Sears Holdings Corporation (SHLD) reported fourth-quarter 2010 adjusted earnings of $3.67 a share, surpassing the Zacks Consensus Estimate of $3.50 a share. However, it falls short by 2 cents from the earnings of $3.69 in the prior year quarter. Including special items, earnings per share came in at $3.43 compared with $3.74 in the prior-year quarter.
For the full fiscal 2010, the company reported adjusted earnings of $2.07 a share compared with $3.19 in the prior fiscal. It outpaced the Zacks Consensus Estimate of $1.27 a share. However, including special items earnings per share came in at $1.19 per share compared with $1.99 in the prior fiscal.
Financial Detail
For the fourth-quarter 2010, revenue declined by 0.8% to $13,144.0 million compared with $13,247.0 million in the prior-year quarter. However, revenue surpassed the Zacks Consensus Estimate of $12,907.0 million. The decline in quarterly revenue was primarily driven by a 1.2% decrease in domestic comparable store sales, which includes 4.5% fall at Sears Domestic and a 2.5% increase at Kmart.
Segment wise, during the reported quarter, sales at Kmart grew by 1.6% to $4,999.0 million. However, sales at Sears Domestic and Sears Canada dropped 3.0% to $6,686.0 million and 1.5% to $1,459.0 million, respectively.
For fiscal 2010, revenue declined by 1.63% to $43,326.0 million compared with $44,043.0 million in the prior fiscal. However, revenue for the reported fiscal surpassed the Zacks Consensus Estimate of $43,111.0 million. The decline resulted in lower comparable store sales and fewer Kmart and Sears full-line stores.
Adjusted EBITDA for the fourth-quarter 2010 decreased 9.8% to $933.0 million compared with $1,034.0 million in the prior-year quarter. EBITDA margin also contracted to 7.1% from 7.8% in the prior-year quarter.
Balance Sheet and Cash Flow
Sears Holdings ended fiscal 2010 with cash and cash equivalents of $1,375.0 million and a long-term debt-to-capitalization ratio of 23.6% compared with a cash balance of $1689.0 million and long-term debt-to-capitalization ratio of 15.3% in the prior fiscal.
During the reported year, the company made significant cash deployments including $603.0 million for purchasing Sears Canada shares, $394.0 million toward share buyback, $486.0 million for debt repayment, $441.0 million as capital expenditures and $316.0 million for pension and post retirement benefit plans.
Sears Holdings, which competes with Wal-Mart Stores Inc. (WMT) and Target Corporation (TGT), currently has a Zacks #3 Rank, implying a short-term “Hold” rating on the stock. Besides, the company retains a long-term Neutral recommendation.
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