SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 7, 1996
SEARS, ROEBUCK AND CO.
(Exact name of registrant as specified in charter)
New York
(State or Other
Jurisdiction of
Incorporation)
1-416
(Commission File Number)
36-1750680
(IRS Employer Identification No.)
3333 Beverly Road, Hoffman Estates, Illinois
(Address of principal executive offices)
60179
(Zip Code)
Registrant's telephone number, including area code (847) 286-2500
Sears Tower, Chicago, Illinois 60684
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On February 7, 1996, the registrant issued its fourth quarter earnings press
release attached hereto as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The Exhibit Index on page E-1 is incorporated herein by reference.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEARS, ROEBUCK AND CO.
Date: February 13, 1996 By: /s/ Michael D. Levin
MICHAEL D. LEVIN
Senior Vice President
and General Counsel
<PAGE>
EXHIBITS
99. Sears, Roebuck and Co. press release dated February 7, 1996.
E-1
CONTACT
William H. Parke
(847) 286-5998
FOR IMMEDIATE RELEASE
February 7, 1996
SEARS 1995 INCOME CLIMBS 27.6 PERCENT IN FOURTH QUARTER
AND 19.6 PERCENT FOR YEAR, TO RECORD LEVELS;
RETAILER ACHIEVES FIRST $1 BILLION EARNINGS
HOFFMAN ESTATES, ILL. -- Sears, Roebuck and Co. reported today
that fourth-quarter 1995 income from continuing operations
jumped 27.6 percent to
$455 million, or $1.13 per common share, a record for the
retailer. Income from continuing operations in fourth-quarter
1994 was $356 million, or $0.90 per common share.
The double-digit growth in income from continuing operations
was achieved on a 6.5 percent increase in fourth-quarter 1995 revenues, which
rose to $10.85 billion from $10.19 billion in the fourth quarter
of 1994.
"Sears performance in the quarter was outstanding, especially
considering the tough retail climate during the holidays," said
Chairman and Chief Executive Officer Arthur C. Martinez. "We
had our first billion dollar sales week, in December, and
achieved solid revenue increases in both mall-based and
off-the-mall stores thanks to the efforts of associates
throughout our organization."
Martinez said that sales were strong in softlines merchandise
such as women's dresses, cosmetics, jewelry and men's fashions,
while sales of hardlines merchandise such as home electronics,
appliances and exercise equipment also were excellent. "Our
automotive business had one of its best years ever, selling 23
million tires and 8.3 million batteries," Martinez added.
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Page 2
Sears achieves record earnings of $1 billion
Sears 1995 income from continuing operations rose 19.6 percent
to a record $1.03 billion, or $2.53 per common share, compared with $857
million, or $2.13 per common share, for the retailer in 1994.
The record earnings were achieved on a 5.8 percent increase in
1995 revenues, which rose to $34.93 billion from $33.03 billion
in 1994.
"Everyone at Sears takes great pride in our surpassing $1
billion in retail earnings for the first time," said Martinez.
"It's a milestone we're recognizing throughout the company
because it confirms that our business strategy is on target and
working. But even more importantly, by achieving profitable
growth in the challenging retail environment of 1995 we have the
momentum to continue gaining market share in 1996."
Income from domestic operations surges; same store sales rise
5.8 percent Fourth-quarter 1995 income from domestic operations climbed
29.0 percent to $462 million, from $359 million in the fourth quarter of 1994.
Revenues from domestic operations in the fourth quarter of 1995
increased 8.6 percent to $9.77 billion from $9.00 billion in the 1994
period. The improvement was driven by a comparable-store sales
increase of 5.8 percent for the quarter, which builds on a 6.8
percent increase in the comparable 1994 period.
For the year, income from domestic operations rose 17.6 percent
to $1.06 billion, from $897 million in 1994.
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Page 3
Gross margins stabilize, S,G&A expenses improve in fourth
quarter
Domestic gross margins as a percent of merchandising sales and
service declined to 27.5 percent in fourth-quarter of 1995 from
27.7 percent in the comparable 1994 period. Gross margins were
negatively impacted by 70 basis points, stemming from a lower
LIFO credit, which was $5 million in the fourth quarter of 1995
and $58 million in the comparable 1994 period.
