Sears Canada earnings fall 50% as Sept. 11 events hurt sales
By Furniture Today Staff -- Furniture Today, November 5, 2001
TORONTO — Sears Canada saw its net income fall by half in the third quarter, which it attributed in part to the Sept. 11 tragedies.
Revenues at this country's largest retailer and top-ranked furniture store came to C$1.58 billion in the 13 weeks ended Sept. 29, up 8.6% from the same quarter a year ago. Merchandise sales increased 5.4%, with credit accounting for most of the other revenues.
Same-store sales fell 1.1%.
Net income of C$17.9 million was just under half of the C$36.2 million earned in the same quarter last year.
These results include an after-tax gain of C$25.3 million related to the sale of receivables as well as an after-tax charge of $2.6 million related to the planned closing of 14 Sears auto centers.
Excluding these non-operating items, the company incurred a loss of 5 cents per share in the quarter compared to earnings of 32 cents per share for the same period last year.
Revenues for the 39 weeks ended Sept. 29 were up 8.2% to C$4.59 billion, with merchandise sales rising 8.2% while same-store sales rose by 1%.
Net income plummeted to C$15.5 million from the C$105.6 million recorded for the same period last year. Excluding the non-operating items, the company reported a loss of 7 cents a share, compared with a profit of 89 cents per share for 2000.
"Our outlook for the remainder of this year and the early part of next year remains highly guarded," said Mark Cohen, chairman and chief executive officer. "We continue to focus on reducing inventory commitments. This focus on inventory management has started to show results, as witnessed by the improvement in our gross margin trend seen in September."
Sears Canada also remains focused on managing expenses "in this time of economic uncertainty," Cohen said.
September did bring a few signs of improvement. Sears reported merchandise sales for the five-week period ended Sept. 29 were up 1.1% from a year earlier, although same-store sales decreased 4.5%.
"While revenues were negatively impacted by the tragic events of Sept. 11, sales recovered to previous levels by the end of September," Cohen said. "Our gross margin rate in September increased significantly from trend, reflecting our focus on managing inventory levels, as well as the improved seasonal content of these inventories."
| 13 weeks ended 9/29 | 2001 | 2000 | Change |
|---|---|---|---|
| Revenues | C$1,581,700,000 | C$1,456,000,000 | 8.6% |
| Operating income | 96,000,000 | 110,600,000 | (13.2%) |
| Net income | (b)17,900,000 | (c)36,200,000 | (50.6%) |
| Earnings per share | 0.17 | 0.34 | (50.0%) |
| 39 weeks ended 9/29 | 2001 | 2000 | Change |
| Revenues | C$4,593,600,000 | C$4,247,000,000 | 8.2% |
| Operating income | 210,500,000 | 312,100,000 | (32.6%) |
| Net income | (b)15,500,000 | (c)105,600,000 | (85.3%) |
| Earnings per share | 0.15 | 0.99 | (84.8%) |
| (a) In Canadian dollars. (b) Includes a $25.3 million after-tax gain on the sale of receivables and a $2.6 million after-tax charge for the closing of 14 auto centers. (c) Includes a $2 million after-tax gain on the acquisition of Eaton's. | |||
