The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from CNW Group

Sears Canada Acknowledges Sears Holdings Report on First Quarter Outlook

Tuesday, May 01, 2012

Sears Canada Acknowledges Sears Holdings Report on First Quarter Outlook06:15 EDT Tuesday, May 01, 2012TORONTO, May 1, 2012 /CNW/ - Sears Canada Inc. (TSX: SCC) acknowledges the release today by Sears Holdings Corporation (NASDAQ: SHLD) of its outlook for the first quarter of 2012.  The release refers to financial information related to Sears Canada's projected first quarter, 2012 performance.  The text of the Sears Holdings release, which includes financial information prepared under United States Generally Accepted Accounting Principles (U.S. GAAP) and presented in U.S. dollars, is set out below.  Sears Canada expects to release its unaudited first quarter earnings, which will include financial information prepared under International Financial Reporting Standards (IFRS), on May 16, 2012.This release contains information which is forward-looking and is subject to important risks and uncertainties. Forward-looking information concerns the Company's future financial performance, business strategy, plans, goals and objectives.  Factors which could cause actual results to differ materially from current expectations include, but are not limited to: the ability of the Company to successfully implement its cost reduction, productivity improvement and strategic initiatives and whether such initiatives will yield the expected benefits; the results achieved pursuant to the Company's long-term marketing and servicing alliance with JPMorgan Chase Bank, N.A.;  general economic conditions; competitive conditions in the businesses in which the Company participates; changes in consumer spending; seasonal weather patterns; customer preference toward product offerings; changes in the Company's relationship with its suppliers; interest rate fluctuations and other changes in funding costs; fluctuations in foreign currency exchange rates; the possibility of negative investment returns in the Company's pension plan;  the outcome of pending legal proceedings; and changes in laws, rules and regulations applicable to the Company.  While the Company believes that its forecasts and assumptions are reasonable, results or events predicted in this forward-looking information may differ materially from actual results or events.The financial outlook set out below is preliminary and therefore subject to change. In addition, there can be no assurance that U.S. GAAP and IFRS will not differ, and such differences could be material. Accordingly, the outlook should be read with caution.The following is the text of the Sears Holdings release:NEWS MEDIA CONTACT:Sears Holdings Public Relations(847) 286-8371SEARS HOLDINGS ANNOUNCES FIRST QUARTER OUTLOOK HOFFMAN ESTATES, IL - In advance of its annual meeting of shareholders to be held on May 2, 2012, Sears Holdings Corporation ("Holdings,"  "we," "us," "our," or the "Company") (Nasdaq: SHLD) today announced its expected first quarter 2012 results as follows:Net income from continuing operations attributable to Holdings' shareholders for the first quarter of 2012 of between $155 million and $195 million (between $1.46 and $1.84 per diluted share from continuing operations) versus a net loss from continuing operations attributable to Holdings' shareholders of $165 million ($1.53 loss per diluted share from continuing operations), for the first quarter in 2011.  The above range includes approximately $400 million ($235 after tax and minority interest) of gains from the sale of certain U.S. and Canadian stores which generated $440 million of proceeds.Adjusted EBITDA of $135 million to $195 million for the first quarter of 2012 versus $58 million for fiscal 2011.  The increase in Adjusted EBITDA reflects an improved margin rate, particularly in appliances, and reduced expenses.Domestic comparable store sales for the first quarter ended April 28, 2012 for its Kmart and Sears stores were as follows:         Quarter Ended         April 28, 2012    Sears Domestic     -1.0%    Kmart     -1.6%     Total     -1.3%While Sears Domestic experienced an overall sales decrease, Sears achieved double-digit increases in its apparel and footwear categories.  These increases were offset by a high single-digit decline in the appliances and double-digit decline in the consumer electronics categories.  