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Selling off subsidiaries helps Sears post big gain in 4Q

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Sears, Roebuck and Co. posted net income of $2.7 billion on revenues of $12.2 billion for the fourth quarter ended Jan. 3, 2004. That compares with net income of $848 million on revenues of $12.5 billion during the same period in 2002.

The 2003 results include an extra week of revenue (the company's fiscal year was 53 weeks long in 2003).

The 2003 4Q results include a pretax gain of $81 million related to the sale of the company's National Tire & Battery (NTB) business to TBC Corp. On Nov. 29, 2003, the company completed the sale, and the fourth quarter segment results include operations of NTB through Nov. 29.

The most significant influence on its fourth-quarter results was the sale of Sears' domestic Credit and Financial Products business on Nov. 3, 2003. Sears recorded a pretax gain of $4.1 billion related to the sale, which was offset by a pretax charge of $791 million taken on the early retirement of debt that occurred as a result of the sale.

The 2002 fourth quarter results included a pretax gain of $265 million related to the sale of the company's remaining investment in Advance Auto Parts Inc.

Comparable store sales for the quarter, excluding the 53rd week, decreased 2.1% percent.

"We made significant strides in restructuring the company and repositioning our retail and related services business in 2003," said Chairman and CEO Alan J. Lacy.

"Our accomplishments in 2003 position us well to achieve our 2004 goals of building topline momentum, improving our margin structure and growing key businesses to further enhance our competitiveness."

For the fiscal year, Sears reported net income of $3.4 billion on revenues of $41.1 billion.

Sears says its preliminary outlook for 2004, before the effect of the cumulative change in accounting principle, is for earnings per share to range from $3.60 to $3.80. This includes the negative carrying cost of approximately $0.20 to $0.25 per share on the company's remaining legacy debt related to its Credit and Financial Products business.

The preliminary outlook encompasses several important factors, including:

* a 52-week fiscal year in 2004 vs. the 53-week fiscal year in 2003;

* pension costs reflected under the new accounting method;

* the amount of outstanding debt; and,

* the number of shares outstanding due to the ongoing share repurchase program.

The company expects domestic comparable store sales "to grow in the low-single digit range for the year."

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