|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 99
MEDIA CONTACT:
Peggy A. Palter
(847) 286-8361
FOR IMMEDIATE RELEASE:
October 19, 2000
SEARS REPORTS THIRD QUARTER 2000 EARNINGS
17 Percent Earnings Per Share Increase on Strength of Credit Business
HOFFMAN ESTATES, Ill. -- Sears, Roebuck and Co. (NYSE: S) reported third-quarter 2000 net income of $278 million, or $0.81 per share, compared with reported 1999 third-quarter net income of $236 million, or $0.62 per share, an increase of 31 percent on a per share basis. Third-quarter 1999 earnings included a non-comparable charge of $29 million, or $0.07 per share, related to a charge for staff reductions and the exit of certain automotive retail markets. Excluding the prior period non-comparable it s per share of $0.81 is 17 percent higher than 1999 third quarter earnings per share of $0.69.
The increase in earnings per share was primarily due to the continuing strength of the credit business coupled with the company's share repurchase program. Credit operating income increased by 21.8 percent primarily due to substantial reductions in selling and administrative expense. Excluding 1999 non-comparable items, retail operating income increased by 2.3 percent as solid sales gains and continued selling and administrative expense leverage were offset by gross margin pressures in softlines. Improve re partially offset by higher corporate expenses and lower operating income in the international and services segments. The company repurchased 6.4 million shares during the quarter.
"Our credit business contributed very strong growth in operating income," said President and Chief Executive Officer Alan J. Lacy. "We are pleased with the quality of our credit portfolio and our on-going productivity improvements. Retail results reflect strong sales performance across several important businesses and investments in new retail growth initiatives such as The Great Indoors."
- more -
SEARS/ADD ONE
For the first nine months of 2000, net income was $901 million or $2.57 per share, compared with $713 million or $1.86 per share for the prior year period, an increase of 38 percent on a per share basis. The year-ago period included a non-comparable charge of $29 million, or $0.07 per share. Excluding this non-comparable item, earnings per share increased 33 percent on a per share basis over the prior year period.
Revenues
Revenues for the third quarter of 2000 increased 4.7 percent to $9.63 billion, compared with $9.20 billion for the same period a year ago. The revenue increase was primarily due to improvements in Sears full-line stores and Sears Canada. Domestic comparable store sales increased 3.5 percent.
"In the third quarter, sales increases in appliances, electronics, lawn and garden, and sporting goods were strong," said Lacy. "In softgoods, footwear, fine jewelry, and cosmetics and fragrances also delivered strong growth but, consistent with difficult industry trends, were offset by soft apparel results. Sears Tire Group, dealer stores and The Great Indoors also posted strong sales performance for the quarter."
Sears Canada's revenue increased 6.9 percent, to $1.02 billion in the third quarter of 2000, due to new store openings and solid comparable store sales growth in its full-line retail stores. Third quarter domestic credit revenues increased 1.4 percent from a year ago, to $999 million. Revenues in the services segment, which include Sears Home Services and Sears Direct Response businesses, were $710 million in the quarter, roughly flat with a year ago.
All revenue amounts reflect the application of SEC Staff Accounting Bulletin 101 (SAB 101), which affected the classification of revenue and related costs of licensed businesses. There was no effect on operating income related to the implementation of SAB 101.
- more -
SEARS/ADD TWO
Gross margin and selling and administrative costs
Consolidated gross margin as a percent of merchandise sales and services was 25.6 percent in the third quarter of 2000 compared with 26.5 percent in the comparable 1999 period. Both domestic and international margins declined. The decline in domestic retail margins is due to an increase in apparel markdown activity and a higher mix of hardlines products.
Selling and administrative expense as a percentage of total revenues was 21.9 percent in the third quarter of 2000 compared to 22.5 percent in the prior year period. The improvement reflects selling and administrative expense leverage in the credit and retail segments, partially offset by Sears Canada's integration expenses for Eatons and higher corporate expenses.
