Sears Canada Reports Second Quarter Earnings

TORONTO, Aug. 21, 2013 /CNW/ - Sears Canada Inc. (TSX: SCC) today announced 
its unaudited second quarter results. Total revenue for the 13-week period 
ended August3, 2013 was $960.1 million compared to $1,061.9 million for the 
13-week period ended July28, 2012, a decrease of 9.6%. Same store sales 
decreased 2.5%. 
Net earnings for the second quarter were $152.8 million or $1.50 per share 
compared to a net loss of $9.8 million or 10 cents per share for the second 
quarter last year. Included in net earnings for the second quarter this year 
is a pre-tax gain of $185.7 million related to transactions for the vacating 
of two stores, and the granting of an option regarding the vacating of a third 
store, as announced by the Company on June 14, 2013. Excluding the after-tax 
gain from these transactions of $164.0 million, the net loss for the second 
quarter of 2013 was $11.2 million or 11 cents per share. Adjusted EBITDA 
(Earnings Before Interest, Taxes, Depreciation and Amortization and 
non-recurring items) for the second quarter this year was $20.2 million versus 
$24.8 million in the second quarter last year. Adjusted EBITDA for the second 
quarter last year included $5.7 million related to 4 stores for which the 
leases were terminated prior to the end of 2012. 
Total revenues for the 26-week period ended August3, 2013 were $1,827.2 
million compared to $1,989.9 million for the 26-week period last year, which 
ended July28, 2012, a decrease of 8.2%. Same store sales decreased 2.5%. 
Net earnings for the first half of 2013 was $121.6 million or $1.19 per share 
compared to net earnings of $83.2 million or 81 cents per share for the first 
half of last year. Included in earnings for the first half of last year was a 
pre-tax gain of $164.3 million related to lease terminations on three 
properties. Excluding the after-tax gains associated with vacating stores of 
$164.0 million and $137.9 million in the first half of 2013 and 2012, 
respectively, the net loss for the first half of 2013 was $42.4 million or 42 
cents per share and the net loss for the first half of 2012 was $54.7 million 
or 54 cents per share. Adjusted EBITDA for the first half of the year was 
$10.4 million versus $2.1 million for the first half of last year. Adjusted 
EBITDA for the first half of last year included $6.0 million related to 4 
stores for which the leases were terminated prior to the end of 2012. 
"This period marks the half-way point of our three-year Transformation plan, 
and although we have much work to do, we are starting to see progress, thanks 
in large part to our 29,000 associates coast to coast who are continuing to 
plan and execute strategies that are designed to drive increased consideration 
for Sears as a shopping destination of choice for Canadian families," said 
Calvin McDonald, President and Chief Executive Officer, Sears Canada Inc., 
commenting on the second quarter. "The success we are seeing in the 
merchandise categories where we have focused most of our Transformation 
efforts continues to be an indication that Canadians are responding positively 
to the changes they are seeing at Sears. 
"We continue to be particularly encouraged by the results in our Apparel and 
Accessories (A&A) business which grew again in the quarter on a same store 
basis and which has now experienced positive year over year same store growth 
for three quarters in a row, performance that the Company has not seen for 
many years. Of particular note is that our two key events in these 
categories, Mother's Day and Father's Day, saw A&A sales increases of 25% and 
10%, respectively, for the two-week period leading up to these two days in May 
and June. 
"The A&A growth was offset by declines in some of our Home and Hardlines (H&H) 
businesses, notably home furnishings, mattresses and home electronics. These 
businesses have struggled in the face of a low growth housing market. 
Although the H&H businesses have had challenges, our merchandising efforts led 
to a sales increase in Major Appliances, a key hero category for Sears which 
has continued to maintain market share over recent periods. 
"On a broader basis, we reduced total expenses by 10.3% in the second quarter 
this year versus the second quarter last year, as management continues to 
adjust to revenue trends. 
"Looking forward, the third quarter will see the arrival in stores of our new 
Nevada denim for men and women designed by Buffalo and private brand footwear 
designed by Aldo. The first five stores carrying the Penningtons brand of 
plus-sized women's fashions will also be presented to customers with 
reconfigured selling floors that will reflect our intention to shift the 
balance of sale into more predictable and profitable categories while reducing 
those which are susceptible to volatility from unfavourable seasonal, industry 
or economic conditions." 
Adjusted EBITDA is a non-IFRS measure, and excludes finance costs, interest 
income, 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. 
This release contains information which is forward-looking and is subject to 
important risks and uncertainties. Forward-looking information concerns, among 
other things, the Company's future financial performance, business strategy, 
plans, expectations, goals and objectives. Although the Company believes 
that the estimates reflected in such forward-looking information are 
reasonable, such forward-looking information involves known and unknown risks, 
uncertainties and other factors which may cause actual results, performance or 
achievements to be materially different from any future results, performance 
or achievements expressed or implied by the forward-looking information and 
undue reliance should not be placed on such information. 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. Information about these factors, other material factors that could 
cause actual results to differ materially from expectations and about material 
factors or assumptions applied in preparing forward-looking information, may 
be found in this release and in the Company's 2012 Annual Report under Section 
11 "Risks and Uncertainties" and elsewhere in the Company's filings with 
securities regulators. The Company does not undertake any obligation to update 
publicly or to revise any forward-looking information, whether as a result of 
new information, future events or otherwise, except as required by law. 
Sears Canada is a multi-channel retailer with a network that includes 181 
corporate stores, 246 hometown dealer stores, over 1,400 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.
RECONCILIATION OF NET EARNINGS (LOSS) TO ADJUSTED EBITDA
For the 13 and 26-week periods ended August3, 2013 and July28, 2012
Unaudited 
                       Second Quarter               Year-to-Date 
(in CAD millions,                              
except per share
amounts)               2013        2012(6)        2013         2012(6) 
Net earnings           152.8     $              $             $  83.2  
(loss)               $              (9.8)         121.6       
Transformation                                             
  expense(1)         —      —           1.5       —   
Gain on lease                                                        
  terminations and
  lease amendments
  (2)                (185.7)      —       (185.7)       (164.3) 
Accelerated                                                
  tenant
  inducement
  amortization(3)      (4.5)        (2.0)         (4.5)         (2.0)   
Lease exit costs                                           
  (4)                —          1.4       —           1.4   
Depreciation and                                           
  amortization
  expense               30.0         32.0          60.2          64.3   
Finance costs          2.8          4.6           5.1           9.1   
Interest income      (0.4)        (2.3)         (0.8)         (2.9)   
Income tax                                                 
  expense               25.2          0.9          13.0          13.3   
Adjusted EBITDA(5)      20.2         24.8          10.4           2.1   
Basic net earnings      1.50     $              $             $  0.81  
(loss) per share     $             (0.10)          1.19       
(1)Transformation expense during 2013 relates to severance costs incurred 
during the year.
(2)Gain on lease terminations and lease amendments represents the pre-tax gain 
on the early vacating of properties described in Note 12 of the Company's 
unaudited condensed consolidated financial statements for the 13 and 26-week 
period ended August 3, 2013.
(3)Accelerated tenant inducement amortization represents the accelerated 
amortization of lease inducements relating to the properties in footnote 2 
above.
(4)Lease exist costs represent costs incurred to exit properties referred to 
in footnote 2 above.
(5)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.
(6)Adjusted to reflect the changes resulting from the retrospective 
application of the change in accounting policy related to the adoption of 
accounting
standard "IFRS 11, Joint Arrangements". 
TABLE OF CONTENTS 
Unaudited Condensed Consolidated Financial Statements      
Condensed Consolidated Statements of Financial Position   
Condensed Consolidated Statements of Net Earnings (Loss) and
  Comprehensive Income (Loss)   
Condensed Consolidated Statements of Changes in Shareholders' Equity 

