February 25, 2009 / 1:58 PM / in 9 years

UPDATE 2-Sears Canada profit drops on weak same-store sales

* EPS C$0.89 vs C$1.35 a year earlier

* Revenue slips 5.9 pct to C$1.62 bln

* Same-store sales drop 6.2 pct

* Shares rise 0.4 pct to C$18.42 (Adds details, analyst and company comments)

TORONTO, Feb 25 (Reuters) - Sears Canada Inc SCC.TO said on Wednesday its quarterly profit dropped 34 percent as waning consumer confidence hammered sales.

Sears, Canada’s second-biggest department store chain, which is majority owned by Sears Holdings Corp (SHLD.O), said it earned C$95.5 million ($76.7 million), or 89 Canadian cents a share, in the fourth quarter, down from C$145.4 million, or C$1.35 a share, in the year-before quarter.

Revenue dropped 5.9 percent to C$1.62 billion as same store sales, a key measure of the performance of stores open for at least a year, dropped 6.2 percent.

The company blamed slumping sales on a fall in consumer confidence to the lowest level in about three decades.

Sears Canada spokesman Vince Power said the company tried to tackle the downturn with aggressive price reductions and promotions, but said it was not enough to bring consumers into the stores.

He said the company would continue to cut prices with campaigns such as its “Budget relief price drop” program.

Last week Sears Canada 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.

The 300 jobs represent less than 1 percent of the company’s total workforce of 35,000 people. Privately held department store chain Hudson’s Bay Co has cut 1,000 jobs.

Brian Yarbrough, an analyst at Edward Jones in St. Louis, Missouri, said Sears Canada faces a rough road as more of the big box chains, including Loews Corp (L.N), fight for market share.

“There is just nothing attractive long term about this story,” he said.

“They are going to continue to lose market share. 2009 is going to continue to be tough for them and it’s going to be a tough economic environment.”

Sears Canada shares were up 0.4 percent at C$18.42 on the Toronto Stock Exchange on Wednesday afternoon.

$1=$1.25 Canadian Reporting by Scott Anderson; Editing by Peter Galloway

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