Sears Canada Reports Fourth Quarter Earnings and Full-Year Results

Sears Canada Reports Fourth Quarter Earnings and Full-Year Results 
TORONTO, Feb. 27, 2013 /CNW/ - Sears Canada Inc. (TSX: SCC) today announced 
its unaudited fourth quarter and full-year results. Total revenues for the 
14-week period ended February 2, 2013 were $1,298.0 million versus $1,365.9 
million for the 13-week period ended January 28, 2012, a decrease of 5.0%. 
Same store sales for the quarter decreased 3.8%. All amounts in this release 
are expressed in Canadian dollars unless otherwise specified. 
Net earnings for the 14-week fourth quarter this year were $39.9 million or 39 
cents per share versus $41.0 million or 39 cents per share for the 13-week 
fourth quarter of the prior year. Included in the net earnings for the 
fourth quarter this year were pre-tax gains of $21.1 million related to a 
voluntary buyout program concerning post-retirement benefits and $8.6 million 
related to the sale of a joint venture interest, and a pre-tax charge of $12.6 
million related to Transformation expenses. Included in net earnings for the 
fourth quarter last year was a pre-tax charge of $14.4 million related to 
Transformation expenses. Adjusted EBITDA (Earnings Before Interest, Taxes, 
Depreciation and Amortization) for the 14-week period ended February 2, 2013 
was $62.4 million versus $101.8 million for the 13-week period ended January 
28, 2012. 
Total revenues for the 53-week period ended February 2, 2013 were $4,300.7 
million versus $4,619.3 million for the 52-week period ended January 28, 2012, 
a decrease of 6.9%. Same store sales for the year decreased 5.6%. Net 
earnings for the year ended February 2, 2013 were $101.2 million or 99 cents 
per share versus a net loss of $50.3 million or 48 cents per share for the 
52-week period ended January 28, 2012. Included in net earnings for the year 
this year was a pre-tax gain of $167.1 million related to lease terminations 
and a charge of $12.6 million related to Transformation expenses. Included 
in the net loss for the year last year was a charge of $60.0 million related 
to Transformation expenses. Adjusted EBITDA for the 53-week period ended 
February 2, 2013 was $47.0 million versus $124.0 million for the 52-week 
period ended January 28, 2012. 
Commenting on the fourth quarter, Calvin McDonald, President and Chief 
Executive Officer, Sears Canada Inc., said, "Although sales were lower than 
last year, our same store sales performance in the fourth quarter improved 
over the three prior quarters. Home electronics and Craftsman, which 
includes snowblowers and hardware, contributed to the majority of our sales 
decline. Though the positive sales trend in major appliances slowed, we 
continued to add market share. Of particular note was the positive same 
store sales growth of our apparel and accessories business in the quarter 
compared to the fourth quarter last year. Inventory quality at the end of 
the quarter improved compared to the same time last year, as a result of a 
significant reduction in out-of-season inventory." 
With respect to the full year, Mr. McDonald said, "While the revenues and 
Adjusted EBITDA in 2012 were disappointing, we have said from the outset that 
our Transformation is a three-year journey. We implemented many initiatives 
during 2012 to which our customers have responded positively such as an 
enterprise-wide price rebalancing under '5,000 Lower Prices', our quarterly 
LOOK! reports, The Baby's Room, the redesigned Sears Home store in Ottawa, and 
nine completely refreshed full-line stores. We expect to build on these and 
our other successes as we move into 2013. 
"I acknowledge the efforts and dedication of the 29,000 Sears associates who 
continue to implement the changes necessary to move the Transformation 
forward, and I thank them for their commitment." 
This release contains information which is forward-looking and is subject to 
important risks and uncertainties. Forward-looking information concerns the 
Company's future financial performance, business strategy, plans, goals and 
objectives. Factors which could cause actual results to differ materially 
from current expectations include, but are not limited to: the ability of the 
Company to successfully implement its cost reduction, productivity improvement 
and strategic initiatives and whether such initiatives will yield the expected 
benefits; the results achieved pursuant to the Company's long-term marketing 
and servicing alliance with JPMorgan Chase Bank, N.A.; general economic 
conditions; competitive conditions in the businesses in which the Company 
participates; changes in consumer spending; seasonal weather patterns; 
customer preference toward product offerings; changes in the Company's 
relationship with its suppliers; interest rate fluctuations and other changes 
in funding costs; fluctuations in foreign currency exchange rates; the 
possibility of negative investment returns in the Company's pension plan; 
the outcome of pending legal proceedings; and changes in laws, rules and 
regulations applicable to the Company. While the Company believes that its 
forecasts and assumptions are reasonable, results or events predicted in this 
forward-looking information may differ materially from actual results or 
events. 
Adjusted EBITDA is a non-IFRS measure, and excludes finance costs, interest 
income, share of income or loss from joint ventures, income tax expense or 
recovery, depreciation and amortization and income or expenses of a 
non-recurring, unusual or one-time nature. Please refer to the table 
attached for a reconciliation of net earnings (loss) to Adjusted EBITDA. 
Sears Canada is a multi-channel retailer with a network that includes 181 
corporate stores, 261 hometown dealer stores, 9 home services showrooms, over 
1,500 catalogue and online merchandise pick-up locations, 101 Sears Travel 
offices and a nationwide home maintenance, repair, and installation network. 
The Company also publishes Canada's most extensive general merchandise 
catalogue and offers shopping online at www.sears.ca. 
SEARS CANADA INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 
Unaudited 
                                           As at              As at
(in CAD millions)                   February 2, 2013   January 28, 2012 
                                                                    