  Condensed Consolidated Statements of Cash Flows 
Notes to the Unaudited Condensed Consolidated Financial Statements 
           
Note 1:    General information 
Note 2:    Significant accounting policies 
Note 3:    Issued standards not yet adopted 
Note 4:    Critical accounting judgments and key sources of 


             estimation uncertainty

  Note 5:    Cash and cash equivalents and interest income

  Note 6:    Inventories

  Note 7:    Long-term obligations and finance costs

  Note 8:    Capital stock

  Note 9:    Revenue

  Note 10:   Retirement benefit plans

  Note 11:   Depreciation and amortization expense

  Note 12:   Gain on lease terminations and lease amendments

  Note 13:   Sale of Cantrex Group Inc.

  Note 14:   Financial instruments

  Note 15:   Contingent liabilities

  Note 16:   Net earnings (loss) per share

  Note 17:   Income taxes

  Note 18:   Segmented information

  Note 19:   Changes in non-cash working capital balances

  Note 20:   Changes in long-term assets and liabilities

  Note 21:   Event after reporting period
              
              

SEARS CANADA INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited
                                               As at  
                                                               As at
                                         February 2,


                             As at          2013   July 28, 2012
(in CAD
millions)       Notes   August 3, 2013    (Note 2.4)      (Note 2.4) 
ASSETS                                                               
Current                                               
assets                                                               
Cash and cash               319.1            238.5     $   336.6    
equivalents        5    $                $ 
Accounts                                      77.7          90.6    
receivable,
net               14         77.2                    
Income taxes                                   5.5          14.5    
recoverable       17          7.0                    
Inventories        6        915.3            851.4         847.2     
Prepaid                                       28.6          40.3    
expenses                     37.0                    
Derivative                                 —       —    
financial
assets            14          1.5                    
Total current                              1,201.7       1,329.2    
assets                    1,357.1                    
                                                                 
