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Sears Holdings Corp (NAS:SHLD)
Gross Profit
$7,653 Mil (TTM As of Oct. 2014)

Sears Holdings Corp's gross profit for the three months ended in Oct. 2014 was $1,601 Mil. Sears Holdings Corp's gross profit for the trailing twelve months (TTM) ended in Oct. 2014 was $7,653 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Sears Holdings Corp's gross profit for the three months ended in Oct. 2014 was $1,601 Mil. Sears Holdings Corp's revenue for the three months ended in Oct. 2014 was $7,207 Mil. Therefore, Sears Holdings Corp's Gross Margin for the quarter that ended in Oct. 2014 was 22.21%.

Sears Holdings Corp had a gross margin of 22.21% for the quarter that ended in Oct. 2014 => Competition eroding margins

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

Warning Sign:

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

Gross Profit (Q: Oct. 2014 )=Revenue - Cost of Goods Sold
=7207 - 5606
=1,601

Sears Holdings Corp Gross Profit for the trailing twelve months (TTM) ended in Oct. 2014 was 2482 (Jan. 2014 ) + 1828 (Apr. 2014 ) + 1742 (Jul. 2014 ) + 1601 (Oct. 2014 ) = $7,653 Mil.

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

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

Gross Margin (Q: Oct. 2014 )=Gross Profit (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=1,601 / 7207
=22.21 %

* 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 Corp had a gross margin of 22.21% for the quarter that ended in Oct. 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 Corp Annual Data

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

Sears Holdings Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Gross_Profit 2,5312,2533,1632,1562,1861,9312,4821,8281,7421,601
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