Newspaper article The Canadian Press

Sears Canada Swings to Q1 Profit on Store Closures despite Dismal Sales: Sears Canada Books Profit on Store Closures

Newspaper article The Canadian Press

Sears Canada Swings to Q1 Profit on Store Closures despite Dismal Sales: Sears Canada Books Profit on Store Closures

Article excerpt

TORONTO - A big gain on the closure of three high-profile stores allowed Sears Canada Inc. (TSX:SCC) to post a healthy profit in the first quarter even as the retailer continued to struggle with declining sales as it attempts to revamp its image.

Sears said Wednesday that it swung to profit in the 13 weeks ended April 28 when it earned $93.1 million, or 91 cents per share, compared with a net loss of $47 million or 45 cents per share for the same period last year.

Included in earnings for the quarter was a $164.3-million pre-tax gain on lease terminations of stores in Vancouver, Calgary and Ottawa announced March 2.

Sears Canada has been cutting jobs, slashing prices, decluttering stores and refocusing sales efforts on money-making items to attract more customers in a highly competitive Canadian retail market.

Despite recent marketing efforts, revenue in the quarter slipped 7.8 per cent from a year earlier to $915.1 million from $992.5 million, including a decrease of 6.3 per cent in same store sales.

"Although not reflected in our top line sales, there are positive signs of progress in many areas of our business," president and CEO Calvin McDonald said in a statement accompanying the results.

"We are making progress on our transformation, having executed two major initiatives during the quarter," McDonald said, including the lowering of more than 5,000 prices to "provide increased value to customers more consistently."

In addition, major appliances and mattresses, two categories that have been aggressively marketed, continue to perform better than last year, he said.

"Balancing our value program has had a positive effect on our Monday to Friday sales, with weekday sales increasing and sales of our regular-priced items in our full-line, Sears Home and hometown dealer stores up significantly compared to the first quarter of last year," McDonald said.

As expected, total-week net sales for the quarter were impacted negatively by the price cuts as well as by a reduction of merchandise offerings in non-strategic categories and lower sales of clearance merchandise.

Still, aside from the pre-tax gain on the early lease terminations -- earnings before interest, taxes, depreciation, amortization and non-operating activities -- the company posted a loss of $30. …

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