Kmart's comparable store sales decrease reflects increases in the apparel and footwear categories, offset by declines in the consumer electronics category.Sears Canada expects to report a comparable store sales decline of 6.2% for the quarter. The decline is primarily due to sales decreases in electronics, home décor, hardware and apparel, partially offset by increases in major appliances and mattresses.We currently expect to end the first quarter with approximately $8.9 billion in merchandise inventories (domestic of $8.1 billion and $0.8 billion at Sears Canada) as compared to $9.7 billion of inventory last year.Adjusted EBITDAThe Company expects to report total Adjusted EBITDA of $135 million to $195 million in the first quarter (domestic of $165 million to $195 million and Sears Canada of $(30) million to $0 million), which is computed as follows:expected net income from continuing operations attributable to Holdings' shareholders of $155 million to $195 million;plus income statement line items not included in EBITDA consisting of income attributable to noncontrolling interest, loss from discontinued operations, income taxes, other income (loss), interest and investment income, interest expense, depreciation and amortization expense and gains on sales of assets of $(80) million to $(100) million;plus pension expense and closed store / severance costs of approximately $80 million, which we do not include in Adjusted EBITDA.In the first quarter of 2011, we reported Adjusted EBITDA of $58 million (domestic of $73 million and Sears Canada of $(15) million).   For further discussion of the reconciling items, see the Company's press release on fourth quarter and full year 2011 results issued on February 21, 2012.Transaction UpdatesOn April 17, 2012, the company closed the previously announced transaction with General Growth Properties to sell 11 properties (six owned and five leased) for $270 million in net cash proceeds.  In addition, Sears Canada, a consolidated, 95%-owned subsidiary of Sears, completed its transaction with The Cadillac Fairview Corporation Limited to surrender and early terminate the leases on three properties for $170 million Canadian in cash proceeds on April 20, 2012.The Company issued a press release on April 30, 2012 related to our previously announced plan to separate its Sears Hometown and Hardware and Sears Outlet businesses.Share Repurchase ActivityDuring the first quarter of 2012, we had no share repurchase activity.  At April 28, 2012, we had $504 million of remaining authorization under our common share repurchase program.We expect to release first quarter results on or about May 17, 2012.Forward-Looking StatementsResults are preliminary and unaudited. This press release contains forward-looking statements about our expectations for the first quarter of fiscal 2012. 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. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: our ability to offer merchandise and services that our customers want, including our proprietary brand products; our ability to successfully implement initiatives to improve inventory management and other capabilities; competitive conditions in the retail and related services industries; worldwide economic conditions and business uncertainty, including the impact of rising fuel prices, the availability of consumer and commercial credit, changes in consumer confidence, tastes, preferences and spending, and changes in vendor relationships, including the impact of increases in the cost of raw materials experienced by certain of our vendors; the impact of seasonal buying patterns, including seasonal fluctuations due to weather conditions, which are difficult to forecast with certainty; our dependence on sources outside the United States for significant amounts of our merchandise; our extensive reliance on computer systems to process transactions, summarize results and manage our business; our reliance on third parties to provide us with services in connection with the administration of certain aspects of our business; impairment charges for goodwill and intangible assets or fixed-asset impairment for long-lived assets; our ability to attract, motivate and retain key executives and other associates; the outcome of pending and/or future legal proceedings, including product liability claims and proceedings with respect to which the parties have reached a preliminary settlement; and the timing and amount of required pension plan funding. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available.About Sears Holdings CorporationSears Holdings Corporation is one of the largest broadline retailers with over 4,000 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, consumer electronics and automotive repair and maintenance.  Sears Holdings is the 2011 ENERGY STAR® Retail Partner of the Year.  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.  It also has the Country Living collection, which is offered by Sears and Kmart.  We are the nation's largest provider of home services, with more than 15 million service calls made annually.  Sears Holdings Corporation operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation.  For more information, visit Sears Holdings' website at www.searsholdings.com. Twitter: @searsholdings ||Facebook: http://www.facebook.com/SHCCareersThis is the conclusion of the text of the Sears Holdings release.Sears Canada is a multi-channel retailer with a network that includes 196 corporate stores, 285 hometown dealer stores, 30 home services showrooms, over 1,700 catalogue and online merchandise pick-up locations, 108 Sears Travel offices and a nationwide home maintenance, repair, and installation network. The Company also publishes Canada's most extensive general merchandise catalogue and offers shopping online at www.sears.ca.  For further information: Media Relations Contact:  Vincent Power Sears Canada Inc. 416-941-4422vpower@sears.ca