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Sears Holdings announced that earnings took a major hit for the fourth quarter and year of 2007, which ended Feb.1.
For the quarter, the company reported net income of $426 million, down 47.5 percent from $811 million in the prior-year quarter. Net sales were $15.1 billion, down 6.8 percent from $16.1 billion in the previous year.
The earnings release came on the heels of the recent news of an internal restructuring of the company, the departure of CEO Aylwin Lewis and the vps in charge of the company’s Craftsman and Kenmore brands. Sears also cut approximately 200 employees at its Hoffman Estates, Ill., headquarters earlier this month.
“Our fourth-quarter and full-year results continued to be negatively impacted by the worsening economic conditions faced by both our customers and competitors, as well as increased markdowns taken to clear excess inventory,” said W. Bruce Johnson, Sears Holdings’ interim CEO and president.
“Given the challenging retail environment, we will work to improve and tighten our management of costs and inventory levels in 2008.”
Net income for the year was $826 million, down 44.6 percent from $1.5 billion in the same quarter last year. Sales for the year were $50.7 billion, down 4.3 percent from $53 billion from last year.
Domestic comparable-store sales declined 4.5 percent for the quarter, with Sears Domestic declining 4 percent and Kmart declining 5.2 percent. For the year, domestic comparable-store sales declined 4.3 percent, with Sears Domestic declining 4 percent and Kmart declining 4.7 percent. The company also reported a more pronounced decline in comparable-store sales in the month of January.
The company also stated that the results were partially offset by improved operating results at Sears Canada.
The company reported plans for a major reorganization of its internal structure in January. According to Edward Lampert, chairman of the board: “Sears Holdings will operate as a holding company that owns five types of businesses: operating businesses, support businesses (e.g., finance, marketing), online businesses, real estate businesses and brand businesses.”
“Our hope is that the new structure will bring much more focus, clarity and accountability to the process of analyzing the performance of our company’s various business units,” he said.
Tina Settecase, vp-Kenmore appliances; and Greg Inwood, vp-Craftsman tools, hardware and paint, have stepped down, to be replaced by Steven Light, vp-inventory management; and former Staples executive Dave Figler, respectively.
Robert Luse, senior vp-human resources, and John Walden, executive vp and chief customer officer, have also left the company in recent weeks.