Sears 2009 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 2,235 full-line and 1,284 specialty retail stores in the United
States operating through Kmart and Sears and 402 full-line and specialty retail stores in Canada operating
through Sears Canada Inc. (“Sears Canada”), a 73%-owned subsidiary.
Business Segments
During fiscal 2009, 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 30, 2010, Holdings operated a total of 1,327 Kmart stores across 49 states, Guam, Puerto
Rico, and the U.S. Virgin Islands. This store count consists of 1,292 discount stores, averaging 93,000 square
feet, and 35 Super Centers, averaging 168,000 square feet, and includes 21 Kmart stores that we have announced
plans to close in early 2010. 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 and Joe Boxer, and
certain proprietary Sears brand products (such as Kenmore, Craftsman, and DieHard brand products) and
services. As of January 30, 2010, 274 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 1,021 Kmart stores that 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 30, 2010, Sears Domestic operations consisted of the following:
• Full-line Stores—908 broadline stores, of which 848 are full-line stores located across all 50 states and
Puerto Rico, and which are 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. In
addition, as of January 30, 2010, we operated 60 Sears Essentials/Grand stores located in 24 states.
These stores are primarily free-standing units averaging 116,000 square feet, offering health and beauty
products, pantry goods, household products and toys in addition to the offerings of the typical mall-
based store. There are 30 Sears Essentials/Grand stores that operate in-store pharmacies. We also have
775 Sears Auto Centers operating in association with full-line stores and 23 Sears Auto Centers
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