May 20, 2009 / 12:55 PM / in 9 years

UPDATE 2-Sears Canada profit falls as sales weaken

*EPS C$0.10 vs C$0.66

*Revenue down 10.4 pct at C$1.12 billion

*Same store sales down 10.4 percent

(Adds background and analyst comments)

TORONTO, May 20 (Reuters) - Sears Canada Inc SCC.TO said on Wednesday its quarterly profit fell 85 percent as fragile consumer confidence hammered sales at the country’s second-biggest department-store chain.

Sears Canada, which is majority owned by Sears Holdings Corp (SHLD.O), earned C$10.3 million ($9 million), or 10 Canadian cents a share, for its first quarter ending May 2, down from C$70.8 million, or 66 Canadian cents, for the same time last year.

Excluding a charge related to staff reductions, the company earned C$16.8 million, or 16 Canadian cents a share.

The company said in February that it would cut about 300 workers across the country to reduce costs. Half of the layoffs were in its Toronto headquarters, with the remainder in repair services.

Analysts were expecting an average of 15 Canadian cents a share before items, according to Reuters Estimates.

Revenue dipped 10 percent to C$1.12 billion, as same-store sales, a key measure of the performance of stores open for at least a year, dropped 10.4 percent.

“It’s a very tough economic environment out there and consumer confidence is low,” said Brian Yarbrough, an analyst at Edward Jones in St. Louis, Missouri.

“I thought the same store sales would be down mid-singles to maybe high-singles, but at 10.4 percent, it is definitely worse than we expected.” ($1=$1.15 Canadian) (Reporting by Scott Anderson; Editing by Frank McGurty)

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