ASSETS                                                                  
Current assets                                                          
Cash and cash equivalents           $          237.0   $          397.4 
Accounts receivable, net                        76.2              116.2 
Income taxes recoverable                         5.5                4.1 
Inventories                                    851.4              823.9 
Prepaid expenses                                30.1               27.9 
Total current assets                         1,200.2            1,369.5 
                                                                    
Non-current assets                                                      
Property, plant and equipment                  840.0              872.0 
Investment property                             21.7               21.7 
Intangible assets                               27.2               23.6 
Goodwill                                         8.7                8.7 
Investment in joint ventures                   263.4              301.4 
Deferred tax assets                             83.8               84.6 
Other long-term assets                          34.1               49.2 
Total assets                        $        2,479.1   $        2,730.7 
                                                                    
LIABILITIES                                                             
Current liabilities                                                     
Accounts payable and accrued        $          482.0   $          576.8
liabilities 
Deferred revenue                               197.5              208.0 
Provisions                                      66.3               64.8 
Income taxes payable                         —                1.0 
Other taxes payable                             33.9               42.8 
Principal payments on long-term                  5.2                5.1
obligations due within one year 
Total current liabilities                      784.9              898.5 
                                                                    
Non-current liabilities                                                 
Long-term obligations                           30.9             117.6  
Deferred revenue                                90.7               89.2 
Retirement benefit liability                   415.7              452.3 
Deferred tax liabilities                         5.8                5.3 
Other long-term liabilities                     74.7               75.8 
Total liabilities                            1,402.7            1,638.7 


                                                                       

SHAREHOLDERS' EQUITY                                                   

Capital stock                                   14.9               15.0

Retained earnings                            1,208.2            1,218.5

Accumulated other comprehensive              (146.7)            (141.5)
loss

Total shareholders' equity                   1,076.4            1,092.0

Total liabilities and               $        2,479.1   $        2,730.7
shareholders' equity
                                                          
                                                          

SEARS CANADA INC.
CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) AND COMPREHENSIVE INCOME 
(LOSS) 
For the 14 and 53-week periods ended February 2, 2013 and the 13 and 52-week 
periods ended January 28, 2012

Unaudited
                        14 and 13-Week Period     53 and 52-Week Period

(in CAD millions,            2012              
except per share
amounts)                                 2011        2012          2011

Revenue                 $ 1,298.0   $ 1,365.9   $ 4,300.7   $   4,619.3

Cost of goods and                                            
services sold               848.7       864.6     2,749.2       2,932.3

Selling, administrative                                      
and other expenses          429.6       442.7     1,634.4       1,737.9

Operating earnings                                           
(loss)                       19.7        58.6      (82.9)        (50.9)
                                                                       

Gain on lease                                                
terminations              —     —       167.1       —

Gain on sale of                                              
interest in joint
venture                       8.6     —         8.6       —

Gain on settlement of                                        
post-retirement
benefits                     21.1     —        21.1       —

Finance costs                 2.4         4.0        13.3          16.0

Interest income               0.8         0.4         4.1           1.7

Share of income from                                         
joint ventures                0.1         1.5         9.5           8.3

Earnings (loss) before                                       
income taxes                 47.9        56.5       114.2        (56.9)
                                                                       

