Sears Holding

that could reduce after-tax profits by as much as 11 million dollars, or about 70% of its 1998 earnings.

A reason for this slight decline could be that there has been an increase in their short-term debt. In this case their current liabilities did actually increase.

Financial ratios are important in assessing the two companies’ performances. Referring to Exhibit A and B, we see that Sears relied heavily on debt financing. Although its 1997 ROE was high, it had a 300 days cash conversion cycle and a slow A/R turnover ratio. After evaluating various ratios, we concluded that the driving force behind Sears’ profitability was its proprietary card business. For a retailer, a strategy of using flexible payment options to boost sales is not a viable long term solution. The slow A/R turnover and negative operating cash flow cause concerns. On the other hand, Wal-Mart had a quick cash conversion cycle of 91 days, and a working capital turnover of 24/yr (vs.10/yr for Sears). These ratios represent a retail company with sound fundamental strategies, as well as the implementation and execution of those strategies. The financial ratios gave us insights into the companies’ operating and financing strategies, putting the two companies’ annual results into

Our recommendation is to take Sears Holdings Corp. (SHLD) private through a private equity buyout. After doing so, we recommend implementing a centralized management structure and recruiting retail-savvy executives for the upper management team. We then recommend focusing on increasing value by capitalizing on SHLD’s real estate holdings through leasing agreements and increasing partnerships with complementary enterprises. Also, we recommend improving employee retention rates and retaining exclusive rights to private brands. Finally, we recommend focusing on a long-term strategy to continue to maximize SHLD’s ecommerce platforms. We believe these recommendations will lead to long-term stability through increases in customer base and

Macy’s Inc. ratio was .02 and JC Penny Co. Inc. was .00. To improve this ratio, both companies need to improve on their net income. If JC Penny doesn’t continue to improve its net income, then this ratio will begin to lean negative, signaling the company is losing money for every dollar is sales and may not be good investment. Macy’s Inc. still has room before it hits .00, however, if their net income continues to fall, they soon too may have the same profit margin ratio as JC Penny Co. Inc. Shutting down unsatisfactory stores – as each company is doing – may help improve this ratio as well. With less funding going to these stores, such as salary’s, rent, and wasted inventory, they will be able to improve their net income value.

Through analysis, it is evident that the company must be restructured entirely through the implementation of a differentiation strategy. This strategy will focus solely on transforming the company into a retail chain providing competitively priced appliances, electronics, furniture and home décor. While maintaining a strategically competitive price point, Sears will be able to maintain competitive prices to draw consumers

However, in 2009 revenues declined to $4.5 million along with net cash flows from all activities declining in 2009 as well. Overall capital expenditures for the company have been continually increasing by 26% each year. Milton had planned on borrowing $20 million in the fourth quarter of 2010 from

The 2 firms had a similar profit margin, major difference exists in COGS and SG&A, while Sears had a higher gross profit margin, high expense (21.17%) is driving the total cost and expense of the two firms to the same level-about 95%.

American Eagle Outfitters Inc. uses straight-line method to find depreciation of plant and property. The estimated useful lives of its buildings is at 25 years while its leasehold improvements and fixtures and equipment have estimated useful lives of lesser of 10 years or the term of the lease and 5 years, respectively. The cost of property and equipment for the fiscal year ending February 1, 2014 was $1,594,360,000 and its book value was $632,986,000. For the fiscal year ending January 31, 2015, the cost was $1,684,709,000 and the book value was $694,856,000. The depreciation expense trend for the past three years was generally upwards. While depreciation expense decreased by $5,995,000 from fiscal year 2013 to fiscal year 2014, it increased by $15,768,000 from fiscal year 2014 to fiscal year 2015.

The following pages focus on providing a strategic analysis of Sears Holding Corporation. The introduction reveals the issues that the paper addresses. The Company Presentation section reveals important facts in Sears' evolution. The Strategy Debates Section discusses theoretical issues applied to the situation of Sears. This is followed by the Strategic Decisions section that provides a series of recommendations that can help Sears improve its situation. The Implementation Challenges section provides important issues that can be considered challenges of strategic implementation.

Return on assets ratio declined in 2010. This is due to increased total assets in 2010 due to company's acquisition of assets. In 2011, the company had a higher return on equity, which indicates that Lowe’s was able to generate more profit from the money that shareholder invested. The sales generated relative to total assets decreased in 2010, mainly due to reduced sales in 2009 coupled with increased total assets. Fixed asset turnover has been relatively good for Lowes. The ratio indicates how well the company is able to put fixed assets to use in generating sales. Current ratio has improved over past three years indicating a strong trend for the company in its ability to pay its current liabilities with current assets. The long-term debt forms a major part of company's financing. The company reviews its

This Profit Margin ratio is acceptable, though not high. The result means that for each dollar of sales at Sears Co., the company earns only 3.27 cents in 1997, compared to 3.77 cents and 5.78 cents in 1996 and 1995 respectively. This slim and downward trend profit margin obviously won't make its investor happy.

In the revised income statement, projected net income after taxes would significantly increase from $3,963K to $4,651K in 2011, and from $3,818K to $4,716K in 2012. This is predominantly driven by the sales growth of $21.6 million in 2011 and $28 million in 2012. Without this project, net income would have otherwise peaked in 2011 and decline in subsequent years. Thus, this investment

2. Asset Turnover rate (Revenue/ Asset) this ratio can measure how efficiency Sears to use its asset for revenue.

The Home Depot bought more than 18 stores and Sears bought 45 for about $524 million. In that same year, Kmart Holding Corporation completed transactions to become a part of Sears, Roebuck and Company now known as Sears Holdings Corporation. Sears Holdings is listed on the NASDAQ under the ticker symbol SHLD. As of 2004 Kmart had 1,422 discount stores, 58 Kmart Supercenters totaling 1,480 stores. 1,323 of those stores were leased and 157 are company owned. Following the takeover, about 400 of Kmart's nearly 1,500 stores will be converted to Sears's outlets over the next three years.