Sears 2015 Annual Report Download - page 42

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Operating Loss
Sears Domestic reported an operating loss of $920 million in 2014 compared to $940 million in 2013. Sears
Domestic’s operating loss in 2014 included significant items which aggregated to an operating expense of $87
million. Operating loss in 2013 included significant items which aggregated to an operating expense of $112 million.
Excluding these items, Sears Domestic would have reported an operating loss of $833 million and $828 million in
2014 and 2013, respectively. The slight increase in operating loss in 2014 was driven by the above noted decline in
sales and gross margin, partially offset by decreases in selling and administrative and depreciation expenses.
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Company no longer maintained control of Sears Canada resulting in the de-consolidation of Sears Canada on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 through the date of de-consolidation were as follows:
millions, except number of stores 2014 2013
Merchandise sales and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,088 $3,796
Comparable sales % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8.0)% (2.7)%
Cost of sales, buying and occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,586 2,780
Gross margin dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 1,016
Gross margin rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.0 %26.8 %
Selling and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 1,085
Selling and administrative expense as a percentage of total revenues. . . . . . . . . . . 28.9 %28.6 %
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 92
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 13
(Gain) loss on sales of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 (538)
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,254 3,432
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(166) $ 364
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(71) $ 3
Number of:
Full-line stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 118
Specialty stores. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 331
Total Sears Canada Stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 449
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