Sears 2008 Annual Report Download - page 2

PART I
Item 1. Business
General
Sears Holdings Corporation (“Holdings,” “we,” “us,” “our,” or the “Company”) is the parent company of
Kmart Holding Corporation (“Kmart”) and Sears, Roebuck and Co. (“Sears”). Holdings was formed as a
Delaware corporation in 2004 in connection with the merger of Kmart and Sears (the “Merger”). The Merger,
completed on March 24, 2005, combined two of America’s oldest existing retail entities, both with origins dating
to the late 1800s. We are a broadline retailer with 2,297 full-line and 1,233 specialty retail stores in the United
States operating through Kmart and Sears and 388 full-line and specialty retail stores in Canada operating
through Sears Canada Inc. (“Sears Canada”), a 73%-owned subsidiary.
Business Segments
During fiscal 2008, we operated three reportable segments: Kmart, Sears Domestic and Sears Canada.
Financial information, including revenues, operating income and total assets for each of these business segments
is contained in Note 18 of Notes to Consolidated Financial Statements. Information regarding the components of
revenue for Holdings is included in Item 7, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations.”
Kmart
As of January 31, 2009, Holdings operated a total of 1,368 Kmart stores across 49 states, Guam, Puerto
Rico, and the U.S. Virgin Islands. This store count consist of 1,321 discount stores, averaging 92,000 square feet,
and 47 Super Centers, averaging 166,000 square feet, and includes 16 Kmart stores that we have announced
plans to close in early 2009. Most Kmart stores are one-floor, free-standing units that carry a wide assortment of
general merchandise, including products sold under such well-known labels as Jaclyn Smith, Joe Boxer and
Martha Stewart Everyday, and certain proprietary Sears brand products, such as Kenmore, Craftsman, and
DieHard brand products, and services. As of January 31, 2009, approximately 290 Kmart stores were selling an
assortment of major home appliances, including Kenmore-branded products. Kmart began operating its own
footwear business, which had previously been operated by a third party, in January 2009. There are 1,025 Kmart
stores which also operate in-store pharmacies. The Super Centers generally operate 24 hours a day and combine a
full-service grocery along with the general merchandise selection of a discount store. There are also 20 Sears
Auto Centers operating in Kmart stores. Sears Auto Centers offer a variety of professional automotive repair and
maintenance services as well as a full assortment of automotive accessories. Kmart also sells its products through
its kmart.com website.
Sears Domestic
As of January 31, 2009, Sears Domestic operations consisted of the following:
• Full-line Stores—929 broadline stores of which 856 are full-line stores located across all 50 states and
Puerto Rico, primarily mall-based locations averaging 133,000 square feet. Full-line stores offer a wide
array of products across many merchandise categories, including home appliances, consumer
electronics, tools, fitness, lawn and garden equipment, certain automotive services and products, such
as tires and batteries, home fashion products, as well as apparel, footwear and accessories for the whole
family. Our product offerings include our proprietary Kenmore, Craftsman, DieHard, Lands’ End,
Covington, Apostrophe, and Canyon River Blues brand merchandise. Also, as of January 31, 2009, we
operated 73 Sears Essentials/Grand stores located in 26 states. These stores are primarily free-standing
units averaging 115,000 square feet and offering health and beauty products, pantry goods, household
products and toys in addition to the offerings of the typical mall-based store. There are 41 Sears
Essentials/Grand stores which operate in-store pharmacies. Also, 782 Sears Auto Centers are operated
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