Provision for uncollectible accounts
In the third quarter of 2000, the consolidated provision for uncollectible accounts was $200 million, a 5 percent increase from $190 million in the third quarter of 1999. The domestic allowance for uncollectible accounts decreased to $624 million from $725 million at year-end 1999 and the first two quarters of 2000. The decrease in the allowance is primarily due to the transfer of $2.4 billion of receivables to the securitization Master Trust. The transferred receivables and the related allowance e been reclassified on the balance sheet to retained interest in transferred credit card receivables.
Sears, Roebuck and Co. is a leading retailer of apparel, home and automotive products and services, with annual revenue of nearly $40 billion. The company serves families across the United States through approximately 860 full-line department stores, more than 2,100 specialized retail locations, and a variety of online offerings accessible through the company's Web site, www.sears.com. Sears, Roebuck and Co. owns a majority stake in Sears Canada.
###
|
SEARS, ROEBUCK AND CO. |
||||||||||||||
|
CONSOLIDATED INCOME |
||||||||||||||
|
For the 13 Weeks Ended |
For the 39 Weeks Ended |
|||||||||||||
|
Sept. 30, 2000 and Oct. 2, 1999 |
Sept. 30, 2000 and Oct. 2, 1999 |
|||||||||||||
|
(millions, except earnings per share) |
2000 |
1999 * |
% Change |
2000 |
1999 * |
% Change |
||||||||
|
Revenues |
||||||||||||||
|
Merchandise and services |
$ 8,561 |
$ 8,150 |
5.0% |
$ 25,365 |
$ 24,277 |
4.5% |
||||||||
|
Credit revenues |
1,066 |
1,048 |
1.7% |
3,311 |
3,213 |
3.1% |
||||||||
|
Total revenues |
9,627 |
9,198 |
4.7% |
28,676 |
27,490 |
4.3% |
||||||||
|
Costs and expenses |
||||||||||||||
|
Cost of sales, buying and occupancy |
6,369 |
5,993 |
6.3% |
18,844 |
17,922 |
5.1% |
||||||||
|
Selling and administrative |
2,105 |
2,073 |
1.5% |
6,171 |
6,050 |
2.0% |
||||||||
|
Depreciation and amortization |
205 |
205 |
0.0% |
624 |
629 |
-0.8% |
||||||||
|
Provision for uncollectible accounts |
200 |
190 |
5.3% |
660 |
696 |
-5.2% |
||||||||
|
Interest |
305 |
308 |
-1.0% |
931 |
955 |
-2.5% |
||||||||
|
Restructuring charge |
0 |
46 |
-100.0% |
0 |
46 |
-100.0% |
||||||||
|
Total costs and expenses |
9,184 |
8,815 |
4.2% |
27,230 |
26,298 |
3.5% |
||||||||
|
Operating income |
443 |
383 |
15.7% |
1,446 |
1,192 |
21.3% |
||||||||
|
Other income, net |
1 |
15 |
- |
7 |
1 |
- |
||||||||
|
Income before income taxes and |
||||||||||||||
|
minority interest |
444 |
398 |
11.6% |
1,453 |
1,193 |
21.8% |
||||||||
|
Income taxes |
(159) |
(151) |
5.3% |
(531) |
(452) |
17.5% |
||||||||
|
Minority interest |
(7) |
(11) |
-36.4% |
(21) |
(28) |
-25.0% |
||||||||
|
Net income |
$ 278 |
$ 236 |
17.8% |
$ 901 |
$ 713 |
26.4% |
||||||||
|
Earnings per share: |
||||||||||||||
|
Basic |
$ 0.82 |
$ 0.62 |
32.3% |
$ 2.58 |
$ 1.87 |
38.0% |
||||||||
|
Diluted |
$ 0.81 |
$ 0.62 |
30.6% |
$ 2.57 |
$ 1.86 |
38.2% |
||||||||
|
Average common and dilutive common |
||||||||||||||
|
equivalent shares outstanding |
341.8 |
381.5 |
350.1 |
383.4 |
||||||||||
|
* |
1999 amounts restated to reflect licensed business operations under SEC Staff Accounting Bulletin No. 101 (SAB 101). The restatement reclassified amounts within the statement of income but did not affect operating income or net income. |
|||||||||||||
|
SEARS, ROEBUCK AND CO. |
|||||||||||||||
|
SUPPLEMENTAL INFORMATION |
|||||||||||||||
|
(millions, except number of stores) |
|||||||||||||||
|
For the 13 Weeks Ended |
For the 39 Weeks Ended |
||||||||||||||
|
Sept. 30, 2000 and Oct. 2, 1999 |
Sept. 30, 2000 and Oct. 2, 1999 |
||||||||||||||
|
2000 |
1999 |
% Change |
2000 |
1999 |
% Change |
||||||||||
|
Total Revenues: |
|||||||||||||||
|
Retail |
$ 6,898 |
$ 6,550 |
5.3% |
$ 20,501 |
$ 19,681 |
4.2% |
|||||||||
|
Services |
710 |
709 |
0.1% |
2,065 |
2,092 |
-1.3% |
|||||||||
|
Credit |
999 |
985 |
1.4% |
3,103 |
3,021 |
2.7% |
|||||||||
|
International |
1,020 |
954 |
6.9% |
3,007 |
2,696 |
11.5% |
|||||||||
|
Total revenues |
$ 9,627 |
$ 9,198 |
4.7% |
$ 28,676 |
$ 27,490 |
4.3% |
|||||||||
|
Operating income as reported: |
|||||||||||||||
|
Retail |
$ 44 |
$ 18 |
144.4% |
$ 237 |
$ 122 |
94.3% |
|||||||||
|
Services |
80 |
87 |
-8.0% |
244 |
256 |
-4.7% |
|||||||||
|
Credit |
385 |
316 |
21.8% |
1,165 |
926 |
25.8% |
|||||||||
|
Corporate |
(87) |
(77) |
13.0% |
(269) |
(213) |
26.3% |
|||||||||
|
International |
21 |
39 |
-46.2% |
69 |
101 |
-31.7% |
|||||||||
|
Total operating income |
$ 443 |
$ 383 |
15.7% |
$ 1,446 |
$ 1,192 |
21.3% |
|||||||||
|
Operating income excluding noncomparable items: |
|||||||||||||||
|
Retail |
$ 44 |
$ 43 |
2.3% |
$ 237 |
$ 147 |
61.2% |
|||||||||
|
Services |
80 |
87 |
-8.0% |
244 |
256 |
-4.7% |
|||||||||
|
Credit |
385 |
316 |
21.8% |
1,165 |
926 |
25.8% |
|||||||||
|
Corporate |
(87) |
(56) |
55.4% |
(269) |
(192) |
40.1% |
|||||||||
|
International |
21 |
39 |
-46.2% |
69 |
101 |
-31.7% |
|||||||||
|
Total operating income |
$ 443 |
$ 429 |
3.3% |
$ 1,446 |
$ 1,238 |
16.8% |
|||||||||
|
Sept. 30, |
Oct. 2, |
||||||||||||||
|
2000 |
1999 |
||||||||||||||
|
Domestic inventories |
-LIFO |
$ 5,604 |
$ 4,940 |
||||||||||||
|
-FIFO |
$ 6,230 |
$ 5,639 |
|||||||||||||
|
For the 13 Weeks Ended |
For the 39 Weeks Ended |
||||||||||||||
|
Sept. 30, 2000 and Oct. 2, 1999 |
Sept. 30, 2000 and Oct. 2, 1999 |
||||||||||||||
|
Pretax LIFO charge |
$ 6 |
$ 6 |
$ 30 |
$ 30 |
|||||||||||
|
Jan. 1, |
Sept. 30, |
||||||||||||||
|
Domestic retail stores: |
2000 |
Opened |
Closed |
2000 |
|||||||||||
|
Full-line stores |
858 |
9 |
(5) |
862 |
|||||||||||
|
Specialty formats |
2,153 |
74 |
(47) |
2,180 |
|||||||||||
|
Total |
3,011 |
83 |
(52) |
3,042 |
