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  • Michael J. Knell

Sears Canada revenues slide 6.4%

Toronto - Eroding salesin two of its critical productsegments that include furniture,mattress and major appliancescontributed to a weak fiscalthird quarter for Sears Canada,even as the multichannel retailerdeclared a special dividendto distribute some C$509million to its shareholders.
     Revenues for the 13-weekperiod that ended Nov. 2 wereC$982.3 million, down 6.4%from the comparable period ayear earlier.
    However, same-store saleswere up 1.2% for the quarter.The company also posted solidgrowth in adjusted EBITDA(earnings before interest, taxes,depreciation and amortization)to C$7.3 million from C$3.9million for the third quarterlast year.
     The net loss was C$48.8million or 48 cents per share,more than double the priorperiod's net loss of C$21.9 millionor 22 cents per share.
   Included in the net losswere nonrecurring charges ofC$42.8 million, related to severancecosts and impairmentcharges.
     For the 39-week period alsoending Nov. 2, Sears Canadahad revenues of C$2.81 billion,down 7.6% from a year earlier.Same-store sales were down1.2%.
     Net earnings for the periodwere C$72.8 million or 71 centsper share compared to C$61.3million or 60 cents per share lastyear, up 18.3% on a per sharebasis. This year's earnings includea C$185.7 million gain onlease terminations realized in thesecond quarter. Last year's earningsinclude a C$167.1 milliongain on lease termination realizedin the first quarter of 2012.
    "This is the first quarterlysame-store sales increase for thecompany since 2008," DougCampbell, Sears Canada's newlynamed president and CEO,said in a statement. "Octoberwas our strongest month ofthe quarter, during which weadjusted our plans to marketconditions and experienceddouble-digit same store salesincreases in both our appareland accessories and home andhardlines categories. Our directbusiness also grew substantiallyduring the quarter."
     Home and hardlines sales ofC$242.0 million in the quarterwere down 2.9% year-over-year.
    For the year to date, sales wereoff 8.9% to C$705.1 million. Inaddition to furniture and mattresses,this category probablyincludes such items as seasonalequipment, small appliancesand tools. The company didn'tprovide further breakdowns.
     Major appliances sales fell3.3% to C$214 million. Forthe year-to-date, sales were off2.5% to C$618.6 million.
Sears Canada also announcedit will declare ananticipated extraordinary cashdividend of C$5 per share earlynext month and will distribute atotal of about C$509 million.
     The two largest shareholdersin Sears Canada are Sears Holdings- the U.S.-based parent ofSears and Kmart - which holds51% of the outstanding shares,and ESL Investments - thefund controlled by hedge fundmanager Edward Lampert -which holds 27.6%. ESL is alsothe largest shareholder in SearsHoldings.
     The special dividend wasfunded by the company's recentasset sales, which included thereturn of the leases for its flagshipEaton Centre store hereand four others to their landlord.
     At the end of the quarter,Sears Canada's network included181 corporate stores,241 hometown dealer stores,over 1,400 catalog merchandisepickup locations, 101 SearsTravel offices and a nationwidehome maintenance, repair,and installation service. It alsopublishes Canada's largest circulationgeneral merchandise catalogand offers shopping onlineat www.sears.ca.

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