Sears Canada sales drop 9.2% in third quarter

Same-store sales, expenses show improvement

Michael Knell -- Furniture Today, November 19, 2009

TORONTO — The consumer's lack of confidence in the economy continues to plague Sears Canada, which has reported falling same-store sales, revenues and earnings for the third quarter of its current fiscal year.

This country's largest multi-channel retailer said total revenues for the 13-week period ending Oct. 31 were C$1.31 billion, a decrease of 9.2% from the C$1.44 billion recorded for the 13 weeks ending Nov. 1, 2008.

Same-stores sales fell 6.3%. However, Sears also reported that total expenses for the period were reduced 11.5%.

Net earnings for the third quarter were C$47.1 million or 44 Canadian cents per share, a decline of 20% on a per-share basis from the C$59.3 million or 55 cents per share earned in the comparable period.

Revenues for the 39-week period also ending Oct. 31 were $3.66 billion, down 11% from $4.12 billion for the 39-week period ending Nov. 1, 2008. Same-store sales decreased 8.8%. Total expenses were reduced by 9.7%.

Net earnings were C$106.5 million or 99 Canadian cents per share, plummeting 44.4% on a per-share basis from the C$191.6 million or C$1.78 per share for the 39-week period of 2008. However, last year's earnings included an unusual after-tax gain of C$28.3 million related to the sale of company property in Calgary, Alberta. This year's earnings included restructuring charges of $6.5 million.

On the positive side of the ledger, Sears Canada reported its cash position improved by C$304.4 million to C$1.11 billion as of Oct. 31, while total debt was C$360.3 million.

"The recession is continuing with increasing unemployment resulting in retracted consumer spending," said Dene Rogers, president and CEO. "The economic uncertainty continued to affect consumer confidence during the third quarter especially as it relates to future employment.

"Sears will be aggressively marketing in the fourth quarter to convey to customers that we have the holiday season's most-wanted products at prices that can't be beat. This will be done in a responsible manner with a focus on driving customer traffic and profitability."

Sears Holding, the Chicago-based parent company of U.S. retailers Sears, Roebuck & Co. and Kmart, is the majority shareholder in Sears Canada.

At the end of its third quarter, Sears Canada operated 196 corporate stores, 193 dealer stores, 41 home improvement showrooms, more than 1,800 catalog merchandise pick-up locations, 108 Sears Travel offices and a nationwide home maintenance, repair and installation network. It also publishes Canada's most circulated general merchandise catalog and offers shopping online at www.sears.ca.