Financial Statements

Sears, a 121 year old company, was founded in 1886 by Richard W. Sears. Richard was a railway worker whose knowledge came from reading business literature while working at the railway. His big break came when a shipment of watches came for a jewelry store that refused the watches. He took this opportunity, bought the watches from the wholesaler, and started to turn a profit. Thus the beginning of Richards's new company, based in Minneapolis, was known as the R.W. Sears Watch Company. The following year Richard placed an ad in the Chicago Daily News for a watch repairman: answered by Alvah Roebuck. (Sears Brands, 2007) In 1893 the official corporate name became Sears, Roebuck and Company.

Sears, whose only major competitor is Montgomery Ward who had based selling their products to the more upscale population, had now established a catalog to prove they are honest and more reputable than Montgomery Ward. With testimonials from customers, by 1894 a 322 pg catalog was launched to all rural areas where Richard had established his customer base; the farmer, the coalmine worker, and ordinary people. The catalog war with Montgomery Ward was now at an end. By 1900 Sears had generated sales of $10,000,000. (Liggett, 1997)

The early history of Sears is fraught with mixed emotions. By 1995 Alvah Roebuck leaves the company and is replaced by Julius Rosenwald who has now become Richards's new financial partner. At this point the central location for Sears became Chicago, a more central location and a better way to compete with Montgomery Ward. Rosenwald began leading Sears in a new direction; a way that began with not "what do we have to sell" but "what do the customers want." (Liggett, 1997) This new way of thinking contrasted with Richards mentality of "free wheeling huckster ways" (Liggett, 2007) and lead to "Satisfaction guaranteed or your money back" a slogan that Sears would stand by for many years. With the inception of Julius Rosenwald, Sears was on its way to become a financial giant in the way of the retail world.

In 1925 Sears opened its first retail store. This store was based in Chicago's mail-order plant. It was an immediate success. By the end of 1925 7 more stores were opened, 4 based in mail-order plants. (Sears Brand, 2007) By the year 1933 400 stores had been opened. Sears had made its way into the city to stay competitive with the retail industry. With the rapid growth of this retail giant Sears began to implement its own trade names; Craftsman, Kenmore, and Diehard. When World War I came around Sears had over 600 operating stores; this came to a sudden halt by the time World War II was engaged. The result was a halt in expansion and several store closings. (Sears Brand, 2007)

Robert E. Wood, Sears vice president, later to become president, had a revelation that the average family needed an automobile and low-cost insurance to go with it. By 1931 a new subsidiary of Sears, AllState insurance company was founded. This too started as a mail-order company that later developed into sales locations located inside of Sears. In the 1940's Sears started to open stores outside the territorial United States. The first of these stores was opened in 1942 in Havana, Cuba. The next store to open was in Mexico City, Mexico. After going south Sears decided to go north and partnered with a Canadian company Simpsons. This partnership is now known as Sears Canada Inc. (Sears Brand, 2007)

1953 offers a new opportunity for Sears, the inception of their own credit card. In 1985 Sears debuts the Discover Card; the first credit card to bring about the use of rewards for its use. By 1992 Sears has come to accept the use of all major credit cards including American Express, MasterCard, and Visa.

In 1969 a new headquarters was built, still in the city of Chicago, it was the famous Sears Towers. This remarkable 110 story building, approximately 1,454 feet, was the largest of its kind in 1973.

1980 offered Sears the chance to acquire the Dean Witter Reynolds Organization Inc and Coldwell Banker Real Estate Group. This formed the Dean Witter Financial Services Group and The Coldwell Banker Real Estate Group enabling the company to form a world trading company known as Sears World Trade. Later with a reduction in activities it was reduced in1986 to Sears Merchandise Group. (Sears Brand, 2007) By 1993 the now unprofitable catalog company was closed due to a decrease in sales.

In 1999 Sears introduced Sears.com a web based shopping store. Through this new outlet customers are able to purchase merchandise and have it delivered to their home or local store for pick-up. This enables for a larger customer base and had increased sales for several years.

In 2005, Eddie Lampert acquired Sears, Roebuck and Company. His swift swoop down to first acquire K-Mart then Sears led many to believe his previous endeavors of buying and selling corporations was only to take place again. With the acquisitions and mergers of these two companies to form the new Sears Holdings Corporation left Lampert with the 3rd largest retailer. In 2006 Sears Holdings fiscal net income was $1.49 billion and their fiscal revenue was $53 billion. Forecasted 1st quarter sales in 2007 were down 2.4%. (Sun Times News Group, 2007)

Sears is abundant with an extensive amount of history: too much to include in this brief history of the company. From the inception of Richard W. Sears to the acquisition in 2005 by Edward Lampert, Sears has been a major player in the world of retail. The continuance of this company falls to rest in the hands Lampert and whether he can hold Sears Holdings together to bring this company back to the splendor it once held in the eyes of the consumer.

Ratios for Sears Holdings

Calculated Company Industry S&P 500

Current Ratio 1.53 1.6 1.5 1.3

Inventory Turnover Ratio 3.97 3.8 5.4 8.9

Accounts Receivable Turnover Ratio 63.95 64.9 132.8 17.5

Debt to Equity .23 .27 .42 1.32

Return on Assets 0.05 or 5% 5.3 8.9 8.1

Return on Equity .12 or 12% 12.6 17.3 21.4

Gross Margin on Sales .29 or 29% 28.7 31.3 36.9

Information retrieved for company, industry, and S&P 500 from (Reuters, 2007)

Current ratio= current assets/current liabilities