Sears Holdings earnings decline in 2008

Sears Holdings, No. 4 on the Home Channel News Top 500 Retailer Scoreboard, posted fourth-quarter net income of $190 million, down from $426 million in the same quarter last year. Domestic comp-store sales declined 8.3 percent company-wide in the quarter, as total revenues decreased 11.9 percent to $13.3 billion.

For the year, net income was $53 million, compared with net income of $826 million in the previous year. Comps for the year declined 8.0 percent. Full-year fiscal 2008 revenues were $46.8 billion as compared to $50.7 billion in fiscal 2007. The decrease in fiscal 2008 was primarily due to lower comparable-store sales.

"Fiscal 2008 was a very difficult year for the U.S. economy, and its effect on consumer confidence reflects the turmoil that has enveloped the retail industry and our business. We maintained our focus on providing great product and service value to our customers, many of whom feel the impact of lower incomes and tighter credit," said Bruce Johnson, Sears Holdings' interim CEO and president.

During the fourth quarter, Sears Holdings incurred $74 million of costs associated with store closings and severance, including $29 million related to the previously announced closure of eight stores and staff reductions. The company also made the decision to close an additional 24 underperforming stores in January 2009.

Broken down by store brand, Sears domestic comparable-store sales declined 9.5 percent, and Kmart comparable-store sales declined 6.1 percent. These comparable-store sales declines continue to be driven by categories directly impacted by housing market conditions, including home appliances at Sears Domestic, and a slowdown in consumers' discretionary spending at both Sears Domestic and Kmart and lawn and garden at Sears Domestic.

Along with its annual results, Sears Holdings chairman Ed Lampert gave investors an 11-page analysis of the company's strategy and recent economic history. "As a believer in free markets and in capitalism's capacity to create growth and opportunity, I have been disheartened by many of the actions that occurred in the second half of 2008," he wrote. (For the complete letter, click here.)