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Sears says weather drove Q4 sales decline of 9.6%

Stores were closed for 220 hours in quarter

TORONTO — Sears Canada has attributed partial responsibility for its drop in fourth quarter sales to the severe winter weather and numerous power outages suffered across the country in December and January.

The multi-channel retailer, controlled by hedge fund manager Edward Lampert and his U.S. retail operation Sears Holding, said its stores were closed for 220 hours in the 13 weeks ended Feb. 1, compared with 40 hours in the previous year.

"We felt the effects of this most notably in the few days leading up to Christmas," Doug Campbell, Sears Canada president and CEO, said in a statement. "Despite this, we continued to have a positive quarterly same-store sales increase in our apparel and accessories business, but it was not enough to offset the impact felt in our home and hardlines businesses. Inventory continues to be a focus for us and we were successful in reducing our year-end inventory by C$76.8 million versus the end of 2012 primarily through the management of clearance activity and the flow of receipts."

Sears did not provide sales figures for either segment of its business.

Total revenues for the quarter were C$1.18 billion, down 9.6% from the C$1.31 billion generated in the 14 weeks ended Feb. 2, 2013. Same-store sales, including an adjustment for the extra week in the prior fiscal year, were down 6.4%.

Total revenues for the just-ended fiscal year were C$3.99 billion, an 8.2% drop from the C$4.35 billion for the 53-week period ended Feb. 2, 2013. Same-stores sale were down 2.7%.

Net earnings for the fourth quarter were C$373.7 million or C$3.67 per share versus $39.9 million or 39 cents per share for last year's 14-week period.

Included in the net earnings this year were pre-tax gains of C$391.5 million generated by the company's decision to return a number of its largest department store units to their landlords, particularly in the greater Toronto area. Another C$108.5 million was gained from other asset sales and changes to the pension plan.

Net earnings for the year were C$446.5 million or C$4.38 per share versus C$101.2 million or 99 cents per share for the previous year. Included in the latest net earnings were pre-tax gains of C$577.2 million related to the early lease terminations.

Campbell said 2013 was the year in which Sears Canada "established and executed our strategy of creating maximum value through three levers: merchandising value, efficiency value and network value."

He said the in 2014 the focus will be on serving customers more effectively both in-store and online.

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