Sears 2009 Annual Report Download - page 20

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
We have divided our “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” (“MD&A”) into the following six sections:
• Overview of Holdings
• Results of Operations:
Fiscal Year
Holdings’ Consolidated Results
Business Segment Results
• Analysis of Consolidated Financial Condition
• Contractual Obligations and Off-Balance Sheet Arrangements
• Application of Critical Accounting Policies and Estimates
• Cautionary Statement Regarding Forward-Looking Information
The discussion that follows should be read in conjunction with the consolidated financial statements and
notes thereto included in Item 8.
OVERVIEW OF HOLDINGS
Holdings is the parent company of Kmart and Sears. We are a broadline retailer and, at the end of fiscal
2009, had 2,235 Kmart and domestic full-line stores 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, a 73%-owned subsidiary.
We currently conduct our operations in three reportable business segments: Kmart, Sears Domestic and
Sears Canada. The nature of operations conducted within each of these segments is discussed within the
“Business Segments” section of Item 1 in this report on Form 10-K. Our business segments have been
determined in accordance with accounting standards regarding the determination, and reporting, of business
segments.
The retail industry is highly competitive and as such, Holdings faces significant challenges, including the
current macroeconomic environment, as many of our product categories are impacted by the housing market and
availability of credit to our customers. In light of these challenges, we remain focused on leveraging our brand
strength and service offerings as we strive to improve our multi-channel capabilities and give customers reasons
to shop with us more frequently. Over the past 12 months, we have worked hard to improve our stores, while also
taking steps to reposition ourselves for retail in the 21st century by adhering to the five key pillars of our
strategy:
•Creating lasting relationships with customers by empowering them to manage their lives. From our
Kenmore appliances, to our home and auto services; from our Lands’ End apparel, to our Sears and
Kmart stores and online experiences, we interact with millions of customers every day. This gives us
the foundation to strengthen and extend our relationships with our customers. During 2009, we focused
on initiatives that increased the breadth and depth of our product offerings, improved our multi-channel
capabilities, created platforms that better engage with customers, and improved our ability to deliver
customer services and solutions. Specifically, we grew our online engagement platforms, MySears.com
and MyKmart.com, allowing our customers to interact with each other and us and get advice from
other customers before they buy. We also created the ShopYourWay rewards program, allowing us to
leverage technology to improve the customer purchase cycle. We continuously aspire to provide our
customers with a platform for whatever they want, wherever and whenever they want it.
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