Sears 2013 Annual Report Download - page 22

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22
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 1,980 full-
line and specialty retail stores in the United States, operating through Kmart and Sears, and 449 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 110
million products and provide the capability for our members and customers to engage in cross-channel transactions
such as free store pickup; buy in store/ship to home; and buy online, return in store. We are also the home of Shop
Your WaySM, a free member-based social shopping platform that offers rewards, personalized services and a unique
experience. Shop Your Way connects all of the ways members shop - in store, at home, online and by phone.
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 in 2013 revolved around continuing our transformation into a member-centric retailer leveraging
Shop Your Way and Integrated Retail, which we believe will position us for enhanced growth and profitability to
create long-term shareholder value. The investments we made throughout 2013 are enabling us to learn more about
how our members want to shop so that we can develop deeper relationships with them and provide them with access
to the widest possible assortment of products and services. Looking ahead, we intend to continue to enhance our
financial flexibility to support and drive our transformation. While transformations of this size are challenging, we
believe that the changes we are making through Shop Your Way and Integrated Retail will benefit us in the changing
retail landscape.
Our transformation is guided by these five key pillars:
• Create lasting relationships with members by empowering them to manage their lives
• Attain best in class productivity and efficiency
• Build our brands
• Reinvent the Company continuously through technology and innovation
• Reinforce "The SHC Way" by living our values every day