Same store sales drop at leading multi-channel retailer

18 May '12

3 min read

Sears Canada Inc announced its unaudited first quarter results. Total revenue for the 13 week period ended April 28, 2012 was $915.1 million compared to $992.5 million for the 13 week period ended April 30, 2011, a decrease of 7.8%. Same store sales decreased 6.3%.

EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization and Non-Operating Activities) for the quarter this year was a loss of $30.1 million compared to a loss of $22.3 million for the same period last year. Net earnings for the quarter this year were $93.1 million or 91 cents per share compared to a net loss of $47.0 million or 45 cents per share for the same period last year. Included in earnings for the quarter this year was a gain of $164.3 million this year representing the pre-tax gain on lease terminations of three stores as announced by the Company on March 2, 2012.

"Although not reflected in our top line sales, there are positive signs of progress in many areas of our business," commented Calvin McDonald, President and Chief Executive Officer, Sears Canada. "We are making progress on our transformation, having executed two major initiatives during the quarter: the lowering of over 5,000 prices to provide increased value to customers more consistently every day and the launch of our Spring LOOK! Report to demonstrate quality, value and merchandising authority on the season's newest apparel and fashion trends.

"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. In addition, Major Appliances and Mattresses, two hero categories we have aggressively marketed, continue to perform better than last year, achieving sales growth in the quarter. These are all positive signs of some core business indicators getting better.

"In addition, the Company has prudently managed expenses during the quarter resulting in operating expense reductions of 5.9% compared to the first quarter of last year."

As expected, total-week net sales for the quarter were impacted negatively by the price rebalancing initiative, as the Company continues to instill more day-in and day-out value across the enterprise. Factors adversely impacting revenue for the quarter were:

- The reduction of merchandise offerings in non-strategic categories
- Lower sales of clearance merchandise, the result of less clearance inventory and reduced promotional activity on clearance merchandise
- The reduction in catalogue pages and distribution

"We will continue to roll out our transformation initiatives, focus on improved management of inventory levels in our apparel businesses and adjust our weekend promotional programs for improved customer response to our Saturday-Sunday offerings," added Mr. McDonald.

Sears Canada is a multi-channel retailer with a network that includes 196 corporate stores, 278 hometown dealer stores, 29 home services showrooms, over 1,500 catalogue and online merchandise pick-up locations, 105 Sears Travel offices and a nationwide home maintenance, repair, and installation network.

Sears Canada Inc

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