Sears 2011 Annual Report Download - page 2

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PART I
Item 1. Business
General
Sears Holdings Corporation (“Holdings”) is the parent company of Kmart Holding Corporation (“Kmart”)
and Sears, Roebuck and Co. (“Sears”). Holdings (together with its subsidiaries, “we,” “us,” “our,” or the
“Company”) 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 2,172 full-line and 1,338 specialty retail
stores in the United States operating through Kmart and Sears and 500 full-line and specialty retail stores in
Canada operating through Sears Canada Inc. (“Sears Canada”), a 95%-owned subsidiary.
Business Segments
During 2011, we operated three reportable segments: Kmart, Sears Domestic and Sears Canada. Financial
information, including revenues, operating income (loss), total assets and capital expenditures for each of these
business segments is contained in Note 17 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” as well as Note 17.
Kmart
At January 28, 2012, Holdings operated a total of 1,305 Kmart stores across 49 states, Guam, Puerto Rico,
and the U.S. Virgin Islands. This store count consists of 1,279 discount stores, averaging 94,000 square feet, and
26 Super Centers, averaging 169,000 square feet, and includes 60 Kmart stores that we plan to close in the first
half of 2012. 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. Beginning in 2011, we now offer an assortment of major appliances, including Kenmore-
branded products, in virtually all of our locations. There are 978 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 22 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 continues to offer 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 900 Kmart stores via either myGofer.com or kmart.com. Kmart also sells its products through
its kmart.com website.
Sears Domestic
At January 28, 2012, Sears Domestic operations consisted of the following:
• Full-line Stores—867 broadline stores, of which 834 are full-line stores located across all 50 states and
Puerto Rico. These stores are primarily mall-based locations averaging 134,000 square feet, and
include 34 stores that we plan to close in the first half of 2012. Full-line stores offer a wide array of
products and service offerings across many merchandise categories, including 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 28, 2012, we operated 33 Sears Essentials/Grand stores located in 19 states
which include 17 stores that we plan to close in the first half of 2012. In 2011, we converted 17 Sears
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