Sears Canada earnings soar in 2Q; revenue flat
By Furniture Today Staff -- Furniture Today, August 5, 2002
TORONTO — Sears Canada said earnings nearly doubled in the second quarter, but conversion of its Eaton's stores still weighs heavily on the bottom line. Revenue in the quarter and first half was flat for this country's largest single retailer and No. 1 furniture and bedding merchant.
Total revenues for the 13-week period ended June 29 inched up 0.5% to C$1.6 billion. Earnings were C$17.4 million, almost twice the C$8.8 million recorded for the same period in 2001. Merchandise sales increased 0.7% and same-store sales slipped 3%.
"While same-store sales were lower than last year, they have been close to plan and reflect last year's liquidation efforts as well as changes in our promotional strategy," said Mark Cohen, chairman and chief executive officer, adding gross margins had improved in the quarter and expenses and inventory were below plan.
Special charges in the quarter included a C$3.2 million pretax expense related to the consolidation of call centers and a C$9 million pretax reduction in income tied to the sale of receivables.
The retailer said revenues for the five weeks ended June 29 were C$603.9 million, up 1.9% from C$592.8 million a year earlier. Merchandise sales were up 0.9%, with same-store sales down 3.2%.
Revenue for the six months was flat at C$3 billion. However, net losses widened in the first half to C$98.5 million from C$2.4 million in 2001 as Sears Canada charged some unusual items in the six months, including a C$150 million noncash write-down of capital assets and a C$30 million cash expense for the conversion of Eaton's stores to the Sears banner.
Excluding special charges, first-half net earnings rose to C$33.2 million from 2001's C$1.6 million.
| 13 weeks ended 6/29 | 2002 | 2001 | Change |
|---|---|---|---|
| Revenues | C$1,593,300,000 | C$1,584,600,000 | 0.5% |
| Operating income | 87,400,000 | 75,600,000 | 15.6% |
| Net income | (b)17,400,000 | 8,800,000 | 97.7% |
| Earnings per share (c) | 0.17 | 0.08 | 112.5% |
| 26 weeks ended 6/29 | 2002 | 2001 | Change |
| Revenues | C$2,998,000,000 | C$3,011,900,000 | (0.5%) |
| Operating income | 149,700,000 | 114,500,000 | 30.7% |
| Net income | (b)(98,500,000) | (2,400,000) | — |
| Earnings per share (c) | (0.92) | (0.02) | — |
| (a) In Canadian dollars. (b) Includes a C$3.2 million pretax charge for the conversion of a call center in both periods. The 2002 26 weeks also includes a $180 million pretax charge for converting the seven Eaton's department stores to Sears, partially offset by a $3.6 million pretax gain on the sale of an airplane. (c) Based on average shares outstanding of 107.2 million in the 2002 13 weeks, 106.9 million in the 2001 13 weeks, 106.7 million in the 2002 26 weeks and 106.6 million in the 2001 26 weeks. | |||
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