|||||||||||
|
Gross square feet |
146.4 |
1.8 |
(1.0) |
147.2 |
|||||||||||
|
SEARS, ROEBUCK AND CO. |
||||||||||||
|
SUPPLEMENTAL INFORMATION - CREDIT SEGMENT |
||||||||||||
|
(millions) |
||||||||||||
|
The following credit information relates to the domestic managed portfolio of credit card receivables which is comprised of on-book credit card receivables, credit card receivables underlying retained interest securities and securities which have been sold to third parties. The effective financing rate is based on both domestic on-book debt of the company and securitization interest of the Sears Master Trust. |
||||||||||||
|
For the 13 Weeks ended |
For the 39 Weeks Ended |
|||||||||||
|
Sept. 30, 2000 and Oct. 2, 1999 |
Sept. 30, 2000 and Oct. 2, 1999 |
|||||||||||
|
2000 |
1999 |
2000 |
1999 |
|||||||||
|
Average domestic credit card receivables: |
||||||||||||
|
Managed credit card receivables |
$ 25,453 |
$ 25,992 |
$ 25,655 |
$ 26,707 |
||||||||
|
Securitized balances sold |
(6,840) |
(6,313) |
(6,540) |
(6,458) |
||||||||
|
Retained interest in transferred |
||||||||||||
|
credit card receivables |
(3,673) |
(3,553) |
(3,293) |
(3,882) |
||||||||
|
Owned credit card receivables |
$ 14,940 |
$ 16,126 |
$ 15,822 |
$ 16,367 |
||||||||
|
Sept. 30, |
Oct. 2, |
|||||||||||
|
2000 |
1999 |
|||||||||||
|
Ending domestic credit card receivables: |
||||||||||||
|
Managed credit card receivables |
$ 25,726 |
$ 25,810 |
||||||||||
|
Securitized balances sold |
(7,054) |
(6,499) |
||||||||||
|
Retained interest in transferred |
||||||||||||
|
credit card receivables |
(3,741) |
(3,153) |
||||||||||
|
Other receivables |
49 |
50 |
||||||||||
|
Owned credit card receivables |
$ 14,980 |
$ 16,208 |
||||||||||
|
For the 13 Weeks ended |
For the 39 Weeks Ended |
|||||||||||
|
Sept. 30, 2000 and Oct. 2, 1999 |
Sept. 30, 2000 and Oct. 2, 1999 |
|||||||||||
|
Domestic managed credit card receivables- |
2000 |
1999 |
2000 |
1999 |
||||||||
|
Net interest margin: |
||||||||||||
|
Portfolio yield |
19.70% |
19.32% |
19.86% |
19.50% |
||||||||
|
Effective financing rate |
5.97% |
5.80% |
5.92% |
5.75% |
||||||||
|
Net interest margin |
13.73% |
13.52% |
13.94% |
13.75% |
||||||||
|
Domestic managed net charge-off rate (1) |
4.97% |
6.39% |
5.24% |
6.85% |
||||||||
|
2000 |
1999 |
|||||||||||
|
Sep. 30, 2000 |
July 1, 2000 |
Apr. 1, 2000 |
Jan. 1, 2000 |
Oct. 2, 1999 |
||||||||
|
Domestic managed credit card receivables- |
||||||||||||
|
Delinquency rate |
7.47% |
7.15% |
7.20% |
7.58% |
7.57% |
|||||||
|
Allowance for uncollectible accounts |
$ 624 |
$ 725 |
$ 725 |
$ 725 |
$ 773 |
|||||||
|
Allowance % of domestic owned credit |
||||||||||||
|
card receivables |
4.18% |
4.46% |
4.48% |
4.26% |
4.78% |
|||||||
|
