Sears Holdings narrows losses in Q4, FY2012

HOFFMAN ESTATES, Ill. — Kmart's comps declined 3.7% for the fourth quarter and fiscal year 2012, while parent company Sears Holdings' integrated online business grew by 25% for the quarter and 17% for the year, Sears Holdings said Thursday.

Sears' U.S. stores, on the other hand, posted a 0.8% increase in comps for the fourth quarter and a 1.4% decrease for the year, while the company's Canadian stores saw comps decline by 3.8% for the quarter and 5.6% for the year.

Members of the Shop Your Way loyalty program drive more than 50% of sales at Sears' U.S. stores and at Kmart for the quarter and year as the company posted a $489 million loss for the quarter and $930 million for the year, compared with respective losses of $2.4 billion and $3.1 billion last year.

In a letter to shareholders Thursday, chairman and CEO Edward Lampert touted the Shop Your Way program as "more than just a typical loyalty program" and highlighted its role in transitioning Sears to a membership-based company. "It is a comprehensive platform that transforms customer transactions into relationships and allows us to know our Members better and to serve them better as well," Lampert wrote. "It includes the rewards program, our shopyourway.com social shopping platform, our SHOP YOUR WAY Max free shipping platform and a variety of other applications and components. Collectively, these elements change the way we do business both inside and outside the company."

Sears Holdings' sales for the quarter were $12.3 billion, compared with $12.5 billion in fourth-quarter 2011, while sales were $39.9 billion for the fiscal year, compared with $41.6 billion in fiscal year 2011.

"Sears Holdings made progress in 2012 improving the profitability of our business, but we know there's more work to be done in 2013," Lampert said; former CEO Lou D'Ambrosio stepped down as CEO in January due to family health matters. "Our focus continues to be on our core customers, our members and finding ways to provide them value and convenience through integrated retail and our Shop Your Way membership platform. We have invested significantly in our online e-commerce platforms, our membership rewards program and the technology needed to support these initiatives." 

The company attributed the decrease in Kmart's comps to a "significant" decrease in the consumer electronics category, as well as declines in the grocery, household and pharmacy categories, with the pharmacy decline reflecting the generic drug wave.