Acosta 1
Individual Company Analysis- Sears Holdings Corporation
Andreina Acosta
December 11,2013
Strategic Management 4305.004
Professor Emily Choi
Acosta 2
Sears Holdings Corporation
EXECUTIVE SUMMARY
Sears Holdings Corporation is the tenth largest retailer and operates in the United
States and Canada. It was founded in 2005, when Kmart Holdings bought Sears Roebuck.
It has 2,500 full-line and specialty retail stores and has 270,000 employees. Aside from
Sears and Kmart, Sears Holdings has an online retailer called Shop Your Way and is
doing very well. They are the leader in various industries and compete against industry
leaders like Wal-Mart and Macy’s.
Sears Holdings hasn’t been able to perform like the industry expects them to.
Looking over their financial statements, their internal and external environment, and
exploring their value chain will give us a better overview of how the company’s
performance and what opportunities the company’s can take advantage of.
FINANCIAL ANALYSIS
Overtime, Sears Holdings Corporation’s financial health has been getting worse
as the years past by. By observing the financial statements, we can conclude that Sears
Holding Corp. is having a difficult time improving its performance. According to their
income statements (table 1), since 2009, their revenues continue to plummet. In between
2009 to 2012, sales have dropped seven million dollars. Impairment charges are a big
factor in decreasing Sears operating income causing them to have a loss. Expenses for
the past four years haven’t really changed. The numbers have stayed constant with the
exception of 2012 where total cost and expenses dropped a 5.5%. Overall, what is hurting
Sears Holdings the most is that their expenses exceed their revenues.
Acosta 3
The balance sheet reinforces what is stated in the income statement about the
company’s financial health. Their current assets continue to decrease (table 2) making the
company more liquid as years continue to pass. In the report of 2011 the current ratio is
1.34 and falls to 1.1 (table 5). Sears is having a hard time covering its short-term debt
and if they let the current ratio fall below one, which they’re not to far from, it can be an
early sign of bankruptcy. Total assets have decreased these past five years. Total
liabilities decreased since 2008, increased in 2011 and fell again in 2012. Total
stockholder’s equity has decreased 66% since 2009. Return on assets and equity ratios
have been negative for the years of 2011 and 2012 (table 5).
Sears Holdings isn’t successful like it’s competitors Wal-Mart and Macy’s. WalMart has higher revenue than Sears, with the exception of Macy’s. Wal-Mart and Macy’s
have positive net income. Wal-Mart is more liquid than Sears but because this company
is giant in the industry it’s liquidity isn’t something to be concerned about because of
their ability to of producing profit. Sears trails behind its competition because it’s having
a hard time being profitable. As stated before, Sears’s return on assets and equity are
negative. If you look at its competitors they all have been finishing the year strong with
high profitability ratios.
EXTERNAL ANALYSIS
General Environment
Our environment is constantly changing. Different trends emerge and industries
have to learn to adapt to these new changes in order to continue to thrive in their
business. Changes can emerge from demographics, sociocultural, political/legal,
technological, economic, and global. Companies use environmental scanning,
Acosta 4
monitoring, and competitive intelligence in order to identify the six segments. Doing this
can help provide a direction as to where a company has decided to partake in the new
trends that are arising.
Sears Holding Corp. is the tenth largest retailer. It carries many products and
provides many services. The aging population continues to increase. The baby boomers
are one of the biggest generations and many of them are retiring or will be retiring soon.
As the years pass, our health isn’t what it was when we were younger. Our immune
system begins to weaken and our senses aren’t sharp like they use to be. This is an
opportunity for Sears Holding Corp. to market their services and products. Sears has eye
care centers in most of their locations. They have an optometrist and have a place to shop
for frames. Some of their newest services are hearing centers and “Link2Life”. At “the
hearing centers, you can get tested, get a cleaning, and have a consultation with the
doctor” (Sears). If in need of hearing aids, you can purchase them and get any
accessories you made need for them. Link2Life offers two products, which are the BOB
4200 and MMS 501. The MMS 501 reminds people when to take their next dosage of
medicine. “BOB 4200 emergency responses for the subscribers in need of care transition
support and/or in need of additional resources in the home, to help keep them safe and
independent” (Sears).
When we look at the capabilities of what a woman can do, we think of Rosie the
Riveter, “We Can Do It!” Because women are a minority, females have to be breath
taking when competing against males. To help women reach their full potential, many
companies have organizations to empower women. Sears Holdings Corp. isn’t an
exception. Sears is an advocate in aiding women in the workforce. They have the
Acosta 5
Women’s Network. The purpose of the network is “to bring meaningful input to the
corporation by channeling the unique attribute and perspectives of all Sears Holdings
Corporation women” (Sears Holdings). We live in a man’s world but women make the
world turn. Sears Holdings is aware that the voice of women is essential to their company
especially when they are the target customers. This helps Sears Holdings grow because
they are assisting women to enhance their talents and in return they are benefited.
Another way that Sear’s is reaching out to women is by their “Latina Smart” program.
The program is a paid internship for young Hispanic women that are interested in a path
of business, fashion, retail, public relations, and marketing. While participating in the
internship, the young women will gain “work experience, develop networking
connections, and receive career development” (Stein). This is such a bold move for Sears
because they’re not just assisting women, but women that are a double minority. They are
promoting higher education while increasing their popularity with women and the
Hispanic community. Sears Holdings Corporation isn’t blind to the gender stratifications
that lie within the community, and they are diminishing the barriers that society builds in
order to help young women thrive in the retail industry. Sears is an advocate for women
because they understand that an unselfish act like “Latina Smart” will result in something
beneficial to their company. It demonstrates the intentions of Sears and makes the
company attractive to work for.
When Congress passes a law towards the retail industry, Sears Holdings Corp has
no choice but to abide by the new law. There are many political and legal procedures that
Sears must adhere to. Two political movements that have affected the retail industry are
The Fair Minimum Wage Act of 2007 and the infamous Sarbanes Oxley Act of 2002.
Acosta 6
The Fair Minimum Wage Act of 2007 affected Sears Holdings by making them increase
their wage expense to pay their employees more than what they previously did. Since
Sears Holdings Corp is publicly traded; Sarbanes Oxley had an affect on them as well.
Big penalties will occur if management materially misstates financial statements. The act
not only forces companies in various industries to have good internal controls but forces
the CEO and CFO to attest that they have verified that financial statements are correct.
The signature of the CEO and CFO ensures the highest level of security to stockholders
and stakeholders. Laws that are passed usually don’t benefit a retailers like Sears. They
result in increasing expenses in various areas to ensure they’re implementing the new
rules and regulations passed by the government.
What’s most fascinating about the world we live in today is the technology. The
Internet has become a commodity that everyone must have at his or her disposal. It is one
of the most popular methods to communicate, it allows people to do their jobs, pay their
expenses, shop, etc. It is a tool with infinite resources. If a company hasn’t been able to
adapt and successfully utilized the Internet to where it’s benefiting the company, then it
will be hard for a company to be successful. Sears Holdings Corp. is no stranger to the
Internet. Although Sears has been in trouble financially for quite sometime, their online
retailer has been able to thrive even in these dark times. “It is the sixth largest online
retailer and has grown 17% in these past 12 months” (Seeking Alpha). If Sears Holdings
wants to salvage their company, a turnaround strategy involving technology may be
Sears’s best decision.
The United States performance is important on a nation level and a global level. A
retail giant like Sears Holdings Corporation’s sales are more volatile to the economy’s
Acosta 7
performance. Consumers spend money on items that are necessities and retract from
spending in bad economic times. When the economy is doing poorly, sales plummet and
prices on goods decrease leading to lower profits or no profit at all. Sears could be forced
to layoff employees and close stores to reduce company expenses. Economic downfalls
can be crucial to Sears Holdings resulting in unpleasant financial statements, which will
cause investors to pull out and being forced to getting rid of exceptional talent, which are
assets to the company.
Global trends don’t impact Sears because their locations are in the United States
and Canada. Their revenues derive from North America.
Stakeholder Analysis
The foundation of a company not only derives from shareholder but stakeholders
as well. Sears Holdings has become as successful as it is because of the people they
employ. Their wonderful people keep the operations of the company going everyday.
Sears’s suppliers are the backbone to the company. Without them, they wouldn’t have
any products to sell. Customers keep are just as important. They are who have kept this
retail giant in the industry for more than 100 years. Lastly, the shareholders are the hope
of the company. They are the people that see the potential in the company and hope to see
the company prosper. The actions that Sears Holdings Corporation takes affect every one
of these stakeholders. Sears must always act in a respectable manner and take the best
decisions because there are many people who invest their money and time with them.
The Competitive Environment
The way a firm adapts and evolves consists of the developments in the industry
environment. The intensity of competition is fairly great for Sears Holdings Corporation
Acosta 8
because they offer a variety of products and services. Sears Holdings competes with
home improvement, department, and automotive maintenance stores to name a few.
Porter’s Five Forces Model of Industry Competition is an analytical tool that can be used
to comprehend the competitive environment that Sears deals with day to day.
The threat of new entrants in the retail industry is low. It’s difficult to compete
with a well-known retailer like Sears. They have strong brand identification and have
customer loyalty. This is the case with their home appliances because they are the market
leader. New entrants would have to advertise heavily to attract Sears’s customers. To
compete in the level that Sears Holdings is in, new entrants are required to have large
financial resources. This is grueling to new entrants because they have to have the capital
and a bank to help support the operations they want to perform.
For a retailer that has a business level strategy that is in the middle of
differentiation and low cost, buyers have high bargaining power. Sears Holdings has no
switching costs for their customers. They are free to go purchase any of their products or
services without getting penalized. Buyers can turn competitors against each other. The
products that Sears offers aren’t differentiated. Their clothing, home appliances, jewelry,
tools, automobile service etc. can be easily be found at other stores.
Suppliers bargaining power is low to moderate for Sears Holdings Corporation.
“Strong supplier relations have been integral to Sears and Kmart throughout their long
histories” (Sears Holdings). This infers that Sears keeps their suppliers happy and the
suppliers keep Sears happy. They reach an agreement where both parties win. Samsung
makes most of its revenues on phone sales. This can cause Samsung to exert more power
to Sears with their home appliance because they don’t represent a large fraction of sales.
Acosta 9
If Samsung didn’t want to supply Sears anymore with their home appliances, this could
really hurt Sears Holdings because they are very well recognized brand and many
consumers like their products. But it could also be favorable opportunity for Sears
because this gives them more of an ability to push their proprietary product, which is
Kenmore. Sears attempts to have as many diverse suppliers. They believe this adds a lot
of value to their business. Because they have so many suppliers, they don’t have that
much bargaining power against Sears Holdings. Sears can easily find an substitute if their
not satisfied with a supplier.
Sears Holdings Corporation offers many services and products. This leaves a big
threat for substitute products and services. There are many stores that can offer surrogates
to what Sears offers. As stated in the previous paragraph, Sears Holdings offers a variety
of services and products. They compete in different industries, so the rivalry among
competitors is very high. With competitors like Wal-Mart, Home Depot, and Macy’s,
Sears has diverse competition. Sears Holdings has to offer low prices like Wal-Mart but
have quality products like Macy’s. This makes things that much more difficult for Sears
because they don’t know which way to fold. Customers are price sensitive. There aren’t
any switching costs, so when given the opportunity competitors lower their prices to
attract potential Sears customers. Sears has had a negative return for the last couple years.
There are high exit barriers for Sears that are requiring them to continue their business
venture regardless of the numbers on the financial statements.
INTERNAL ANALYSIS
Strengths
Acosta 10
“Sears Holdings Corporation is the leading home appliance retail leader as well as
a leader in tools, lawn and garden, fitness equipment and automotive repair and
maintenance”(Sears Holdings). Sears is a leader in several of the industries that they
partake in. This is a strength they possess and this has helped them gain strong company
presence in its industry. They are a leader in many industries so many potential customers
go to Sears because they know that the items they have are of good quality and customers
are always satisfied when they walk out the door. Another strength of Sears Holdings is
the ability of offering many different products and services in their retail stores. Many
customers go to Sears because it’s pretty convenient for them to do many things without
having to go to another location. Customers can drop off their prescription and shop for
clothing while they wait for their prescription.
Weaknesses
What is most apparent about Sears Holdings Corporation, is their financial
statements. “In the third quarter of 2013, same store sales declined 4% at Sears, 2.1% at
Kmart, and 3.1% overall” (Cooper). Their revenues continue to go continue to decrease
and this is a result in the company not earning a profit. When the company continues to
do badly and not have a profit, this forces Sears Holdings to start closing down stores.
“The company has closed 300 stores in the last three years” (Cooper). Investors aren’t
attracted to Sears because of their inability to have solid numbers. Their quick ratios have
been less than one for more than five years now (table 5). This shows that they aren’t able
to pay off their short-term debt on time because of lack of cash. Cash is a very important
current asset. It shows that a company is financially stable. In the statement of cash flow,
Sears Holdings has a negative change in cash. This infers that the company spending
Acosta 11
more than what they are receiving. With hardly any anyone interested in investing in
Sears Holdings, current investors are just waiting to get a piece of the pie once Sears
declares bankruptcy.
VALUE CHAIN ANALYSIS
Like every business, Sears is composed of different segments that together form
the giant retailer. Each one of the segments adds value to the organization, whether it’s a
primary or support activity.
Primary Activities
With more than 2000 stores in North America, Sears Holdings Corporation
spends approximately “$1 billion on transportation” (Sears Holdings). Needless to say,
logistics is very important to Sears Holdings. The logistics department is associated with
warehousing and transporting the goods we see at Kmart and Sears. The merging of the
two companies led them to change their logistics and implement the Fusion
Transportation Intelligence (FTI) in 2009. “The FTI has benefited Sears holdings by
improving communication of information to business partners (internal and external) and
improved ownership of data accuracy by business”(Transportation BI at Sears Holdings).
The people who work in the warehouse add value to the company by helping handle the
products that consumers purchase. The drivers that transport the goods are key to make
sure the products are delivered on time and help keep the appropriate amount of
inventory on hand.
Marketing is critical to an organization’s success. Sears Holdings Corporation is
always trying to stay on top of trends and informs whenever they’re leading an industry.
To attract a younger crowd, Sears and Kmart launched Kardashian Kollection and Sofia.
Acosta 12
Sears Holdings chose some of the most popular women to be the face of their apparel.
They hope younger women will be more inclined to shop at their stores. Sears is the
leader of home appliances. They are able to have that title because they offer quality
products at good prices. Another marketing tactic that Sears Holdings does to attract
customers is competitive pricing. Sears price matches an identical product that’s lower at
a local competitor’s retail or online store. This helps retain customers by preventing them
from visiting other competitors’ stores.
Sears Holdings Corporation is the largest provider of home services. To enhance
that they are the leader in various industries, they vertically integrated to provide
installations and repairs. This was a smart move for Sears Holdings because this
improves the sales of their products. Customers will be more driven to go shop at their
stores not just because of the quality of the products but also because of the quality that
comes with the product, the service.
Support Activities
“Great talent makes good business and for 100 years, this has been true for Sears
Brand” (Sears Holdings). The people a company hires will be the mirror image of the
company. Sears Holdings isn’t ignorant to the world we live in. Although civil rights
laws have been passed, discrimination is still present in today’s society. The human
resource department makes sure they hire the most qualified diverse individuals the
company needs regardless of their sex, origin, sexual orientation, race, etc. Being diverse
is something Sears Holdings prides their success on. “Diversity among employees can
create better performance when it comes to out-of the-ordinary creative tasks such as
product development or cracking new markets” (Stanford Business). When you have
Acosta 13
different people working together, this creates an atmosphere of different thoughts and
views that open the eyes of their peers. Sears Holdings is going through difficult times
and by having a wide variety of diverse people, this can help assist them to steer the
company in a different way that can lead them to success. The way Sears compensates
their employee for their talents is by the Annual Incentive Plan (AIP). “The purpose of
the AIP is to reward eligible employees of Sears Holdings Corporation and it’s
participating subsidiaries and affiliates, for sustained Company fiscal performance.”
(Sears Holdings) When companies acknowledge and reward employees’ hard work, the
employees give back by working harder because they feel appreciated and they will
always be remembered in a good way. Employees are an intangible resource that perfects
the company.
The general administration consists of finance and accounting. These activities
are the operations that are pulling the strings to make the operations flow smoothly. The
finance department “plays a critical role to successfully and accurately forecast and then
implement plans for Sears” (Business Analyst). Finance adds value by making sure there
are enough funds to attain tangible resources and helps management evaluate
performance. Internal auditors are important to the company because they add value and
improve an organization’s operations. They way internal auditors add value is by “1.
Recognizing and analyzing industry, business, and operational risks, 2. Improving the
economy and efficiency of the operation, 3. Ensuring compliance with management
directives, 4. Serving as management’s representative” (Louwers 682). Internal auditors
help mitigate risks, enhance efficiency when they recommend to management that a
particular store or distribution center’s procedures are more cost effective, and help the
Acosta 14
company not sway away from its goals and objectives. “Sears has many distribution
centers it would be feasible for the vice president of materials management to personally
visit and review every individual operation at each distribution center. Therefore, the
reports from the internal audit department may be the only critical objective evaluations
received by that manager regarding certain distribution centers” (Louwers 683). Sears
Holdings social responsibility is to help the heroes of our community. Sears Holdings is
committed to helping our military veterans by providing jobs to qualified candidates and
helping them repair their homes. Sears is on the path to use their resources to help those
that they believe are in need.
Competitor Analysis
Sears Holdings Corporation has diversified into various industries. It’s difficult to
find competitors that offer the exact same products as Sears Holdings. The two closest
competitors to Sears Holdings are Macy’s and Wal-Mart because they offer a wide
selection of products and services just like Sears Holdings. Sear’s competitors are very
industry giants and are very well recognized. With competition like these giants, only one
can lead the pack.
The following is information from Mergent Online and S&P Capital IQ. Sears
Holdings is inferior to most activities when compared to Wal-Mart and Macy’s. When
looking at Sears’s financial statements, Sears has been doing badly prior to the recession
of 2008. So their misfortune can’t be blamed on a weak economy. The only one that
seems to have been affected by the recession of 2008 was Macy’s with a negative net
income that year. Wal-Mart continued operations smoothly because of their ability to
have low prices and have all the commodities needed by consumers. Wal-Mart was the
Acosta 15
carried the substitute products people could afford when they were price sensitive to
Macy’s quality products. After the year of 2008, the companies began to recover.
Although Sears had revenue of $39,854 million for the year of 2012, their expenses
exceed revenues and they aren’t able to produce a substantial amount of operating
income to help combat having a negative net profit. Macy’s is doing a good job at
keeping their COGS to 60% of their sales for the past five years. Sears is spending 72%
or more on percentage of sales for their COGS (table 4). That is 12% more than Macy’s.
Operating income has been a loss for the past two years for Sears Holdings. This means
that Sears Holdings core business isn’t profitable. Macy’s and Wal-Mart both have
attractive operating income with Macy’s being the most profitable in 2012. Lastly, Sears
Holdings net income is negative. This is unfavorable when looking at company ratios.
When looking at the company’s ROA and ROE, Sears Holdings isn’t able to generate any
income with neither their assets nor the money from investors. They have -4.49% ROA
and a -26.01% ROE for 2012. This is very low compared to Wal-Mart’s 8.55% and
22.96%. To end this comparison, we look at cash flow per share. Sears Holdings has a
negative ratio of 2.81% while Macy’s has 5.49% and Wal-Mart has a 7.56% (table 5).
This ratio shows analysts the company’s ability to generate cash. When looking at the net
change in cash, Sears Holdings hasn’t been able to produce cash for the past five years
(table 3). The cash flow per share confirms that Sears Holdings is in a troubled path
because of its inability to produce cash.
STRATEGY COMPARISON
Firm Name
Strategy Highlights
Rationale for
Strategy
Pros and Cons
Acosta 16
Wide variety of
Sears Holdings products that comes
Corporation with services
Macy's Inc.
Wal-Mart
Stores Inc.
To provide good
quality products to
consumers at
reasonable prices
Overall cost
leadership
Not only does Sears
want to provide
products for
customers, but make
their experience with
the product easier.
Pro: Sears has the ability
to earn extra income by
providing a service
because of their product.
Con: People retrain
themselves from
spending money on
services.
Quality over quantity.
The products are
worth the money.
Pro: People usually are
willing to pay for a good
item.
Con: In economic crisis,
people won't buy good
quality items
Consumers are drawn
to lower prices and
being able to earn
money.
Pro: People are price
sensitive and are always
trying choosing the
cheapest item.
Con: the quality of the
products isn't grade A
material.
RECOMMENDATIONS
After looking at Sears Holdings Corporation’s internal, external, financial, and
value chain, there is a good understanding of the company’s health. Sear’s Holdings
performance is poor. Sears has good strengths but their financial numbers overshadow
those strengths. Sears Holdings will declare bankruptcy if they don’t improve their
financial performance. They are at a point of no return. The probability of seeing the
Sears Holdings that thrived in the 90s is slim. Their company focus should be to salvage
the most they can of the company and go a different direction from the one they are on.
Recommendations for the company are to focus on their strengths (home appliances,
tools, lawn and garden, fitness equipment, and automotive repair and maintenance),
become and online retailer (like amazon), and to tap into different global markets.
Diminishing Unnecessary Units | Focus on Strengths
Acosta 17
Although one of Sears Holdings strengths is a wide product and service portfolio,
it has also been its downfall. They have over diversified. They aren’t able to offer the
lowest price or differentiate themselves through their products. They should focus on the
industries where they are successful so they can retain their leadership in the market.
Jewelry and apparel, for example, aren’t products consumers walk into the stores for.
This probably has to do with the fact that the scenery for the two isn’t aesthetically
pleasing. Which is ironic because women are their target customers. Their clothes is
expensive for the quality that is used. It can be compared to Wal-Mart’s low quality
clothing and Wal-Mart’s is at a much lower cost. Sears Holdings has unknown services
that consumers aren’t aware of that are increasing costs. Since they trail the market in
those industries, they should get rid of the segments that aren’t very successful to reduce
costs and concentrate on their home appliances, lawn and garden, fitness, and automotive
section. They could market these sections strongly and this can be very beneficial for
them.
Online Opportunity
In the external analysis, it was mentioned that Sears Holdings was the sixth
largest online retailer and has gown by 17% in the last 12 months. The Shop Your Way is
having huge success. Consumers today can conveniently shop from home without having
to step out. This year it was said on the news that Cyber Monday beat Black Friday. This
gives Sears Holdings an idea as to how people don’t like dealing with crowds or maybe
even sales associates that try to steer them into buying something they didn’t want. They
can dramatically reduce expenses if they became a solely online retailer like Amazon.
Acosta 18
The company’s workforce would decrease and wage expense would decrease as well.
They would reduce rent expense and overhead costs.
Globalization
Lastly, my final recommendation is expanding into global markets. Sears
Holdings is only in North America. This is a weakness because they are only reliant on
sales that are made in the US and Canada. If the economy goes into another recession,
this hits Sears Holdings twice as hard because they don’t have income coming in from
another direction. Although their proprietary brands do well in the North America, Sears
Holdings can extend the life of their products by taking them into foreign markets.
CONCLUSION
I strongly believe that Sears Holdings should start off by getting rid of the
divisions that don’t produce much revenue in the retail stores. I suggest the company
implement this by diminishing services that no one knows they provide like Sears
Cleaning, Sears Garage Solutions, and Sears Flowers or products that aren’t gainful (e.g.
jewelry and apparel). I argue this is more important because of their inability to lower
expenses. The only constraint to this would be the getting rid of apparel. Although it’s
not it’s most promising division, many people do like the clothing brands Sears and
Kmart offer. If decreasing units isn’t successful, the second strategy I argue that would
be most beneficial would be becoming an online retailer. The way they would implement
this would be to moderately start closing the slower stores. The constraint of doing this
would be this would the disruption of the culture. Sears has had retail stores for more
than 80 years and Kmart for more than 100. Even though most customers do enjoy
shopping at the comfort of their home, they also like to go see the products and get an
Acosta 19
expert opinion occasionally. Although globalization is a good idea, I think it comes with
more constraints than good. They would be taking a huge risk hoping they would
advance in the foreign markets. Economic risk would arise where they would have to
abide by the laws of the country. Management risk would also rise because of the lack of
knowledge of the country/culture. They wouldn’t know how to manage employees
because of the different background.
Sears Holdings Corporation is a very well recognized retailer that has faced
adversity since the merge of Kmart and Sears Roebuck. They were hoping to bring
synergy to both the companies by diversifying and increase shareholder value.
Unfortunately, after the merger the Basic EPS fell to $5.62 from $12.39. Since the
merger, they haven’t been able to prosper like they expected to. Sears Holdings is a tough
position where they’re just hoping for the best right now and that somehow they have a
turnaround that can help the continue to have a presence in the retail industry.
Acosta 20
Table 1.
Source: S&P Capital IQ. "S&P Capital IQ." S&P Capital IQ. N.p., n.d. Web. 14 Dec.
2013.
Acosta 21
Table 2.
Source: S&P Capital IQ. "S&P Capital IQ." S&P Capital IQ. N.p., n.d. Web. 14 Dec.
2013.
Acosta 22
Table 3.
Source: S&P Capital IQ. "S&P Capital IQ." S&P Capital IQ. N.p., n.d. Web. 14 Dec.
2013.
Acosta 23
Table 4.
Common Size Income Statement
Wal-Mart Stores Inc.
Macy's, Inc.
Sears Holdings
Corporation
% of Revenue
Revenue
COGS
Gross Profit
Operaing Expenes
Operating Income
Interest expense
Income tax expense
Net income
Jan-09
100.00%
72.87%
27.13%
25.79%
1.34%
-0.48%
0.18%
0.11%
Jan-10
100.00%
72.27%
27.73%
25.74%
1.99%
-0.50%
0.26%
0.54%
Jan-11
100.00%
72.63%
27.37%
26.42%
0.95%
-0.60%
0.06%
0.31%
Jan-12
100.00%
74.18%
25.82%
27.36%
-1.54%
-0.60%
3.29%
-7.55%
Feb-13
100.00%
73.53%
26.47%
28.51%
-2.04%
-0.43%
0.11%
-2.33%
Revenue
COGS
Gross Profit
Operaing Expenes
Operating Income
Interest expense
Income tax expense
Net income
Jan-09
100.00%
60.30%
39.70%
34.07%
5.63%
-2.25%
-0.65%
-19.18%
Jan-10
100.00%
59.49%
40.51%
34.32%
6.19%
-2.37%
0.76%
1.40%
Jan-11
100.00%
59.29%
40.71%
33.04%
7.68%
-2.03%
1.89%
3.39%
Jan-12
100.00%
59.60%
40.40%
31.36%
9.04%
-1.68%
2.70%
4.76%
Feb-13
100.00%
59.73%
40.27%
30.64%
9.63%
-1.52%
2.77%
4.82%
Revenue
COGS
Gross Profit
Operaing Expenes
Operating Income
Interest expense
Income tax expense
Net income
Jan-09
100.00%
75.19%
24.81%
19.18%
5.63%
-0.47%
1.76%
3.31%
Jan-10
100.00%
74.52%
25.48%
19.53%
5.95%
-0.46%
1.75%
3.52%
Jan-11
100.00%
74.66%
25.34%
19.29%
6.05%
-0.48%
1.80%
3.89%
Jan-12
100.00%
74.98%
25.02%
19.08%
5.94%
-0.48%
1.78%
3.51%
Jan-13
100.00%
75.13%
24.87%
18.94%
5.93%
-0.44%
1.70%
3.62%
Source: S&P Capital IQ. "S&P Capital IQ." S&P Capital IQ. N.p., n.d. Web. 14 Dec.
2013.
Acosta 24
Table 5.
Financial Ratios
Profitability Ratios
ROA % (Net)
Sears Holdings
Macy's Inc.
Wal-Mart Stores
02/02/2013
02/02/2013
01/31/2013
(4.49)
6.1
8.55
(26.01)
21.92
22.96
0.15
0.43
0.2
Current Ratio
Debt Management
1.1
1.55
0.83
LT Debt to Equity
0.71
1.12
0.54
Total Debt to Equity
Asset Management
1.13
1.15
0.71
Total Asset Turnover
1.93
1.26
2.36
Receivables Turnover
58.96
73.72
73.65
3.68
3.17
8.34
Cash Flow per Share
(2.81)
5.49
7.56
Book Value per Share
25.99
15.61
23.04
ROE % (Net)
Liquidity Ratios
Quick Ratio
Inventory Turnover
Per Share
Source: Mergent Online. "Mergent Online." N.p., n.d. Web. 14 Dec. 2013
Acosta 25
Works Cited
"Business Analyst." Business Analyst. N.p., n.d. Web. 14 Dec. 2013.
Cooper, Ted. "3 Reasons to Sell Sears Holdings Right Now." 3 Reasons to Sell Sears
Holdings Right Now. N.p., 7 Dec. 2013. Web. 14 Dec. 2013.
Louwers, Timothy J. "Module D." Auditing & Assurance Services. New York: McGrawHill/Irwin, 2011. 682-83. Print.
Mergent Online. "Mergent Online." N.p., n.d. Web. 14 Dec. 2013.
Sears Holdings. "Sears Holdings Career Center." Sears Holdings Career Center. N.p.,
n.d. Web. 14 Dec. 2013.
Sears Holdings. "Sears Holdings Career Center." Sears Holdings Career Center. N.p.,
n.d. Web. 14 Dec. 2013.
Sears Holdings. "Sears Holdings Corporation Annual Incentive Plan." Sears Holdings
Corporation Annual Incentive Plan. N.p., 8 Mar. 2012. Web. 13 Dec. 2013.
Sears Holdings. "Transportation Manager, Outbound." LinkedIn. N.p., Oct.-Nov. 2013.
Web. 14 Dec. 2013.
Sears Holdings. "Vendor/Supplier Diversity." Sears Holdings Supplier Diversity
Overview. N.p., n.d. Web. 14 Dec. 2013.
Sears. "Sears Hearing Aid Centers." Find Hearing Aid Centers Near You at Sears. N.p.,
n.d. Web. 14 Dec. 2013.
Sears. "Sears Link2Life." Personal Emergency Response. N.p., 2012. Web. 14 Dec.
2013.
Sears. "Sears: Online Department Store Featuring Appliances, Tools, Fitness Equipment
and More." Sears: Online Department Store Featuring Appliances, Tools, Fitness
Acosta 26
Equipment and More. N.p., n.d. Web. 14 Dec. 2013.
Seeking Alpha. "Can Sears Be The Next Amazon?" Sears Holdings Corp (SHLD):
[Macy's, Inc.]. N.p., 5 Nov. 2013. Web. 14 Dec. 2013.
S&P Capital IQ. "S&P Capital IQ." S&P Capital IQ. N.p., n.d. Web. 14 Dec. 2013.
Stanford Business. "Stanford Graduate School of Business." Diversity and Work Group
Performance. N.p., 1 Nov. 1991. Web. 13 Dec. 2013.
Stein, Lindsay. "Kmart Empowers Hispanic Women with Internships." PRWeek US. N.p.,
19 Oct. 2012. Web. 14 Dec. 2013.
"Transportation BI at Sears Holdings." N.p., n.d. Web. 12 Dec. 2013.