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John P. Gavin, CFA, is the founder and CEO of Disclosure Insight®, an independent publisher of investment research. Mr. Gavin has spent his entire career of over 25 years in the financial services industry. Prior to starting “DI” in 2000, he worked as an equity analyst and portfolio manager with... More
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  • Latest Charges for Sears Holdings Eclipse Charges Taken in 2008 0 comments
    Dec 27, 2011 4:54 PM | about stocks: SHLD

    In a press release today, Sears Holdings Corporation (NASDAQ: SHLD) reported that due to its performance during 2011, the company plans to close 100 to 200 Sears and K-mart stores and record a $1.6 billion to $1.8 billion charge during fiscal 4Q11. In addition, SHLD may recognize a goodwill impairment charge of up to $600 million.

    While these charges are undoubtedly substantial, this isn’t the first time the company has recorded such charges. SHLD has incurred $368 million in impairment charges in the past 5 years, $360 million of which were taken in fiscal 2008. The company has also recorded a total of $290 million in store closing, severance, and conversion charges.

    The company reported in the release that combined quarter-to-date sales and year-to-date sales are down 5.3% and 2.6%, respectively. As a result, CEO Lou D'Ambrosio announced that the company intends to “implement a series of actions to reduce ongoing expenses, adjust our asset base, and accelerate the transformation of our business model.” The $1.6 billion to $1.8 billion charge relates to a valuation allowance on certain deferred tax assets.

    In an 8-K filed today, SHLD disclosed that based on fiscal 4Q11 results to date, the company has reduced its current earnings outlook for the current year and can no longer assume it will generate a level of income sufficient enough to allow it to report the full value of its deferred tax assets.

    Here is the press release on the store closings.

    Stocks: SHLD
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