Sears Canada 4Q earnings flat as sales fall 5%

Michael J. Knell -- Furniture Today, March 18, 2013

TORONTO - Sears Canada continued to lose ground in its fiscal fourth quarter as revenue fell 5% and same store-store sales decreased 3.8%. Earnings were flat and continued to be driven by factors other than the basics of being a retailer.
     Revenues for the 14-week period ending Feb. 2 were C$1.3 billion, declining even though the quarter had an extra week than the fiscal 2012 fourth quarter.
     Net earnings for the period were C$39.9 million or 39 Canadian cents per share, basically unchanged from the C$41 million or 39 cents per share for the comparable period.
     Included in the net earnings for the fourth quarter were pre-tax gains of C$21.1 million related to a voluntary buyout program concerning post-retirement benefits and C$8.6 million related to the sale of a joint venture interest.
     Earnings were reduced, however, by a pre-tax charge of C$12.6 million related to Sears Canada's ongoing business transformation plan, launched almost a year ago. The company had a similar pre-tax charge of C$14.4 million in the comparable 2012 quarter.
    "Although sales were lower than last year, our same-store sales performance in the fourth quarter improved over the three prior quarters," Calvin McDonald, president and CEO, said in a statement. He said consumer electronics and products such as snow blowers and hardware contributed to most the sales decline.
     "Though the positive sales trend in major appliances slowed, we continued to add market share," he said. "Of particular note was the positive same store sales growth of our apparel and accessories business in the quarter compared to the fourth quarter last year."
     Total revenue for the 53-week fiscal year ended Feb. 2 was C$4.3 billion, a 6.9% decline from the C$4.62 billion for the 52-week 2012 fiscal year. Same-store sales fell 5.6%.
     Net earnings for the year were C$101.2 million or 99 cents per share versus a net loss of C$50.3 million or 48 cents per share for prior year. Net earnings for the year were bolstered by a pre-tax gain of C$167.1 million received when Sears Canada sold the leases for three of its largest downtown stores - in Vancouver, Calgary and Ottawa - back to the landlord.
     During the last fiscal year, Sears Canada also sold its Cantrex Group subsidiary to Nationwide Marketing Group of Winston-Salem, North Carolina.
      Just this month, the big U.S. retailer Target opened the first of what is expected to be a 130-store chain in Canada - a move that is expected to negatively impact Sears and shake up the country's retail scene.
     Some 51% of Sears Canada's outstanding shares are held by Sears Holdings, the Chicago-based operator of Sears and Kmart in the United States.