans, t-shirts and other everyday items.

SIZE="2">Gross Margin

For fiscal 2007, Sears Domestic generated $8.3 billion in total gross margin, as compared to $9.1 billion in
fiscal 2006, with the $0.8 billion decline primarily reflecting the negative margin impact of lower overall sales levels, as well as a decline in Sears Domestic’s gross margin rate for the year. Sears Domestic’s gross margin rate was 29.6%
in fiscal 2007, as compared to 31.0% in fiscal 2006, a decline of 1.4% as a percentage of total revenues. Reduced leverage of buying and occupancy costs, given lower overall sales levels, accounted for approximately 0.3% of the total 1.4% decline,
with the remaining 1.1% decline attributable to gross margin rate declines across a number of merchandise categories, most notably in the apparel and home categories. Increased markdowns had a negative impact on our margins in these categories as we
made efforts to clear excess seasonal apparel, as well as appliances and other home improvement product inventory affected by the slowdown in the housing market. The decline was also attributable to a higher proportion of sales of home electronics,
which traditionally have a lower margin rate.

These excerpts taken from the SHLD 10-K filed Mar 26, 2008.

Fiscal 2007 Compared to Fiscal 2006

Total revenues increased 7.9% to $5.6 billion in fiscal 2007, as compared to revenues of $5.2 billion in fiscal 2006. The increase in revenues was mainly due to the impact of favorable exchange rates, as the Canadian dollar strengthened during fiscal 2007 relative to fiscal 2006.

The gross margin rate for fiscal 2007 as compared to fiscal 2006 increased 1.5% to 31.3% in 2007. The increase was primarily due to improved inventory management during the year, as well as the favorable impact of a stronger Canadian dollar on the cost of imported merchandise.

 

36


The selling and administrative expense rate increased slightly for fiscal 2007 as compared to fiscal 2006. The increase was primarily due to small increases in advertising expense in connection with a program to discourage cross-border shopping, which increased during the year due to a strengthening Canadian dollar.

Operating income was $400 million in fiscal 2007 as compared to $258 million in fiscal 2006. As discussed, the increase was the result of increased sales (mainly due to the impact of favorable exchange rates) in addition to increases in gross margin during the year, while controlling costs to ensure profitable growth. The increase in 2007 is also partially due to the absence of restructuring charges during the year, as compared to $19 million of such expenses incurred during 2006.

Fiscal 2007 Compared to Fiscal 2006

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Total revenues increased 7.9% to $5.6 billion in fiscal 2007, as compared to revenues of $5.2 billion in fiscal 2006. The increase in revenues was mainly
due to the impact of favorable exchange rates, as the Canadian dollar strengthened during fiscal 2007 relative to fiscal 2006.

The gross
margin rate for fiscal 2007 as compared to fiscal 2006 increased 1.5% to 31.3% in 2007. The increase was primarily due to improved inventory management during the year, as well as the favorable impact of a stronger Canadian dollar on the cost of
imported merchandise.

 


36








The selling and administrative expense rate increased slightly for fiscal 2007 as compared to fiscal
2006. The increase was primarily due to small increases in advertising expense in connection with a program to discourage cross-border shopping, which increased during the year due to a strengthening Canadian dollar.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Operating income was $400 million in fiscal 2007 as compared to $258 million in fiscal 2006. As discussed, the increase was the result of increased sales
(mainly due to the impact of favorable exchange rates) in addition to increases in gross margin during the year, while controlling costs to ensure profitable growth. The increase in 2007 is also partially due to the absence of restructuring charges
during the year, as compared to $19 million of such expenses incurred during 2006.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki