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Sears reports $2.4 billion Q4 loss

BY HBSDEALER Staff

Sears Holdings Corp. has reported a loss of $2.4 billion in the fourth quarter, compared with a profit of $374 million in the year-ago period. And in a move long anticipated by some analysts, the chain also announced plans to tap into its massive real estate holdings to help make up for its faltering retail performance.

Revenue slipped 4% to $12.5 billion from $13 billion. Same-store sales fell 4.1% during the quarter at Sears and 2.7% at Kmart.

The parent to Sears and Kmart disclosed that it plans to separate its smaller Hometown and Outlet stores as well as some hardware stores to raise $400 million to $500 million, and will sell 11 stores to mall owner General Growth Properties to raise $270 million. That deal, which includes stores that are currently located on GGP properties, is expected to close in April. The stores will continue to operate as Sears locations into 2013 with final closing dates to be determined and announced later this year, according to Sears Holdings.

"We’re executing actions to unlock the value of our portfolio and assets," said Sears CEO Lou D’Ambrosio in a call with analysts.

The plans, which follow news in December that the company would close at least 100 stores to raise cash, are part of the retailer’s aggressive turnaround strategy, which has also included job cuts.

Sears said its quarterly performance was hurt by high costs for cotton and fuel, too-high inventory, and unseasonable weather that led to lower sales of winter gear. The company also cited low consumer demand for two of its biggest categories, appliances and consumer electronics.

For the year, net loss totaled $3.1 billion, compared with net income of $133 million.

Revenue fell 3% to $41.57 billion from $42.66 billion a year ago.

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Toro Co. has a record first quarter

BY Ken Clark

The Toro Co. reported gains in sales and net earnings for its fiscal first quarter ended Feb. 3.

Looking specifically at the Bloomington, Minn.-based company’s residential segment reveals the same upward trend. Residential segment net sales for the fiscal 2012 first quarter totaled $137.6 million, up 11.6% from the same period last year. The company said consumers’ continued acceptance of the residential zero-turn riding product and retailers’ desire to take walk power mower products earlier generated strong shipments of spring goods.

Residential segment earnings for the fiscal 2012 first quarter totaled $12.6 million, up 10.9% from $11.4 million in the same period last year.

Across the total company, which includes a professional segment where golf and landscape contractor equipment showed strength, Toro reported record sales of $423.8 million, up 10.6%. Net earnings were $19.9 million, up 15.3%.

“Looking beyond our existing business, our most recently announced acquisition of the Astec underground products presents substantial opportunities in adjacent markets. As always, now begins the challenge of successfully integrating the acquisition into the company’s operations," said Michael Hoffman, Toro’s chairman and CEO.

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Home Depot points to Q4 winners

BY Ken Clark

The Home Depot this week announced fourth-quarter sales of $16 billion, a 5.9% increase over the same quarter last year. What happened? From Craig Menear’s perspective, the answer involves execution, warm weather and strength in maintenance and repair categories.

"Warmer-than-expected weather encouraged customers to tackle exterior projects," said Menear, Home Depot’s executive VP merchandising. A "nimble response," he said, led to double-digit comps in gutters, roofing, vinyl siding, patio furniture, fencing, exterior paint, pressure washers, exterior lighting and concrete.

The company said the growth was widespread — all 40 top markets saw positive comps.

Menear cited the departments that outperformed the company’s average comp: tools, electrical, building materials, paint, lumber, lighting, outdoor garden and flooring.

Other categories were merely described as "positive comps" — hardware, bath, kitchen, indoor garden and plumbing. And on the negative side of the ledger was millwork, where negative comps were probably caused by an anniversary against the expiration of an energy-efficient tax credit.

"In addition to strength in seasonal products, exterior projects and interior projects, the maintenance and repair categories that make up the core of our store continued to execute well in the fourth quarter," Menear said. Light bulbs, cleaning, pipes and fittings, and caulk performed well.

On the product side, Home Depot has high expectations for a variety of products. First, an improved version of its Behr Premium Plus Ultra Interior Paint & Primer in One. (Menear said the new version will have better stain-blocking capabilities and improved adhesion.) Also, new Maytag ranges equipped with Aqualift cleaning technology, are coming into stores. So are washer and dryer laundry pairs from GE and LG. And a new line of power trimmers from Ryobi will be offered. The latter was described as combining "gas like" performance with a quick-charge platform.

And another good sign for home spending: Transactions for tickets more than $900 were up 3.0% in the fourth quarter, he said.

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