Eroding sales in two of its critical product segments that include furniture, mattress and major appliances contributed to a weak fiscal third quarter for Sears Canada, even as the multichannel retailer declared a special dividend to distribute some C$509 million to its shareholders.
Revenues for the 13-week period that ended Nov. 2 were C$982.3 million, down 6.4% from the comparable period a year earlier.
However, same-store sales were up 1.2% for the quarter. The company also posted solid growth in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and non-operating activities) to C$7.3 million from C$3.9 million for the third quarter last year.
The net loss was C$48.8 million or 48 cents per share, more than double the prior period's net loss of C$21.9 million or 22 cents per share.
Included in the net loss were nonrecurring charges of C$42.8 million, related to severance costs and impairment charges.
For the 39-week period also ending Nov. 2, Sears Canada had revenues of C$2.81 billion, down 7.6% from a year earlier. Same-store sales were down 1.2%.
Net earnings for the period were C$72.8 million or 71 cents per share compared to C$61.3 million or 60 cents per share last year, up 18.3% on a per share basis. This year's earnings include a C$185.7 million gain on lease terminations realized in the second quarter. Last year's earnings include a C$167.1 million gain on lease termination realized in the first quarter of 2012.
"This is the first quarterly same-store sales increase for the company since 2008," Doug Campbell, Sears Canada's newly named president and CEO, said in a statement. "October was our strongest month of the quarter, during which we adjusted our plans to market conditions and experienced double-digit same store sales increases in both our apparel and accessories and home and hardlines categories. Our direct business also grew substantially during the quarter."
Home and hardlines slaes of C$242.0 million in the quarter were down 2.9% year-over-year. For the year to date, sales were off 8.9% to C$705.1 million. In addition to furniture and mattresses, this category probably includes such items as seasonal equipment, small appliances and tools. The company didn't provide further breakdowns.
Major appliances sales fell 3.3% to C$214 million. For the year-to-date, sales were off 2.5% to C$618.6 million.
Sears Canada also announced it will declare an anticipated extraordinary cash dividend of C$5 per share early next month and will distribute a total of about C$509 million.
The two largest shareholders in Sears Canada are Sears Holdings - the U.S.-based parent of Sears and Kmart - which holds 51% of the outstanding shares, and ESL Investments - the fund controlled by hedge fund manager Edward Lampert - which holds 27.6%. ESL is also the largest shareholder in Sears Holdings.
The special dividend was funded by the company's recent asset sales, which included the return of the leases for its flagship Eaton Centre store here and four others to their landlord.
At the end of the quarter, Sears Canada's network included 181 corporate stores, 241 hometown dealer stores, over 1,400 catalog merchandise pickup locations, 101 Sears Travel offices and a nationwide home maintenance, repair, and installation service.
