Going forward, though, chairman Edward Lampert is thinking outside the box, so to speak, and in a letter to shareholders said the retailer would have to consider new ways of reaching customers.
“We need to be prepared to supply them where and when our customers want,” said Lampert. “In many cases, that may not be exclusively through our stores. Instead, it could be online, via catalogue, or possibly even through other retail outlets.”
For the quarter ended Feb. 2, net income fell 47.5 percent to $426 million, or $3.17 a diluted share, from $811 million, or $5.27, in the same period last year on sales that shed 6.8 percent to $15.1 billion from $16.2 billion. The gross margin rate dropped to 27.7 percent from 29.7 percent. Same-store sales fell 4.5 percent during the quarter.
For the year, net income slipped 45 percent to $826 million on a sales decline of 4.3 percent to $50.7 billion.
The retailer said in its quarterly report that the drop in same-store sales reflects “increasing competition and the impact of unfavorable economic conditions, including a deteriorating housing market, a decrease in consumers’ disposable income and the increased costs of consumer staples.”
At the end of the quarter, the company also reported a lower cash position. Cash and cash equivalents were $1.6 billion, which compares with $3.8 billion at the close of the prior year’s quarter. “For the year, the significant uses of our cash included $2.9 billion for share repurchases, approximately $580 million in capital expenditures, debt payments (net of new borrowings) of approximately $600 million, and approximately $220 million of contributions to our pension plans,” the company stated.
For further coverage, see Thursday’s issue of WWD.