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Sears Canada reports Q2 earnings

26
Aug '08
Operating EBITDA Increases 5.7% on Comparable Basis Sears Canada Inc announced its unaudited second quarter results. Total revenues for the 13-week period ended August 2, 2008 were $1.420 billion compared to $1.444 billion for the 13 weeks ended June 30, 2007, a decrease of 1.6%.

Beginning in 2008, the Company changed its year end to the Saturday closest to January 31st instead of the Saturday closest to December 31st. Excluding the effect of the fiscal year change, revenues increased 0.5%.

Same store sales increased 1.8% for the 13 week period ended August 2, 2008 compared to the 13 week period ended August 4, 2007.

Net earnings for the second quarter, including unusual items, were $61.1 million or 56 cents per share compared to $42.3 million or 39 cents per share in the second quarter last year, which ended June 30, 2007. There were no unusual items in the quarter this year. Unusual items in 2007 were $105,000. Net earnings, excluding unusual items, for the second quarter last year, which ended June 30, 2007, were $42.4 million or 39 cents per share.

Operating EBITDA (Earnings before interest, taxes, depreciation and amortization), before unusual items, increased by 5.7% to $124.3 million versus $117.6 million in the 13-week period ended August 4, 2007. Operating EBITDA is a non-GAAP measure; please refer to "Reconciliation of Net Earnings to Operating EBITDA" attached. For this comparable period, gross margins increased 86 basis points as a percentage to revenue.

Total revenues for the 26-week period ended August 2, 2008 were $2.675 billion compared to $2.663 billion for the 26-week period last year, which ended June 30, 2007, an increase of 0.4%. Excluding the effect of the fiscal year change, revenues decreased 0.8%. Same store sales were flat for the 26 week period ended August 2, 2008 compared to the 26 week period ended August 4, 2007.

Net earnings for the 26 weeks ended August 2, 2008, including unusual items, were $124.2 million or $1.15 per share compared to $56.6 million or 52 cents per share for the 26-week period last year, which ended June 30, 2007. Net earnings for the first 26 weeks of 2008, excluding unusual items, were $95.9 million or 89 cents per share compared to $47.4 million or 43 cents per share for 26-week period ended June 30, 2007.

Operating EBITDA before unusual items increased by 6.1% to $207.4 million versus $195.4 million in the 26-week period ended August 4, 2007. As previously mentioned, please refer to "Reconciliation of Net Earnings to Operating EBITDA" attached. For this comparable period, gross margins increased 101 basis points as a percentage to revenue.

Commenting on the second quarter and first half, Dene Rogers, President and Chief Executive Officer, Sears Canada Inc. said, "Our same store sales compared to last year headed in a positive direction during the quarter despite depressed consumer confidence and a tougher economy.

Challenges in our soft lines were offset by improved performance in our big-ticket areas. We remain focused on becoming Canada's No. 1 retailer by providing products, services and solutions that improve the lives of our customers and build lifetime relationships."

Sears Canada Inc


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