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Sears Holdings Corporation (NAS:SHLD)
Retained Earnings
$-480 Mil (As of Jan. 2014)

Retained earnings is the accumulated portion of net income that is not distributed to shareholders. Sears Holdings Corporation's retained earnings for the quarter that ended in Jan. 2014 was $-480 Mil.

Sears Holdings Corporation's quarterly retained earnings declined from Jul. 2013 ($412 Mil) to Oct. 2013 ($-122 Mil) and declined from Oct. 2013 ($-122 Mil) to Jan. 2014 ($-480 Mil).

Sears Holdings Corporation's annual retained earnings declined from Jan. 2012 ($1,865 Mil) to Jan. 2013 ($885 Mil) and declined from Jan. 2013 ($885 Mil) to Jan. 2014 ($-480 Mil).


Definition

Retained Earnings is the accumulated portion of net income that is not distributed to shareholders. Because the net income was not distributed to shareholders, shareholders’ equity is increased by the same amount.

Of course, if a company loses, it is called retained losses, or accumulated losses.


Explanation

Historically profitable companies sometimes have negative retained earnings. This is because they have cumulatively paid out more to shareholders than they reported in profits.

For example, in 2011, Microsoft had negative retained earnings. This does not mean the company lost more money than it made over the years. It just means it paid out more money than it earned.

If a company has negative retained earnings, investors should check the 10-year financial results. They should not assume that negative retained earnings prove a company has generally lost money in the past.

Of course, many companies with negative retained earnings have indeed lost money in the past.

Retained Earnings: Warren Buffett’s Secret.

One of the most important indicators of durable competitive advantage. Net earnings can be paid out as dividends, used to buy back shares or retained for growth.

If the company loses more than it has accumulated, retained earnings is negative.

If a company isn’t adding to its retained earnings, it isn’t growing its net worth.

Rate of growth of retained earnings is good indicator whether it’s benefiting from a competitive advantage.

Microsoft is negative because it chose to buyback stock and pay dividends.

The more earnings retained, the faster it grows and increases growth rate for future earnings.


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
Retained Earnings 1,3402,1983,6894,5094,5624,7974,9301,865885-480

Sears Holdings Corporation Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Retained Earnings 4,1931,8652,0541,9221,424885606412-122-480
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