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Sears Canada revenue plunges 11 percent in first quarter

Total revenues for the quarter were $771.7 million down from $867.1 million year-over-year

Sears Canada closed its location at the Eaton Centre
Photo: CTV News

Sears Canada, which could be sold by its U.S. parent, saw its net loss more than double in the first quarter as it felt the impacts of shoppers staying away due to a long winter throughout most parts of Canada.

The struggling department store chain reported Wednesday it had losses of $75.2 million, or 74 cents per share, for the three-month period ended May 3. This compared with a loss of $3.2 million, or 31 cents per share, for the same period a year earlier.

``The unseasonable weather had an adverse effect on our revenues,'' president and chief executive Douglas Campbell said in a statement.

``Sales of spring merchandise were below last year, as winter-like weather was prevalent in most parts of the country well into the new season with cooler temperatures and significantly more snow in many areas,'' he said.

Campbell said an upside to the cold weather was that it allowed the retailer to clear leftover fall and winter merchandise, ``virtually emptying our stockrooms and getting it in front the customer.''

Sears Canada Inc. said its net loss included pre-tax expenses of $7.6 million primarily related to severance costs. Also included in net loss for the quarter were pre-tax lease exit costs, warranty and other costs related to such things as the future settlement of retirement benefits, totalling $11.2 million.

Same-store sales, which are stores open for at least a year and are an important metric in the retail industry, decreased by 7.6 per cent year-over-year.

Total revenues for the quarter were $771.7 million down from $867.1 million year-over-year, affected by a number of factors, including store closures.

Last week, U.S.-based Sears Holdings announced it was considering selling its 51 per cent interest in Sears Canada. Sears Canada's board and management have said they plan to fully co-operate with Sears Holdings in the process.

Over the last few years, the embattled retail chain has faced stiff competition from long-time rivals such as Hudson's Bay Co., and American giants like Walmart and Target.

It's in the midst of a three-year turnaround plan, and has said that it's not interested in stocking high-priced runway styles and lavish decor and instead, is aiming for middle-class shoppers.

The revamp intensified when the company began a more aggressive reduction of staff aimed at lowering expenses. Since January, Sears has announced it will chop 2,200 employees from its payroll, on top of thousands more that were laid off last year.

Sears Canada's previous CEO, Calvin McDonald, abruptly left the company last September amid the company's turnaround plan for a job at North American beauty giant Sephora.

The company has said it plans on investing $30 million over the next two or three years in an new inventory management system and website enhancements to improve the customers' online shopping experience.

Over the past few years, Sears Canada has sold leases to some of its most prominent locations, including its flagship location at the Toronto Eaton Centre.

It recently announced it was selling its 15 per cent minority ownership interest in the Centre commercial Les Rivieres in Trois-Rivieres, Que., for $33.5 million. Sears says the buyer is Ivanhoe Cambridge, the real estate subsidiary of the Caisse de depot et placement du Quebec pension fund and the owner of the remaining 85 per cent of the shopping centre. The transaction, subject to customary conditions, is scheduled to close on June 2.

Sears Canada operates a retail network that includes 176 corporate stores, 234 Hometown stores, more than 1,400 catalogue and online merchandise pick-up locations, 97 Sears Travel offices and a nationwide repair and service network.

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