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Sears Canada Q1 sales fall 4.4% PDF Print E-mail
Written by HGO Staff   
TORONTO (18 May 2010) - Sears Canada said reported lower sales and earnings for the first quarter of its current fiscal year attributing the slide to a stronger Canadian dollar and the continuing negative impact the recession is having on consumer confidence. At the same time, the multi-channel retailer announced a special dividend of $3.50 per share.

Revenue for the 13-week period ending 01 May 2010 was $1.07 billion, a decrease of 4.4% from the $1.12 billion for the 13-weeks ending 02 May 2009. Same store sales fell 2% although gross margins gained 51 basis points compared to first quarter of 2009.

Net earnings were $7.2 million or seven cents per share, a step-down from the $10.3 million or 10 cents per share recorded for the comparable period.

Sears Canada also said that it had holdings of cash, restricted cash and investments valued at $1.29 billion at the end of the first quarter this year, an increase of $417.4 million compared to the end of the first quarter last year. Total debt was $349.3 million at the end of the quarter this year compared to $364.4 million at the end of the quarter last year.

"Canadians are still feeling the effects of the economic recession," Sears Canada president and chief executive officer Dene Rogers said in a statement. "The Consumer Confidence Index in April 2010 at 84.8% was lower than it was three months earlier in January, 2010 at 96.6%."

Rogers also said that the strong dollar prompted more cross-border shopping, which negatively impacted the company's sales. Also dragging down Sears Canada's top line performance was a planned reduction in catalogue impressions of 16.6%.

"In response, we are lowering prices to offer Canadians exceptional value and providing special services like deferred financing and equal billing payments to make it easy for customers to manage their household budgets for appliances, furniture, electronics and home improvement items such as roofing and air conditioners," he continued, adding the company will also launch new apparel brands and upgrade the quality and assortment of its existing apparel lines.

Sears Canada will also pay an extraordinary cash dividend of $3.50 per share to shareholders of record at the close of business on 31 May 2010. The payout has a total estimated value of $376.7 million and comes just weeks after the retailer's parent company - Sears Holdings of Hoffman Estates, Illinois - acquired 17.3% of the Canadian unit's outstanding shares from William Ackman and Pershing Square Management.

Sears Holdings now controls 90.4% of Sears Canada's outstanding share and most observers expect it will be taken private in the not-too-distant future.

Controlled by hedge fund manager Edward Lampert, Sears Holdings also operates Sears Roebuck & Co. and Kmart in the United States.

Sears Canada also announced that it has sought permission from the Toronto Stock Exchange to launch a ‘Normal Course Issuer Bid' to buy back for cancellation as much as 5% of its issued and outstanding shares. There are currently just over 107.6 million common shares of Sears Canada outstanding.

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