Sears to put its name on hundreds of Kmarts, reports numbers

HOFFMAN ESTATES, Ill. — Sears, Roebuck and Co. discussed plans to convert "several hundred" Kmart stores into Sears nameplates over the next three years, during its fourth quarter and full year-end results conference call today.

The plan "represent(s) the largest expansion of Sears locations in our 119-year history," noted Alan Lacy, chairman and CEO.

"We are excited about the opportunity to rapidly grow our off-mall locations and become closer and more convenient to our customers," he continued. "We are two years into our off-mall growth strategy, and I continue to be very encouraged with results posted by these stores."

"Moreover, the significant amount of work done to develop, launch and operate these off-mall stores should be extremely beneficial following the merger," he said.

The Kmart stores set for conversion will predominately be located in key urban and high-density suburban markets that feature customer demographics and average income levels matching those of the typical Sears shopper.

The company also presented its fourth quarter numbers.

With deep cuts in costs helping to offset weakening sales during the all-important Christmas quarter, Sears recorded a fourth-quarter profit of $378 million, or $1.76 a share, besting a Wall Street expectation of $1.66.

The $378 million quarter profit was sharply off, by 86.2 percent, from a year-before return of $2.7 billion. But last year's quarter was swollen by $4.2 billion in proceeds from the sale of the company's credit card business. Evening out the year-over-year comparison, operating profits still declined by 42.7 percent, to $912 million from $1.6 billion, hobbled by a holiday sales shortfall.

Sales during the Christmas selling season skidded 4.6 percent, to $11.1 billion from $11.6 billion, reducing year-over-year sales by more than half a billion dollars, or $533 million.

Accounting for most of the shortfall in sales, last year's fourth quarter included an extra week of Christmas sales, which generated $560 million in revenues. Another $80 million in sales in the year-ago quarter stemmed from the National Tire & Battery business, which was subsequently sold off. Ironing out the one-time items that cloud the year-over-year sales picture, same-store sales were virtually flat during the period, slipping just 0.2 percent.

"As we forecasted in October, domestic comparable store sales were flat during the fourth quarter, with sales increases in October and November offset by a decline in December," said Lacy. Looking beyond the quarter, he added, "The year was marked by further restructuring and repositioning of our core retail business, which slowed short-term results, but positions us well for the future."

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