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Sears records loss for 2016

 4 May 2017     Michael J. Knell 

TORONTO – An uptick in same store sales for the fourth quarter of its last fiscal year has given Sears Canada reason for optimism as revenues fell dramatically for both the company as a whole and its critical ‘Homes & Hardlines’ segment, which sells furniture, mattresses and major appliances as well as other big-ticket items such as seasonal outdoor goods.

The multi-channel merchant reported total revenue for the 13-week period ending January 28, 2017 was $744.0 million, down 16.2% from the $887.6 million for the comparable period ending January 30, 2016. However, same store sales were up 1.3%.

Sears Canada shuttered some 16 of its Sears Home during its 2016 fiscal year. Fourth quarter revenue for its ‘Home & Hardlines’ segment fell $101.4 million or 25.8% compared to the same period last year. Sales in all product categories declined. They also fell in both the direct channel, primary because of a decrease in catalogues, catalogue pages and distribution as well as challenges experienced with the launch of the new web site. Sales in retail store sales were the result of store closures throughout the 2016 fiscal year.

Despite the drop in dollar volume, same store sales for ‘Home & Hardlines’ gained 4.0% during the fourth quarter.

Sears Canada reported a fourth quarter loss of $45.8 million or 45 cents a share, deeper than the loss for the comparable period of $30.9 million or 30 cents a share.

For the fiscal year ending January 28, 2017, Sears Canada revenues $2.61 billion, down 41.6% from the $3.15 billion recorded for the prior year.

Total same store sales decreased by 4.3%. This was attributed primarily to a drop in major appliance sales, which stemmed from the loss of its credit card in November 2015.

Revenue for the ‘Home & Hardlines’ segment was $1.14 billion, falling 22.6% from the prior year’s $1.48 billion. Same store sales for the segment fell 3.3%.

During the 2016 fiscal year, Sears Canada closed 16 of its Sears Home stores. This includes eight stores, whose leases it assigned to the Toronto-headquartered Leon’s Furniture. There are now 26 stores in the network, down from 47 at the end of its 2015 fiscal year. They occupy approximately 1.2 million square feet, down from 2.1 million square feet two years earlier.

The last outlet in its ‘Mattress & Appliance Store’ network was closed in fiscal 2015.

The company also operates 95 full-line department stores, the majority of which sell at least mattresses. Some also sell appliances. It also operates Corbeil, a 32-unit chain of appliance speciality stores in Ontario and Quebec.

Sears Canada – which believes it remains the largest retailer of major appliances in the country – has also undertaken two initiatives designed to bolster sales of both white goods and mattresses. The first is ‘internet price scraping’. Here, the company “researches competitor pricing daily to seek to ensure we offer the lowest price on comparative items.”

To recover from the loss of its credit card, it entered into a new loan processing and servicing agreement with Easyfinancial Services to extend financing options to customers purchasing major appliances as well as other big ticket home goods.

The net loss for fiscal 2016 was $321.0 million or $3.15 cents a share, compared to a net loss of $67.9 million or 67 cents per share for the prior year.

Related Story: Sears to price-match mattresses, appliances after weak first quarter
Related Story: Leon’s is changing and growing

LVM Feb 2018
This HGO article was written by:
Michael J. Knell
Michael J. Knell

Michael is the publisher and editor of Home Goods Online. A seasoned business journalist, he has researched and written about the furniture, mattress and major appliance industries in both Canada and the United States for the past three decades.

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