TORONTO-Now at the halfway point of its three-year transformation plan, Sears Canada posted a 9.6 percent drop in second-quarter sales, to $960.1 million, including a decrease of 2.5 percent in same-store sales.
The retailer reported net income of $152.8 million in the quarter, which ended on July 28. This included a $185.7 million pretax gain related to transactions for the vacating of two stores, along the granting of an option regarding the vacating of a third store. Without this gain, Sears Canada’s second-quarter net loss was $11.2 million, compared to a net loss of $9.8 million in last year’s second quarter.
According to Calvin McDonald, the company’s president and CEO, the sales picture included declines in home furnishings, mattresses and home electronics. McDonald attributed this shortfall to a low-growth housing market north of the border.
Gross margin finished the quarter at 37.4 percent, down 23 basis points from the second quarter of last year. Selling, general and administrative expenses fell 10.3 percent in dollars and 30 basis points as a percentage of sales, to 37.9 percent.
McDonald acknowledged that Sears Canada has “much work to do” in its transformation, although “we are starting to see progress. The success we are seeing in the merchandise categories where we have focused most of our transformation efforts continues to be an indication that Canadians are responding positively to the changes they are seeing at Sears.”