November 21, 2008 / 2:05 PM / 10 years ago

UPDATE 2-Sears Canada operating profit, sales rises

* Net EPS C$0.64 vs C$0.97

* Revenue rises 5.1 pct to C$1.44 billion

* Same store sales up 0.9 percent

* Shares gain 2.2 pct to C$16.90 (Adds details, background)

TORONTO, Nov 21 (Reuters) - Sears Canada Inc SCC.TO, reported higher operating earnings on Friday, helped by a slight boost in same store sales, and vowed to slash prices ahead of the Christmas shopping rush.

Canada’s second-biggest department store chain promised to be competitive as shoppers tread cautiously into December faced with a slumping economy and lower consumer confidence.

“We’re certainly ready for an economy where Canadians are still not that confident about the economic outlook,” said Sears Canada spokesman Vince Power.

“Compared with previous years, I would say that the consumer is going to be a lot more careful because of the uncertainty.”

Earlier this week, the company, which boasts more than 400 stores across Canada, lowered prices on a number of name brand items to entice shoppers into stores.

Canadian retailers have been forced to cut prices as they look to fend off stiff price competition from U.S.-based retail giant Wal-Mart Stores (WMT.N).

However, the outlook is not all gloom for retailers.

“All evidence points to Canadian retail spending holding up relatively well to date,” Keith Howlett, an analyst at Desjardins Securities, wrote in a recent note.

“Given relatively stable employment levels, the recent ‘gas dividend’ from falling crude oil prices, the likely reduction in external travel and cross-border shopping, and the relatively short time to the holidays, we expect retail spending in Canada to hold through to the end of the year.”


Despite the economic slowdown, Sears Canada still managed to eke out a small gain in same store sales, which rose 0.9 percent in the quarter, ended Nov. 1.

Net profit declined from a year earlier, when earnings were boosted by big one-time gains from the sale of the company’s corporate headquarters.

Excluding unusual items, Sears Canada earned C$67.8 million, or 63 Canadian cents a share, up from C$46 million, or 44 Canadian cents a share, for the same period in 2007.

Net earnings fell to C$68.9 million ($54 million), or 64 Canadian cents a share, from C$104 million, or 97 Canadian cents a share.

The 2007 net included one-time gains of C$58 million, or 53 Canadian cents a share, largely from the sale of the downtown Toronto headquarters.

Revenue rose to C$1.44 billion from C$1.37 billion.

Shares of Sears Canada, which is controlled by U.S. retailer Sears Holdings Corp (SHLD.O), rose 2.2 percent to C$16.90 on the Toronto Stock Exchange, much better than the consumer discretionary index, of which it is a member, which was down 0.9 percent. ($1=$1.29 Canadian) (Reporting by Scott Anderson; editing by Rob Wilson)

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