Income tax (expense)                                         
recovery                                                               

  Current                     3.9        12.3       (8.2)        (18.7)

  Deferred                 (11.9)      (27.8)       (4.8)          25.3
                        $   (8.0)   $  (15.5)   $  (13.0)   $       6.6

Net earnings (loss)     $    39.9   $    41.0   $   101.2   $    (50.3)
                                                                       

Basic net earnings      $           $           $           $
(loss) per share             0.39        0.39        0.99        (0.48)

Diluted net earnings    $           $           $           $
(loss) per share             0.39        0.39        0.99        (0.48)
                                                                       

Net earnings (loss)     $    39.9   $    41.0   $   101.2   $    (50.3)
                                                                       

Other comprehensive                                          
loss:                                                                  

  Gain (loss) on                                           
  foreign exchange
  derivatives             —         0.9     —         (4.1)

  Reclassification to                                      
  net earnings (loss)
  of (gain) loss on
  foreign exchange
  derivatives               (0.2)         0.2       (0.2)           7.1

  Remeasurement loss on                                    
  net defined
  retirement benefit
  liability                 (6.3)      (79.1)       (5.0)        (79.1)

Other comprehensive     $           $           $           $
loss                        (6.5)      (78.0)      (5.2 )        (76.1)

Comprehensive income    $           $           $           $
(loss)                       33.4      (37.0)        96.0       (126.4)
                                                               
                                                               

SEARS CANADA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the 14 and 53-week periods ended February 2, 2013 and the 13 and 52-week 
periods ended January 28, 2012

Unaudited
                                                  Foreign                                   
                                                  exchange
                                               derivatives                     Accumulated
                                             designated as                           other


                   Capital    Retained            cash   Remeasurement   comprehensive   Shareholders'
(in CAD millions)        stock    earnings     flow hedges            loss   (loss) income         equity 
Balance as at             14.9   $ 1,270.2             0.2   $               $                $
October 27, 2012     $                       $                    (140.4 )        (140.2 )        1,144.9 
Comprehensive                                                                                  
income (loss)                                                                                             
Net earnings                        39.9                                         —           39.9 
Other                                                                                          
comprehensive loss                                                                                        
Reclassification                                                                             
  of gain on
  foreign
  exchange
  derivatives                                        (0.2)                           (0.2)          (0.2) 
Remeasurement                                                                                
  loss on net
  defined
  retirement
  benefit
  liability                                          (6.3)                           (6.3)          (6.3) 
Total other            —     —           (6.5)                                     
comprehensive loss                                                 —           (6.5)          (6.5) 
Total                  —        39.9           (6.5)                                     
comprehensive
income (loss)                                                      —          (6.5 )           33.4 
Dividends                        (101.9)                                                     
  declared                                                                                        (101.9) 
Balance as at             14.9   $ 1,208.2           (6.3)   $               $                $
February 2, 2013     $                       $                     (140.4)         (146.7)        1,076.4 
                                                                                                      
Balance at October        15.1   $ 1,188.2           (0.9)   $               $                $
29, 2011             $                       $                      (62.6)          (63.5)        1,139.8 
Comprehensive                                                                                  
(loss) income                                                                                             
Net earnings                        41.0                                         —           41.0 
Other                                                                                          
comprehensive
(loss) income                                                                                             
Gain on foreign                                                                              
  exchange
  derivatives                                          0.9                             0.9            0.9 
Reclassification                                                                             
  of loss on                                                                                
  foreign
  exchange
  derivatives                                          0.2                             0.2            0.2 
Remeasurement                                                                                
  loss on net
  defined
  retirement
  benefit
  liability                                                         (79.1)          (79.1)         (79.1) 
Total other            —     —             1.1                                     
comprehensive
(loss) income                                                       (79.1)          (78.0)         (78.0) 
Total                  —        41.0             1.1                                     
comprehensive
(loss) income                                                       (79.1)          (78.0)         (37.0) 
Repurchases of         (0.1)      (10.7)                                                     
  common shares                                    —         —         —         (10.8) 
Balance as at             15.0   $ 1,218.5   $         0.2   $               $                $
January 28, 2012     $                                             (141.7)         (141.5)        1,092.0 
                                                                                                      
