Sears Canada profit drops on lower sales

Tue Aug 17, 2010 12:10pm EDT
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TORONTO (Reuters) - Retailer Sears Canada said on Tuesday its quarterly profit dropped 35 percent as weaker consumer confidence weighed on sales.

Sears Canada, which is now 90.4 percent owned by parent company Sears Holdings Corp, said net income fell to C$31.9 million ($30.1 million), or 29 Canadian cents a share, for the second quarter ended July 31. That compares with C$49.1 million, or 45 Canadian cents, for the same quarter a year earlier.

Revenues dropped 3 percent to C$1.2 billion while same-store sales, or sales in stores opened at least a year, fell 2.4 percent.

"Our results reflect a continuing downward trend in consumer confidence caused by high unemployment and other factors," Chief Executive Dene Rogers said in a statement.

Sears Canada, which owns a network of 197 corporate stores, 241 dealer stores and 31 home improvement showrooms, said it was taking steps to remain competitive with its zero-interest and payment-deferral financing plans, by rolling out new apparel brands this fall, and by offering affordable custom furniture.

Parent company Sears Holdings Corp took steps in April toward full ownership of the Canadian unit, buying hedge fund manager Bill Ackman's 17.3 percent stake in Sears Canada for $560 million.

A share buyback program that ends May 24, 2011, for 5 percent of the shares outstanding could increase its ownership by another 5 percent.

Sears Canada shares were down 0.8 percent at C$24.69 late on Tuesday morning on the Toronto Stock Exchange.

($1=$1.03 Canadian)

(Reporting by Solarina Ho; editing by Peter Galloway)