Sears 2012 Annual Report Download - page 21

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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” 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, the parent company of Kmart and Sears, was formed in connection with the March 24, 2005 Merger
of these two companies. We are an integrated retailer with significant physical and intangible assets, as well as
virtual capabilities enabled through technology. We currently operate a national network of stores with 2,019 full-
line and 54 specialty retail stores in the United States, operating through Kmart and Sears, and 475 full-line and
specialty retail stores in Canada operating through Sears Canada Inc. (“Sears Canada”), a 51%-owned subsidiary.
Further, we operate a number of websites under the Sears.com and Kmart.com banners which offer more than 60
million products and provide the capability for our customers to engage in cross-channel transactions such as buy
online/pick-up in store; buy in store/ship to home; and buy online, return in store. We are also the home of SHOP
YOUR WAY™, a social shopping experience where members have the ability to earn points, receive additional
benefits and interact/shop with each other through shopyourway.com. The Company is the leading home appliance
retailer as well as a leader in tools, lawn and garden, fitness equipment and automotive repair and maintenance. Key
proprietary brands include Kenmore®, Craftsman®and DieHard®. We also maintain a broad apparel offering
including such well-known labels as Lands' End®, the Kardashian Kollection, Jaclyn Smith, Joe Boxer, Sandra Lee
and Levi's, as well as Sofia by Sofia Vergara and the Country Living Home Collection. We are the nation's largest
provider of home services, with more than 14 million service calls made annually.
We currently conduct our operations in three 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.
Our focus continues to be on our core customers, our Members, and finding ways to provide them value and
convenience through Integrated Retail and our SHOP YOUR WAY Membership platform. We have invested
significantly in our online ecommerce platforms, our Membership rewards program and the technology needed to
support these initiatives. Our actions in 2012 were guided by the following strategic priorities:
Innovation Around Our Customers and Members
We continue to focus on building and growing a deeply engaging membership program, called SHOP YOUR
WAY. SHOP YOUR WAY is more than just a typical loyalty program. It is a comprehensive platform that transforms
customer transactions into relationships and allows us to know our Members better and to serve them better as well.
It includes the rewards program, our shopyourway.com social shopping platform, our SHOP YOUR WAY Max free