Fourth-quarter 2004 net income for the retailer was $378 million, compared with net income of $2.7 billion in the fourth quarter of 2003, but last year's figures were pushed vastly upward by the sale of both Sears' credit business and National Tire & Battery, both of which were closed in the fourth quarter of 2003. The 4Q 2004 income represented $1.76 per share, slightly ahead of analysts' forecasts.
Sears Canada—the retailer has 122 department stores, and 47 Sears Home stores, in that country—also turned in a sluggish fourth quarter. Overall, on a Canadian dollar basis, Sears Canada comparable store sales decreased 1.7% in the fourth quarter of 2004, compared with 4Q 2003. Still, Brent Hollister, president and CEO Sears Canada, noted optimistically in Thursday's Sears Canada earnings call that "we have a strong franchise that we know is capable of delivering better results than we experienced in 2004."
In the midst of its proposed acquisition by Kmart—which Sears chairman and CEO Alan J. Lacy called "early in the process" during Sears' fourth quarter earnings conference call on Thursday—mum was the word on that deal, which might close as early as March. "Due to the ongoing regulatory reviews, we're unable to provide any significant information about the merger, and we won't be hosting a question-and-answer session after our remarks," Lacy said. He also declined to comment on earnings expectations for fiscal 2005 for either Sears or the projected new Kmart-Sears entity, which will be known as Sears Holdings Corp.
Overall, last year wasn't especially kind to Sears, with Lacy attributing tepid results to disruptions from the company's efforts to refurbish its stores, stiff competition, and "sub-optimal" inventory levels, particularly in apparel. He did cite some progress in the company's merchandising efforts, however. In the wake of reconfiguring Sears' consumer electronics offerings throughout the chain, which was completed in September, "same-store sales of consumer electronics increased in the low single-digits in the fourth quarter," he said.
He also touted Sears as an appliance purveyor. "We sell more major appliances than Lowe's, Home Depot and Best Buy combined," he said, adding that Sears' market share nationally for major appliances stood at 37.5% in the fourth quarter of 2004, 100 basis points more than the same quarter a year earlier.
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