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Sears Canada posts disappointing sales in Q2 FY'12

Aug '12
Sears Canada Inc. announced its unaudited second quarter results.  Total revenues for the 13-week period ended July 28, 2012 were $1.050 billion compared to $1.148 billion for the 13 weeks ended July 30, 2011, a decrease of 8.5%.  Same store sales decreased 7.1% over the same periods.

The net loss for the second quarter was $9.8 million or 10 cents per share compared to a net loss of $0.2 million or nil earnings per share for the 13-week period ended July 30, 2011. 

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization and Non-Operating Activities) for the quarter this year was $17.8 million versus $30.0 million in the same 13-week period last year.  Adjusted EBITDA is a non-IFRS measure; please refer to the table attached for a reconciliation of net (loss) earnings to Adjusted EBITDA.

Total revenues for the 26-week period ended July 28, 2012 were $1.965 billion compared to $2.140 billion for the 26-week period last year, which ended July 30, 2011, a decrease of 8.2%.  Same store sales decreased 6.7% over the same periods.

Net earnings for the first half of 2012 were $83.2 million or 81 cents per share compared to a net loss of $47.2 million or 45 cents per share for the 26 weeks ended July 30, 2011.  Included in earnings for the first half of this year was a gain of $164.3 million representing the pre-tax gain on the early surrender and return of leases on three properties.  Adjusted EBITDA for the first half of the year was ($12.3) million versus $7.7 million for the same period last year.

"While we are not pleased with our quarterly sales results, we continued to implement key transformation initiatives," commented Calvin McDonald, President and Chief Executive Officer, Sears Canada Inc.

"We are encouraged by the results of the four stores in Ontario which received significant refreshes and re-opened at the end of May to customer accolades.  Of note was the performance in our apparel departments which received a significant portion of our investment.  We are exploring other possible locations across Canada to refresh.

"Also during the quarter, we continued to see sales increases of regularly priced merchandise in the Monday to Friday periods, supporting our price rebalancing initiatives begun in February of this year.  We had sales increases in Major Appliances and Mattresses, two core hero categories which we have identified as key to our success. 

“In fact, sales following the opening of our new Sears Home location in Ottawa, the largest Sears Home store in the country, exceeded our expectations and the Sears Home format experienced year over year sales increases.  I am pleased with our management of both our inventory levels, ending the quarter $66 million below last year with less aged content, and our expenses, staying in line with our revenue trend.

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