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Sears Canada Inc declares Q2 earnings

27 Jul '06

3 min read

Sears Canada Inc announced its unaudited second quarter results. Total revenues for the 13-week period ended July 1, 2006 were $1.428 billion compared to $1.522 billion for the 13 weeks ended July 2, 2005, a decrease of 6.2 percent. The decrease in revenues was primarily due to the sale of the Credit and Financial Services operations in the fourth quarter of 2005. Same store sales decreased 3.0 percent.

Net earnings for the second quarter, including non-comparable items, were $18.1 million or 17 cents per share compared to $10.9 million or 10 cents per share in the same quarter last year. Net earnings for the quarter, excluding non-comparable items, were $27.7 million or 26 cents per share compared to $10.8 million or 10 cents per share in the quarter last year.

Gross margins for the quarter increased by 150 basis points. Total expenses were reduced by 14.1 percent, approximately 60 percent of which are related to the sale of the Credit and Financial Services operations. Inventory levels were down 2.4 percent.

The improvement in gross margins over the prior year period reflects lower promotional discounts, a favorable shift in sales mix as a higher proportion of sales were realized in the higher margin categories and channels, reduced inventory shrinkage costs and the stronger Canadian dollar. In addition, the quarter's margin rate was positively affected by a product cost reduction retroactive to the beginning of the year which was realized in the quarter.

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