Domestic operations selling and administrative expense as a
percent of revenues improved to 19.9 percent in the fourth
quarter from 21.5 percent in the comparable 1994 period, as a
result of continued emphasis on controlling expenses and
leveraging the fixed cost base.
Included in fourth-quarter 1995 domestic operations selling and
administrative expense is a $51 million pre-tax restructuring
charge related to the company's previously-announced
organizational realignment. This initiative better aligns the
company's structure with its growth strategy, particularly the
creation of separate tire and auto parts units and the
consolidation of certain distribution facilities. Beginning
in 1997, resulting after tax savings from the restructuring will
be an estimated $30 to $35 million annually.
In the 1995 fourth quarter, the company also reversed $62
million of the $2.65 billion pre-tax reserves previously established as part of
its restructuring announced in 1993, which are no longer needed
due to the settlement of obligations and the adjustment of the carrying values
of certain properties to be disposed of in connection with that restructuring.
The restructuring adjustments largely offset each other and on
a net basis have no significant impact on fourth-quarter 1995
results.
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Page 4
Credit operations benefit from sales growth; international
operations slow
Domestic credit operations continued to benefit from the strong
merchandise sales growth and the impact of uniform pricing.
"Credit is integrated with all of our marketing and
merchandising strategies," Martinez said, "and as a result, the
Sears Card continued to gain significant market share of our
retail sales."
International operations, which consist of merchandising and
credit operations in Canada and Mexico, posted a fourth-quarter
1995 loss of $7 million, compared with net income of $6 million
in the 1994 period. For the year, international operations had
a loss of $30 million in 1995 compared with a loss of $7 million
in 1994, reflecting very difficult economic conditions in Canada
and Mexico.
Fourth-quarter impact of insurance and real estate divestitures
Fourth-quarter 1994 net income was $685 million, or $1.74 per
common share. It included the discontinued operations of
Allstate Insurance Group and Homart Development Co. Sears
distributed its 80.3 percent ownership in Allstate on June 30,
1995 to Sears common shareholders through a tax-free dividend,
and completed the divestiture of Homart in December 1995. The
Homart transaction did not result in any gain or loss for the
company.
Fourth-quarter 1994 net income also included an extraordinary
gain from the early extinguishment of debt related to Sears
Tower. The extraordinary gain was $195 million, or $0.50 per
common share, while discontinued operations represented $134
million, or $0.34 per common share, for the quarter.
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Page 5
Net income for 1995, including discontinued operations, was
$1.80 billion, or $4.50 per common share.
Income from discontinued operations in 1995 was $776 million,
or $1.97 per common share, compared with $402 million, or $1.03
per common share, in 1994. Allstate's 1994 results were
affected by catastrophe losses related to the January 1994 California
earthquake.
Through its network of more than 800 mall-based department
stores and 1,500 off-the-mall stores, Sears provides apparel,
home and automotive products and services to more than 50
million North American households.
<TABLE>
<CAPTION>
SEARS, ROEBUCK AND CO.
