Sears Canada posts loss as sales fall 5.3% in quarter

CEO says retailer working to ‘reenergize and transform' itself

Michael J. Knell -- Furniture Today, August 18, 2011

TORONTO — Sears Canada's sales declined 5.3% in its second quarter and posted a loss of C$2.7 million or three cents per share, a reflection of an increasingly challenged retail marketplace in Canada.

For the 13 weeks ended July30, Sears Canada had revenues of C$1.14 billion, down from the C$1.21 billion reported in the comparable quarter last year. Same-store sales were off 5.8%.

The multi-channel retailer's net loss for the latest period was a reversal from a year earlier, when the company had a profit of C$20.5 million or 19 cents per share. EBITDA (earnings before interest, taxes, depreciation and amortization) fell to C$26.7 million from C$68.5 million for the same period of 2010.

Revenue for the first half of the fiscal year was C$2.14 billion, down 6.2% from a year earlier, with same-store sales falling 7.4%.

The net loss for the first half was C$52.2 million or 50 cents per share, compared with net earnings of C$11.7 million or 11 cents per share a year ago. EBITDA for the first half was C$1.1 million versus C$103.5 million for the same period last year.

Calvin McDonald, who was named president and CEO of Sears Canada in late June, said in a note to shareholders that the company has to turn things around.

"We are disappointed with our performance and know we have enormous potential to improve and deliver value to Canadians by delivering a more compelling customer-driven proposition," he said. "The leadership team and I are working on longer-term initiatives planned to bring out the potential in Sears Canada to reenergize and transform the company into a more meaningful shopping choice for Canadians coast to coast."

Earlier this year, former CEO Dene Rogers indicated Sears was pursuing a number of new initiatives to capitalize on its position as one of Canada's leading furniture, mattress and appliance merchants, including the rollout of Thomasville furniture brand, the addition of a luxury sleep shop and a renewed focus on its appliance brand, Kenmore.

At the end of its fiscal half, Sears Canada's network included 196 corporate stores, 280 dealer stores, 32 home showrooms, over 1,700 catalogue pick-up locations, 108 travel offices and a nationwide home maintenance network. It also publishes this country's most widely circulated general merchandise catalogue and offers shopping online at www.sears.ca. It is also the owner of Cantrex, one of Canada's largest retail buying groups.

Chicago-based Sears Holdings, owners of the Sears and Kmart store chains in the U.S., owns approximately 93% of the outstanding shares of Sears Canada.