Sears sees 4Q profits grow by 12%
January 21, 2002,
HOFFMAN ESTATES, IL — In a second quarter of improved earnings, and rebounding from losses earlier in the year, Sears, Roebuck and Co., the nation's fourth-largest retailer, recorded a fourth-quarter profit of $494 million, up 11.8 percent from $442 million the prior year.
Excluding all the one-time items that obscure the bottom line both this year and last, the retailer posted a profit of $657 million, up 7.9 percent from the prior year.
Still acting as a big drag on profits, Sears recorded a $415 million provision for uncollectible accounts in its big credit card business as consumers defaulted on their debt. This year's bad-debt provision was up more than 85 percent, from $224 million a year ago.
In spite of strong gains in its credit and financial products unit, overall sales slipped by 1.1 percent, to $12.2 billion from $12.4 billion a year ago. Sliding even further in a sluggish retail economy, merchandise sales and services fell by 3.6 percent, to $10.8 billion from $11.2 billion. Still going strong as consumers continue to add to their household debt, Sears' credit and financial services business jumped up by 24.1 percent, to $1.4 billion from $1.1 billion the preceding year.
"Despite slow holiday sales, our retail and related services profits increased solidly, driven by margin rate improvements across virtually all of our retail formats," said Alan Lacy, chairman and ceo.
Average gross margin, calculated on merchandise sales and services, widened by 30 basis points, to 28.0 percent from 27.7 percent the prior year. At the same time, costs were modestly pared, by 10 basis points, to 22.2 percent from 22.3 percent.
Going forward, Lacy forecast that Sears' earnings per share will climb by 13 percent to 15 percent. "We anticipate that our retail and related services business will grow operating income at a low double-digit rate, and credit and financial products will grow at a mid single-digit rate," he said. Further boosting profits, said Lacy, Sears Canada "should post improved profitability," and cost-cutting and productivity programs are expected to kick in.
Sears, Roebuck & Co.
|Qtr. 12/29 (x000)||2001||2000||% CHG|
|Average gross margin and SG&A expenses are calculated as a percentage of merchandise sales and services. a-Total sales for the fourth quarter includes $1.4 billion in credit revenues, up 24.1 percent from $1.1 billion a year ago; and 12-month total sales include $5.2 billion in credit revenues, up 14.5 percent from $4.6 billion last year. b-Net income in the fourth quarter includes a $415 million provision for uncollectible accounts, up 85.3 percent from $224 million a year ago; $225 million in special charges and impairments, up 1.6 percent from last year; and $15 million in other income. Compared with $29 million in 2000. Net income for the 12 months includes a $1.3 billion provision for uncollectible accounts, up 52.0 percent form last year; a $522 million provision for previously securitized receivables; $542 million in special charges and impairments vs. $251 million the prior year.|
|Oper. income (EBIT)||1,817,000||1,533,000||18.5|
|Per share (diluted)||1.52||1.32||15.2|
|Average gross margin||28.0%||27.7%||—|
|Oper. income (EBIT)||5,001,000||4,570,000||9.4|
|Per share (diluted)||2.24||3.88||-42.3|
|Average gross margin||26.6%||26.5%||—|
Related Content By Author
Live From New York: Fashion Comes Across the Pond
Home & Textiles Today eDaily
Most Viewed Articles
See the September 2017 issue of Home & Textiles Today. In this issue, we look at the Attack of the Killer Third Tier: Monster off-pricers are climbing to the top of the food chain, plus New Products: 40 pages of new products debuting at the New York Home Fashions Market; Home Stores: TJX unveils first U.S. HomeSense store; Clicks to Bricks: Boll & Branch moves from digital to physical retailing; and much more...