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Sears Canada Sales Down, Earnings Up

Sears Canada said its unaudited revenues for the 13-week period ended Dec. 30 were C$1.87 billion, down 1.8% from the comparable 2005 period. The retailer attributed the decline to the sale of the company's credit and financial services operations to JPMorgan Chase, which closed in November 2005.

Same-store sales were off 0.6%, but were even year-over-year if adjusted for the Sears Days promotion that was partly shifted into the third quarter.

Earnings of C$108.5 million or C$1.01 per share were up 6.4% from a year earlier, excluding one-time items. Fourth-quarter 2005 earnings including all items came to C$783.4 million or C$7.30 per share — C$6.31 of which was realized from the sale of the credit-card operations.

"Despite unusual weather conditions during this very important quarter of the year, which impacted seasonal merchandise sales, the quarterly results are solid and reflect the ongoing efforts of our associates to offer products, services and experiences that make us relevant to our customers," said Dene Rogers, president and ceo.

For the full year, revenues fell 4.9% to C$5.93 billion as same-store sales declined 1.1%.

Net earnings excluding one-time items rose 30.2% to C$169.1 million or C$1.57 per share. Including the credit-card business sale, 2005 earnings were C$770.8 million or C$7.22 per share.

Rogers said the company was able to replace the earnings reduction resulting from the credit-card operations sale "through more profitable sales and expense management. While same-store sales were down 1.1%, gross margin improved 81 basis points and expenses were down 11.5%.

He said earnings before interest, taxes, depreciation and amortization, excluding one-time items, increased to 7.8% of revenues in 2006 from 6.8% in 2005.

Sears Holdings, which operates Sears and Kmart stores in the United States, owns about 70% of the shares of Sears Canada. It was unsuccessful in its bid to acquire all outstanding shares of Sears Canada after losing a court challenge late last year.

Reported by Michael J. Knell of Furniture Today, an HTT sister publication.

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