* To pay C$3.50/shr special dividend
* Q1 EPS C$0.07 vs year-before C$0.10
* Says will make normal course issuer bid
TORONTO, May 18 (Reuters) - Sears Canada SCC.TO said on Tuesday first-quarter profit fell 30 percent, and announced a C$3.50-per-share special dividend and a possible share buyback that would bring parent Sears Holdings Corp (SHLD.O) closer to full ownership of the company.
Sears Canada said it will spend C$367.7 million ($351 million) to issue the dividend, which will be paid to shareholders of record at the close of business on May 31.
Sears Canada will also make a normal course issuer bid, allowing the company to purchase for cancellation up to 5.4 million shares, or about 5 percent of the company.
Sears Holdings said in April it would buy hedge fund manager Bill Ackman's 17 percent stake in Sears Canada, giving Sears Holdings a 90 percent stake. Sears Holdings failed in an attempt to take Sears Canada private several years ago.
Net profit fell to C$7.2 million, or 7 Canadian cents per share, in the three months ended May 1, from C$10.3 million, or 10 Canadian cents per share, in the year-before period.
Revenue eased 4.4 percent to C$1.1 billion, as the strong Canadian dollar prompted shoppers to seek bargains in the United States. ($1=$1.04 Canadian) (Reporting by Cameron French; Editing by Steve Orlofsky)