CONSOLIDATED INCOME
<S>
Three Months Ended Twelve Months Ended
<C> <C> <C> <C> <C> <C> <C>
(millions, except per Dec. 30, Dec. 31 Percent Dec. 30, Dec. 31 Percent
common share data) 1995 1994 Change 1995 1994 Change
Revenues
Merchandise sales and services $9,822 $9,283 5.8 $****** $****** 5.4
Credit revenues 1,032 911 13.2 3,890 3,574 8.8
Total revenues ****** ****** 6.5 ****** ****** 5.8
Costs and expenses
Cost of sales, buying and occupancy 7,141 6,720 6.3 ****** ****** 6.0
Selling and administrative 2,181 2,173 0.4 7,577 7,498 1.1
Depreciation and amortization 161 161 578 528 9.4
Provision for uncollectible accounts 246 197 25.2 826 698 18.2
Interest 348 314 10.8 1,373 1,279 7.3
Total costs and expenses ****** 9,565 5.4 ****** ****** 5.2
Operating income 777 629 23.4 1,705 1,454 17.3
Other income (loss) 3 (6) 23 17 36.5
Income before income taxes 780 623 25.0 1,728 1,471 17.5
Income taxes 325 267 21.5 703 614 14.5
Income from continuing operation 455 356 27.6 1,025 857 19.6
Income from discontinued operations,
net of income taxes - 134 776 402 93.0
Income before extraordinary gain 455 490 (7.1) 1,801 1,259 43.1
Extraordinary gain related to early
extinguishment of debt - 195 - - 195 -
Net income $ 455 $ 685 ***** $1,801 $1,454 23.9
Income from continuing operations
consists of:
Domestic operations $ 462 $ 359 29.0 $1,055 $ 897 17.6
International operations (7) 6 (30) (7) -
Corporate * - (9) - (33) -
Income from continuing operations $ 455 $ 356 27.6 $1,025 $ 857 19.6
Earnings per common share, after
allowing for dividends on
preferred shares:
Income from continuing operations $ 1.13 $ 0.90 $ 2.53 $ 2.13
Discontinued operations - 0.34 1.97 1.03
Extraordinary gain - 0.50 - 0.50
Net income $ 1.13 $ 1.74 $ 4.50 $ 3.66
Average common and common
equivalent shares outstanding 397.5 389.8 394.0 388.9
<FN>
* Corporate operating results for 1995 are not significant and have been
included in domestic operations.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SEARS, ROEBUCK AND CO.
SUPPLEMENTARY DOMESTIC OPERATIONS INFORMATION
<S>
Three Months Ended Twelve Months Ended
<C> <C> <C> <C>
Dec. 30, Dec. 31, Dec. 30, Dec. 31,
(millions, except number of stores) 1995 1994 1995 1994
Revenues
Domestic merchandising sales
and services $ 8,824 $ 8,172 $ 28,020 $ 26,127
Domestic credit revenues 948 828 3,538 3,249
Total revenues 9,772 9,000 31,558 29,376
Costs and Expenses
Cost of sales, buying and occupancy 6,396 5,912 20,555 19,034
Selling and administrative 1,947 1,932 6,813 6,709
Depreciation and amortization 142 137 514 462
Provision for uncollectible accounts 219 177 764 651
Interest 303 275 1,183 1,120
Total costs and expenses 9,007 8,433 29,829 27,976
Operating income - Domestic operations* $ 765 $ 567 $ 1,729 $ 1,400
* Includes Corporate operating results
Comparable store sales increase 5.8% 6.8% 4.7% 8.3%
Gross margin ratio 27.5% 27.7% 26.6% 27.1%
Selling and administrative expense ratio 19.9% 21.5% 21.6% 22.8%
Pretax LIFO charge (credit) $ (5) $ (58) $ 19 $ (34)
Domestic invenventories - FIFO $ 4,319 $ 4,284
- LIFO $ 3,608 $ 3,592
</TABLE>
<TABLE>
<CAPTION>
<S>
Dec. 31, 1994 Opened Closed/Sold Dec. 30, 1995
<C> <C> <C> <C>
Domestic merchandising stores:
Large sized 412 15 (2) 425
Medium sized 379 1 (8) 372
Small hard line 9 - - 9
Total mall stores 800 16 (10) 806
Off-the-mall stores 1,140 412 (52) 1,500
</TABLE>
Gross Square Feet:
December 31, 1994 127.7
Opened 7.4
Closed (1.6)
December 30, 1995 133.5
<TABLE>
<CAPTION>
<S>
Three Months Ended Twelve Months Ended
<C> <C> <C> <C>
Dec. 30, Dec. 31, Dec. 30, Dec. 31,
Domestic credit revenues: 1995 1994 1995 1994
Gross finance charges and other revenues $ 1,026 $ 909 $ 3,863 $ 3,600
Funding cost on securitized receivables (78) (81) (325) (351)
Total $ 948 $ 828 $ 3,538 $ 3,249
</TABLE>