Balance as at             15.0   $ 1,218.5   $         0.2   $               $                $
January 28, 2012     $                                            (141.7 )         (141.5)        1,092.0 
Comprehensive                                                                                  
income (loss)                                                                                             
Net earnings                       101.2                                        —           101.2 
Other                                                                         
comprehensive loss                                                                                        
Reclassification                                                                             
  of gain on
  foreign
  exchange
  derivatives                                        (0.2)                           (0.2)          (0.2) 
Remeasurement                                                                                
  loss on net
  defined
  retirement
  benefit
  liability                                                          (5.0)           (5.0)          (5.0) 
Total other            —     —           (0.2)                                     
comprehensive loss                                                   (5.0)           (5.2)          (5.2) 
Total                  —       101.2           (0.2)                           (5.2)
comprehensive
income (loss)                                                        (5.0)                           96.0 
Repurchases of         (0.1)       (9.6)                                    
  common shares                                                                                     (9.7) 
Dividends                        (101.9)                                    
  declared                                                                                        (101.9) 
Balance as at             14.9   $ 1,208.2   $                               $                $
February 2, 2013     $                             —   $     (146.7)         (146.7)        1,076.4 


                                                                                                         

Balance at January        15.4   $ 1,310.4   $               $                                $
29, 2011             $                               (2.8)          (62.6)   $      (65.4)        1,260.4

Comprehensive                                                                 
(loss) income                                                                                            

  Net loss                          (50.3)                                         —         (50.3)

Other                                                                         
comprehensive
(loss) income                                                                                            

  Loss on foreign                                           
  exchange                                                                                     
  derivatives                                        (4.1)                           (4.1)          (4.1)

  Reclassification                                                                             
  of loss on                                                                                   
  foreign
  exchange
  derivatives                                          7.1                             7.1            7.1

  Remeasurement                                                                                
  loss on net
  defined
  retirement
  benefit
  liability                                                         (79.1)          (79.1)         (79.1)

Total other                                                                                    
comprehensive
(loss) income          —     —             3.0          (79.1)          (76.1)         (76.1)

Total                  —      (50.3)             3.0                                     
comprehensive
(loss) income                                                       (79.1)          (76.1)       (126.4) 

  Repurchases of         (0.4)      (41.6)                                    
  common shares                                                                                    (42.0)

Balance as at             15.0   $ 1,218.5   $               $                                $
January 28, 2012     $                                 0.2         (141.7)   $     (141.5)        1,092.0
                                                                                                 
                                                                                                 

SEARS CANADA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the 14 and 53-week periods ended February 2, 2013 and the 13 and 52-week 
periods ended January 28, 2012

Unaudited
                          14 and 13-Week Period   53 and 52-Week Period

(in CAD millions)              2012        2011        2012        2011

Cash flow generated from                                               
(used for) operating
activities

  Net earnings (loss)     $    39.9   $    41.0   $   101.2   $  (50.3)

  Adjustments for:                                                     
    Depreciation and           28.1        28.8       113.3       114.9
    amortization expense
    Impairment losses           1.9         2.5       (0.2)         2.5
    (reversal)
    Loss on disposal of         0.3         0.3         1.2         1.1
    property, plant and
    equipment
    Gain on sale of joint     (8.6)     —       (8.6)     —
    venture
    Gain on lease           —     —     (167.1)     —
    terminations
    Finance costs               2.4         4.0       13.3)        16.0
    Interest income           (0.8)       (0.4)       (4.1)       (1.7)
    Share of income from      (0.1)       (1.5)       (9.5)       (8.3)
    joint ventures
    Retirement benefit          7.8         7.5        31.6        30.2
    plans expense
    Gain on settlement of    (21.1)     —      (21.1)     —
    post-retirement
    benefits
    Short-term disability       2.5         2.4         8.4         8.4
    expense
    Income tax expense          8.0        15.5        13.0       (6.6)
    (recovery)

  Interest received             0.7         0.3         2.3         1.6

  Interest paid               (1.5)       (3.9)       (5.3)       (4.6)

  Retirement benefit         (31.9)       (2.9)      (63.0)      (17.9)
  plans contributions

  Income tax refunds            8.3        16.1         9.0      (21.6)
  (payments), net

  Other income tax             11.1        11.7       (4.1)     —
  receipts (deposits),
  net

  Changes in non-cash          68.2        40.5     (122.2)        29.6
  working capital

  Changes in long-term          3.8      (10.7)        32.0       (8.3)
  assets and liabilities
                              119.0       151.2      (79.9)        85.0

Cash flow (used for)                                                   
generated from investing
activities

  Purchases of property,                                     
  plant and equipment and
  intangible assets          (45.1)      (28.3)      (97.5)      (84.3)

