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Sears Holdings Corporation (NAS:SHLD)
Gross Profit
$8,755 Mil (TTM As of Jan. 2014)

Sears Holdings Corporation's gross profit for the three months ended in Jan. 2014 was $2,482 Mil. Sears Holdings Corporation's gross profit for the trailing twelve months (TTM) ended in Jan. 2014 was $8,755 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Sears Holdings Corporation's gross profit for the three months ended in Jan. 2014 was $2,482 Mil. Sears Holdings Corporation's revenue for the three months ended in Jan. 2014 was $10,593 Mil. Therefore, Sears Holdings Corporation's Gross Margin for the quarter that ended in Jan. 2014 was 23.43%.

Sears Holdings Corporation had a gross margin of 23.43% for the quarter that ended in Jan. 2014 => Competition eroding margins

During the past 11 years, the highest Gross Margin of Sears Holdings Corporation was 28.66%. The lowest was 22.55%. And the median was 27.05%.

Warning Sign:

Sears Holdings Corporation gross margin has been in long term decline. The average rate of decline per year is -2.2%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Sears Holdings Corporation's Gross Profit for the fiscal year that ended in Jan. 2014 is calculated as

Gross Profit (A: Jan. 2014 )=Revenue - Cost of Goods Sold
=36188 - 27433
=8,755

Sears Holdings Corporation's Gross Profit for the quarter that ended in Jan. 2014 is calculated as

Gross Profit (Q: Jan. 2014 )=Revenue - Cost of Goods Sold
=10593 - 8111
=2,482

Sears Holdings Corporation Gross Profit for the trailing twelve months (TTM) ended in Jan. 2014 was 2156 (Apr. 2013 ) + 2186 (Jul. 2013 ) + 1931 (Oct. 2013 ) + 2482 (Jan. 2014 ) = $8,755 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Sears Holdings Corporation's Gross Margin for the quarter that ended in Jan. 2014 is calculated as

Gross Margin (Q: Jan. 2014 )=Gross Profit (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=2,482 / 10593
=23.43 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Sears Holdings Corporation had a gross margin of 23.43% for the quarter that ended in Jan. 2014 => Competition eroding margins


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Sears Holdings Corporation Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Gross_Profit 4,90113,71215,19214,06512,65212,21911,66410,60110,5148,755

Sears Holdings Corporation Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Gross_Profit 2,3943,0622,5672,5312,2533,1632,1562,1861,9312,482
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