(1) The 1999 domestic managed net charge-off rate includes all of the accounts in the domestic portfolio. Twelve percent of the accounts were converted to the new Total Systems Services, Inc. ("TSYS") account processing system in October 1998, 38% were converted in March 1999, and 50% were converted in April 1999. Balances are generally charged-off earlier under the TSYS system than under the proprietary system. For a description of the anticipated effects of the TSYS convers | ||||||||||||
|
SEARS, ROEBUCK AND CO. |
|||||||||||||
|
CONSOLIDATED BALANCE SHEET |
|||||||||||||
|
(millions) |
|||||||||||||
|
September 30, |
October 2, |
January 1, |
|||||||||||
|
2000 |
1999 |
2000 |
|||||||||||
|
Assets |
|||||||||||||
|
Current Assets |
|||||||||||||
|
Cash and cash equivalents |
$ 497 |
$ 281 |
$ 729 |
||||||||||
|
Retained interest in transferred credit card receivables |
3,741 |
3,153 |
3,144 |
||||||||||
|
Credit card receivables, net |
15,899 |
16,879 |
18,033 |
||||||||||
|
Other receivables |
406 |
356 |
404 |
||||||||||
|
Merchandise inventories |
6,323 |
5,556 |
5,069 |
||||||||||
|
Prepaid expenses and deferred charges |
613 |
609 |
579 |
||||||||||
|
Deferred income taxes |
651 |
600 |
709 |
||||||||||
|
Total current assets |
28,130 |
27,434 |
28,667 |
||||||||||
|
Property and equipment, net |
6,391 |
6,415 |
6,450 |
||||||||||
|
Deferred income taxes |
352 |
517 |
367 |
||||||||||
|
Other assets |
1,477 |
1,510 |
1,470 |
||||||||||
|
Total assets |
$ 36,350 |
$ 35,876 |
$ 36,954 |
||||||||||
|
Liabilities |
|||||||||||||
|
Current liabilities |
|||||||||||||
|
Short-term borrowings |
$ 4,238 |
$ 3,393 |
$ 2,989 |
||||||||||
|
Current portion of long-term debt and capitalized leases |
2,490 |
1,393 |
2,165 |
||||||||||
|
Accounts payable and other liabilities |
6,736 |
6,443 |
6,992 |
||||||||||
|
Unearned revenues |
1,049 |
940 |
971 |
||||||||||
|
Other taxes |
436 |
452 |
584 |
||||||||||
|
Total current liabilities |
14,949 |
12,621 |
13,701 |
||||||||||
|
Long-term debt and capitalized leases |
11,523 |
13,245 |
12,884 |
||||||||||
|
Postretirement benefits |
2,017 |
2,216 |
2,180 |
||||||||||
|
Minority interest and other liabilities |
1,420 |
1,465 |
1,350 |
||||||||||
|
Total liabilities |
29,909 |
29,547 |
30,115 |
||||||||||
|
Commitments and Contingent Liabilities |
|||||||||||||
|
Shareholders' Equity |
|||||||||||||
|
Common shares |
323 |
323 |
323 |
||||||||||
|
Capital in excess of par value |
3,540 |
3,563 |
3,554 |
||||||||||
|
Retained income |
6,613 |
5,297 |
5,952 |
||||||||||
|
Treasury stock - at cost |
(3,620) |
(2,316) |
(2,569) |
||||||||||
|
Deferred ESOP expense |
(105) |
(154) |
(134) |
||||||||||
|
Accumulated other comprehensive income |
(310) |
(384) |
(287) |
||||||||||
|
Total shareholders' equity |
6,441 |
6,329 |
6,839 |
||||||||||
|
Total liabilities and shareholders' equity |
$ 36,350 |
$ 35,876 |
$ 36,954 |
||||||||||
|
Total common shares outstanding |
336.7 |
377.7 |
369.1 |
||||||||||
|
|