September 2, 2015 / 12:06 PM / 2 years ago

UPDATE 1-Sears Canada operating loss narrows on cost cuts

(Adds details from statement, background)

Sept 2 (Reuters) - Canadian department store chain Sears Canada reported a smaller operating loss, helped by the slowest decline in same-store sales in six quarters and cost cuts.

Same-store sales, a key measure of retail performance, fell 3.9 percent in the second quarter ended Aug. 2. Comparable sales fell 6.8 percent in the same period a year earlier.

The company said on Wednesday it is still searching for a new CEO to replace Ronald Boire, who is stepping down by the end of summer to take up the top job at struggling U.S. bookstore chain Barnes & Noble Inc.

Sears Canada, whose largest shareholders include Sears Holdings Corp Chief Executive Eddie Lampert and his hedge fund ESL Investments Inc, said total revenue fell 9 percent to C$768.8 million ($581.1 million).

The company, which traces its Canadian roots back to the early 1950s, has stepped up spending on areas such as its website and profitable merchandise categories, while looking to exit unprofitable product lines.

Sears Canada has closed stores and cut jobs as it lost market share to aggressive U.S. rivals such as Wal-Mart Stores Inc.

The Toronto-based company said on Wednesday it was looking to cut costs by C$100 million to C$125 million on an annualized basis from 2014 levels.

The new program will be implemented in the third quarter and the company said it expects to take one-time charges of about C$15 million to C$20 million.

The company has also launched a couple of programs, including one that allows customers to exchange children's clothing for the next size.

Sears Canada reported a profit of C$13.5 million ($10.20 million), or 13 Canadian cents per share, in the second quarter, compared with a loss of C$21.3 million, or 21 Canadian cents per share, a year earlier.

The net income included a pre-tax gain of C$67.2 million on a sale and leaseback of three properties in British Columbia and Alberta.

Operating loss narrowed to C$47.1 million from C$64.2 million.

The company's Toronto-listed shares had fallen more than 44 percent in the last 12 months through Tuesday's close. ($1 = 1.3230 Canadian dollars)

Reporting by Anannya Pramanick in Bengaluru; Editing by Anil D'Silva

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