Sears 2010 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”) on March 24,
2005. We are a broadline retailer with 2,201 full-line and 1,354 specialty retail stores in the United States
operating through Kmart and Sears and 483 full-line and specialty retail stores in Canada operating through Sears
Canada Inc. (“Sears Canada”), a 92%-owned subsidiary.
Business Segments
During 2010, we operated three reportable segments: Kmart, Sears Domestic and Sears Canada. Financial
information, including revenues, operating income, total assets and capital expenditures 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
At January 29, 2011, Holdings operated a total of 1,307 Kmart stores across 49 states, Guam, Puerto Rico,
and the U.S. Virgin Islands. This store count consists of 1,278 discount stores, averaging 93,000 square feet, and
29 Super Centers, averaging 169,000 square feet, and includes 6 Kmart stores that we have announced plans to
close in early 2011. Most Kmart stores are one-floor, free-standing units that carry a wide array of products
across many merchandise categories, including consumer electronics, seasonal merchandise, outdoor living, toys,
lawn and garden equipment, food and consumables and apparel, 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) and services. At January 29, 2011, 268 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 981 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 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 has continued to expand its layaway program, which allows
customers to cost-effectively finance their purchases. In addition, we have expanded the ways our customers can
receive their purchases, allowing our customers to buy online and pick up in store. This service, powered by
MyGofer, is now available in over 600 Kmart stores via either MyGofer.com or Kmart.com. Kmart also sells its
products through its kmart.com website.
Sears Domestic
At January 29, 2011, Sears Domestic operations consisted of the following:
• Full-line Stores—894 broadline stores, of which 842 are full-line stores located across all 50 states and
Puerto Rico. These stores are primarily mall-based locations averaging 133,000 square feet. Full-line
stores offer a wide array of products and service offerings across many merchandise categories,
including home appliances, consumer electronics, tools, sporting goods, outdoor living, lawn and
garden equipment, certain automotive services and products, such as tires and batteries, home fashion
products, as well as apparel, footwear, jewelry 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, at January 29, 2011, we operated 52 Sears
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