Sears 2014 Annual Report Download - page 43

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43
Sears Canada
Sears Canada conducts similar retail operations as Sears Domestic. As previously noted, the Company
completed a rights offering for a portion of its interest in Sears Canada in the third quarter of 2014. As such, the
Company no longer maintained control of Sears Canada resulting in the de-consolidation of Sears Canada on
October 16, 2014.
Sears Canada results and key statistics were as follows:
millions, except number of stores 2014 2013 2012
Merchandise sales and services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,088 $ 3,796 $ 4,310
Comparable sales % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8.0)% (2.7)% (5.6)%
Cost of sales, buying and occupancy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,586 2,780 3,075
Gross margin dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 1,016 1,235
Gross margin rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.0 % 26.8 % 28.7 %
Selling and administrative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 1,085 1,251
Selling and administrative expense as a percentage of total revenues . . 28.9 % 28.6 % 29.0 %
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 92 105
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 13 295
(Gain) loss on sales of assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 (538) (170)
Total costs and expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,254 3,432 4,497
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (166) $ 364 $ (187)
Adjusted EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (71) $ 3 $ 69
Number of:
Full-line stores. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 118 118
Specialty stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 331 357
Total Sears Canada Stores. . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 449 475
2014 Compared to 2013
Revenues and Comparable Store Sales
Sears Canada's revenues decreased $1.7 billion for 2014 as compared to the same period last year primarily
driven by the de-consolidation of Sears Canada which occurred on October 16, 2014 and accounted for
approximately $1.3 billion of the revenue decline. Revenues also declined due to an 8.0% decline in comparable
store sales through the date of de-consolidation, which accounted for $161 million of the decline, as well as the
effect of having fewer stores in operation, which accounted for $97 million of the decline. Sears Canada also
experienced declines in the Home Services business, which accounted for $27 million of the decline. Revenues also
included a decrease of $125 million due to foreign currency exchange rates.
Gross Margin
Gross margin dollars decreased $514 million in 2014 to $502 million and included a $28 million decrease due
to the impact of exchange rates and was affected by the de-consolidation on October 16, 2014.
Sears Canada’s gross margin rate decreased 280 basis points to 24.0%, in 2014 from 26.8% in 2013.
Selling and Administrative Expenses
For 2014, Sears Canada’s selling and administrative expenses decreased $482 million, and included a decrease
of $37 million due to the impact of exchange rates and was affected by the de-consolidation on October 16, 2014.