Sears Canada continues to struggle
May 01, 2012 Francine Kopun
Sears Canada is expected to report same-store sales decline of 6.2 per cent, according to a release from Sears Holdings in the U.S. on Tuesday.
Sears Holdings Corporation announced the results in advance of its annual meeting of shareholders, to be held May 2. Sears Canada expects to release its unaudited first-quarter earnings on May 16.
The decline was in line with expectations, Keith Howlett, analyst at Desjardins Securities, said in
a note issued Tuesday.
Sears Holdings said the decline in same-store sales in Canada is primarily due to sales decreases in electronics, home décor, hardware and apparel, partially offset by increases in major appliances and mattresses.
Sears Canada Inc. is 95 per cent owned by Sears Holdings. The two companies report using different accounting formats.
According to Sears Holdings, Sears Canada is also expected to report total adjusted EBITDA of between $0 to – $30-million for 1Q12. The loss is less than predicted, according to Howlett. He pointed out that 1Q is seasonally the weakest for retailers.
Sears Holdings is expecting net income in the first quarter of 2012 of between $155 million and $195 million, versus a net loss of $165-million for the first quarter in 2011.
That includes approximately $400-million in gains from the sale of U.S. stores and in Canada, the early termination of leases in malls in Ottawa, Vancouver and Calgary for $170-million in cash to Sears.
Sears Holdings also expects to report adjusted EBITDA of $135-million to $195-million for the first quarter of 2012, versus $58-million for fiscal 2011. The increase reflects an improved margin rate, particularly in appliances, and reduced expenses.