Switch to:
Sears Holdings Corp (NAS:SHLD)
Gross Margin
21.74% (As of Jul. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Sears Holdings Corp's gross profit for the three months ended in Jul. 2014 was $1,742 Mil. Sears Holdings Corp's revenue for the three months ended in Jul. 2014 was $8,013 Mil. Therefore, Sears Holdings Corp's Gross Margin for the quarter that ended in Jul. 2014 was 21.74%.

Warning Sign:

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

SHLD' s 10-Year Gross Margin Range
Min: 22.55   Max: 28.66
Current: 24.19

22.55
28.66

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%.

SHLD's Gross Marginis ranked lower than
100% of the Companies
in the Global Department Stores industry.

( Industry Median: vs. SHLD: 24.19 )

Sears Holdings Corp had a gross margin of 21.74% for the quarter that ended in Jul. 2014 => Competition eroding margins

The 3-Year average Growth Rate of Gross Margin for Sears Holdings Corp was -2.20% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

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

Gross Margin (A: Jan. 2014 )=Gross Profit (A: Jan. 2014 ) / Revenue (A: Jan. 2014 )
=8755 / 36188
=(Revenue - Cost of Goods Sold) / Revenue
=(36188 - 27433) / 36188
=24.19 %

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

Gross Margin (Q: Jul. 2014 )=Gross Profit (Q: Jul. 2014 ) / Revenue (Q: Jul. 2014 )
=1742 / 8013
=(Revenue - Cost of Goods Sold) / Revenue
=(8013 - 6271) / 8013
=21.74 %

* 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 21.74% for the quarter that ended in Jul. 2014 => Competition eroding margins


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, 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 Margin 24.7027.7328.6627.7427.0527.7427.4225.5026.3824.19

Sears Holdings Corp Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Gross Margin 27.6926.7325.4425.8025.5124.6423.3423.4323.2021.74
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK