Sears Canada 3Q net earnings drop 59.2%
By Furniture Today Staff -- Furniture Today, October 28, 2002
Toronto — Sales and earnings at Sears Canada, this country's largest furniture merchant, were down for both the third quarter and first nine months.
Net earnings for the 13 weeks ended Sept. 28 were C$7.3 million, down 59.2% from C$17.9 million in the corresponding quarter last year.
Revenue was down 6.4% to C$1.48 billion from C$1.58 billion in last year's quarter. Merchandise sales decreased 5% and same-store sales dropped 7.3%, Sears Canada said.
"We are extremely pleased with our profit performance in the third quarter," said Chairman and Chief Executive Officer Mark Cohen. "Sales continued to be under pressure, in no small measure as a result of our remodeling efforts in eight stores and the conversions and closings of Eaton's.
"Nevertheless, our ongoing focus on profitability through gross margin improvement, expense control and inventory management enabled us to deliver an outstanding bottom-line performance in the quarter," he said
For the nine months, the retailer reported a net loss of C$91.2 million, compared with net income of C$15.5 million last year. Total revenues for the 39 weeks dipped 2.5% to C$4.48 billion from C$4.59 billion. Merchandise sales decreased 1.6% while same-store sales fell 4.1%.
Cohen attributed the loss to changes in the company's promotion efforts, continued investments in store remodelings and conversions, and a general weakness in department store business in Canada and the United States.
"Our performance has been driven by sustained increases in gross margins and inventory turnover, as well as careful expense management," he said. "We continue to forecast operating earnings for the year to be C$1.10 per share, a 77% improvement over last year's 62 Canadian cents per share."
| Sears Canada(a) | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| 13 weeks ended 9/28 | 2002 | 2001 | Change |
| (a) In Canadian dollars. (b) Includes a C$4.5 million pretax charge in both periods for the closure of auto centers. (c) Includes a C$180 million pretax charge for the Eatons conversion, a C$3.6 million pretax gain on the sale of an airplane and a C$3.2 million pretax charge for the consolidation of call centers. | |||
| Revenues | C$1,481,100,000 | C$1,581,700,000 | (6.4%) |
| Operating income | 68,900,000 | 96,000,000 | (28.2%) |
| Net income | 7,300,000 | (b)17,900,000 | (59.2%) |
| Earnings per share | 0.07 | 0.17 | (58.8%) |
| 39 weeks ended 9/28 | 2002 | 2001 | Change |
| Revenues | C$4,479,100,000 | C$4,593,600,000 | (2.5%) |
| Operating income | 218,600,000 | 210,500,000 | 3.8% |
| Net income | (c)(91,200,000) | (b)15,500,000 | — |
| Earnings per share | (0.85) | 0.15 | — |
