Sears Canada posts profit after credit card unit sale
By Michael J. Knell -- Furniture Today, February 12, 2006
Toronto — The sale of its credit card division to JP Morgan Chase Bank in November produced record profits for Sears Canada in the fourth quarter and year, despite mixed results from its retail operations.
Total revenues in the fourth quarter came to C$1.9 billion, nearly even with 2004's final period. Same-store sales were up 1.1%. Net earnings in the quarter, excluding non-comparable items, were C$102 million, an increase of 16.7% over C$87.3 million in the prior year's comparable quarter.
The most significant non-comparable item was the credit card sale, which resulted in an after-tax gain of C$677.2 million, or C$6.34 per share.
For all of 2005, revenues were C$6.2 billion, essentially even with 2004. Same-store sales dipped 2.9%. Net earnings in the year, excluding non-comparable items, were C$129.9 million, a gain of 5.8% from C$122.8 million in the prior year. Including non-comparables, 2005 net earnings were C$770.8 million, or C$7.22 per share.
The multi-channel retailer, running neck-and-neck with The Brick Group as Canada's largest vendor of furniture and bedding, said merchandise sales rose 2% in the fourth quarter, with the largest improvement in major appliances.
Sears Canada's full-line department stores, its Sears Home stores and its independently owned dealer stores all showed sales increases in the fourth quarter, the company said. Expenses dropped 3.5% in the quarter, gross margin was up 89 basis points and inventory levels were slightly lower. By region, sales were strongest in western Canada and weakest in the Atlantic provinces.
The retailer slashed 1,200 jobs, about 3% of its total work force, in the third quarter.
Sears Canada operates 188 corporate stores, 180 dealer stores, 67 home improvement showrooms, over 2,100 catalog merchandise pick-up locations, 112 Sears Travel offices and a nationwide home maintenance, repair and installation network. It also sells online and publishes Canada's largest-circulation general merchandise catalog.
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