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Sears Canada takes revenue, comp hits in Q3, but improves on net loss

Toronto - The third quarter for Sears Canada Inc. proved a challenge, as the chain posted declines in revenue and comps.

But its net loss was reduced, encouraging the company about ongoing improvements it is making at the store level in merchandise mix.

Calvin McDonald, president and ceo, explained the reasons for the 6.8% decrease in revenue - to $1,037.5 million compared to the prior year's $1,113.2 million -- was "primarily due to a significant reduction in promotional and clearance sales in apparel, declines in pre-season sales of snow blowers, and the planned exiting of certain product lines and reduced sales of televisions in electronics."

He noted that the company "carefully managed expenses and reduced our spend in payroll and marketing and advertising expenses" to offset harsher results for the 13-week period.

Quarterly same store sales decreased by 5.7%.

But showing improvement was the net loss, which was $21.9 million or 22 cents per share compared to $44.1 million or 42 cents per share in the third quarter last year.

The company explained that included in the net loss for the 2011 third quarter is a $45.6 million pre-tax charge relating to the disposition of excess inventory and internal restructuring costs.

Year-to-date total revenues decreased 7.7% to $3,002.7 million versus $3,253.4 million a year ago, and same store sales dipped 6.4% during this period.

Net earnings for the 39 weeks came to $61.3 million or 60 cents per share compared to a net loss of $91.3 million or 87 cents per share last year.

McDonald said Sears Canada continues to make progress in its transformation strategy, "and are seeing positive signs of success. For example, even though we cycled over our attack plan from last year in major appliances and mattresses, we continue to see strength in these two key hero categories. The Baby's Room, another key hero category, which we launched in June, has experienced positive sales increases since this time over the previous year. In addition, we experienced positive sales with our Back to School program, both key indicators that we are attracting a younger, family oriented customer."

However, the company "can and must do more," he added. The pace of execution of these improvements "has not met our expectations. Recent changes to our management team have been made that are designed to lead the organization effectively through the Transformation and help us achieve our operational and financial objectives."

 

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