  Proceeds from sale of         0.4         0.1         2.2         0.7
  capital assets

  Proceeds from lease       —     —       175.0     —
  terminations

  Proceeds from sale of     —     —         3.5     —
  Cantrex operations

  Proceeds from sale of        38.3     —        38.3     —
  joint venture

  Dividends received from       1.6         6.0        18.4        20.1
  joint ventures
                              (4.8)      (22.2)       139.9      (63.5)

Cash flow (used for)                                                   
generated from financing
activities

  Interest paid on            (0.7)       (0.6)       (2.4)       (2.2)
  finance lease
  obligations

  Repayment of long-term      (3.0)       (1.5)     (142.3)     (117.1)
  obligations

  Proceeds from long-term       1.5       101.1        35.8       105.0
  obligations

  Dividend payments         (101.9)     —     (101.9)     —

  Repurchases of common     —      (10.8)       (9.7)      (42.0)
  shares
                            (104.1)        88.2     (220.5)      (56.3)

Increase (Decrease)  in   $    10.1   $   217.2   $ (160.5)   $  (34.8)
cash and cash equivalents

Effect of exchange rate                                        
on cash and cash
equivalents at end of
period                          0.1         0.1         0.1       (0.1)

Cash and cash equivalents $   226.8   $   180.1   $   397.4   $   432.3
at beginning of period

Cash and cash equivalents $   237.0   $   397.4   $   237.0   $   397.4
at end of period
                                                                 
                                                                 

SEARS CANADA INC.
RECONCILIATION OF NET EARNINGS (LOSS) TO ADJUSTED EBITDA
For the 14 and 53-week period ended February 2, 2013 and the 13 and 52-week 
period ended January 28, 2012

Unaudited
                                 Fourth Quarter                  Fiscal

(in CAD millions,              2012        2011        2012        2011
except per share
amounts)

Net earnings (loss)       $    39.9   $    41.0   $   101.2   $  (50.3)

  Transformation               12.6        14.4        12.6        60.0
  expense(1)

  Gain on lease             —     —     (167.1)     —
  terminations(2)

  Accelerated tenant        —     —       (4.0)     —
  inducement
  amortization(3)

  Lease exit costs(4)           2.0     —         8.0     —

  Gain on settlement of      (21.1)     —      (21.1)     —
  post-retirement
  benefits(5)

  Gain on sale of             (8.6)     —       (8.6)     —
  interest in joint
  venture(6)

  Depreciation and             28.1        28.8       113.3       114.9
  amortization expense

  Finance costs                 2.4         4.0        13.3        16.0

  Interest income             (0.8)       (0.4)       (4.1)       (1.7)

  Share of income from        (0.1)       (1.5)       (9.5)       (8.3)
  joint ventures

  Income tax expense      $     8.0        15.5   $    13.0       (6.6)
  (recovery)

Adjusted EBITDA(7)        $    62.4   $   101.8   $    47.0   $   124.0

Basic net earnings        $    0.39   $    0.39   $    0.99   $  (0.48)
(loss) per share

(1)Transformation expense during 2012 relates to severance costs incurred 
during the end of the year. Fiscal 2011 Transformation expense includes costs 
related to internal reorganization and the disposition of excess inventory. 
(2)Gain on lease terminations represents the pre-tax gain on the early 
surrender and return of leases on four properties.
(3)Accelerated tenant inducement amortization represents the accelerated 
amortization of lease inducements relating to three of the properties referred 
to in footnote 2 above.
(4)Lease exit costs represent costs incurred to exit properties referred to in 
footnote 2 above.
(5)Gain arising from the settlement of post-retirement benefits of eligible 
members covered under the non-pension post-retirement plan. 
(6)During Q4 2012, the Company sold its interest in Medicine Hat Mall for net 
proceeds of $38.3 million, recognizing a pre-tax gain of $8.6 million on the 
sale.
(7)Adjusted EBITDA is a measure used by management, the retail industry and 
investors as an indicator of the Company's performance, ability to incur and 
service debt, and as a valuation metric. Adjusted EBITDA is a non-IFRS measure.



Media Relations Contact:

Vincent Power Sears Canada Inc. 416-941-4422 vpower@sears.ca

SOURCE: Sears Canada Inc.

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CO: Sears Canada Inc.
ST: Ontario
NI: RET ERN 

-0- Feb/27/2013 12:00 GMT


 
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