Non-current                                           
assets                                                               
Property,                                  1,118.5       1,165.3    
plant and
equipment                 1,078.5                    
Investment                                    21.7          21.7    
property                     21.7                    
Intangible                                    27.2          24.1    
assets                       24.6                    
Goodwill                      8.7              8.7           8.7     
Deferred tax                                  83.8          84.0    
assets                       77.0                    
Other            7,                           43.1          34.5    
long-term        14,
assets           17          49.1                    
Total assets            $ 2,616.7        $ 2,504.7     $ 2,667.5     
                                                                 
LIABILITIES                                                          
Current                                               
liabilities                                                          
Accounts                    505.7            483.7     $   536.3    
payable and
accrued
liabilities       14    $                $ 
Deferred                                     197.8         192.8    
revenue                     182.3                    
Provisions                   50.8             66.3          52.2     
Income taxes                               —           0.3    
payable           17      —                    
Other taxes                                   34.0          39.2    
payable                      50.2                    
Current                                        9.2           9.0    
portion of
long-term
obligations     7,14          9.3                    
Total current                                791.0         829.8    
liabilities                 798.3                    
                                                                 
Non-current                                           
liabilities                                                          
Long-term                                     50.2          47.1    
obligations     7,14         45.9                    
Deferred                                      90.7          88.2    
revenue                      86.9                    
Retirement                                   415.7         452.4    
benefit
liability         10        414.5                    
Deferred tax                                   6.0           5.8    
liabilities                   5.0                    
Other                                         74.7          77.4    
long-term
liabilities                  67.0                    
Total                                      1,428.3       1,500.7    
liabilities               1,417.6                    
                                                                 
SHAREHOLDERS'                                         
EQUITY                                                               
Capital stock      8         14.9             14.9          14.9     
Retained                                   1,208.2       1,292.1    
earnings           8      1,329.8                    
Accumulated                                (146.7)       (140.2)    
other
comprehensive
loss                      (145.6)                    
Total                                      1,076.4       1,166.8    
shareholders'
equity                    1,199.1                    
Total                     2,616.7          2,504.7     $ 2,667.5    
liabilities
and
shareholders'
equity                  $                $ 
The accompanying notes are an integral part of these unaudited condensed 
consolidated financial statements. 
SEARS CANADA INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) AND COMPREHENSIVE 
INCOME (LOSS)
For the 13 and 26-week periods ended August 3, 2013 and July 28, 2012
Unaudited 
                                     13-Week Period              26-Week Period 
(in CAD millions,                                  2012                        2012
except per share
amounts)               Notes         2013    (Note 2.4)          2013    (Note 2.4) 
                                                                                
Revenue                   9     $ 960.1     $ 1,061.9     $ 1,827.2     $ 1,989.9   
Cost of goods and                               662.6       1,139.0       1,243.0  
services sold          6, 14      601.3                               
Selling,                                        405.9                       808.5  
administrative and
other expenses       10,11,14     364.1                       735.0 
Operating loss                    (5.3)         (6.6)        (46.8)        (61.6)   
                                                                                
Gain on lease                                 —                       164.3  
terminations and
lease amendments         12       185.7                       185.7 
Finance costs           7,17        2.8           4.6           5.1           9.1   
Interest income           5         0.4           2.3           0.8           2.9   
Earnings (loss)                                 (8.9)                        96.5  
before income
taxes                             178.0                       134.6 
                                                                                
Income tax                                                             
recovery (expense)                                                                  
Current                17       (4.4)         (7.9)         (7.3)        (11.0)   
Deferred               17      (20.8)           7.0         (5.7)         (2.3)   
                             (25.2)         (0.9)        (13.0)        (13.3)   
Net earnings                      152.8         (9.8)     $   121.6     $    83.2  
(loss)                          $           $           
                                                                                
Basic net earnings                 1.50        (0.10)     $    1.19     $    0.81  
(loss) per share         16     $           $           
Diluted net                        1.50        (0.10)     $    1.19     $    0.81  
earnings (loss)
per share                16     $           $           
                                                                                
Net earnings                      152.8         (9.8)     $   121.6     $    83.2  
(loss)                          $           $           
                                                                                
Other                                                                  
comprehensive
income, net of
taxes:                                                                              
                                                                                
Items that may                                                         
subsequently be
reclassified to
net income:                                                                         
Mark-to-market                                (0.1)                     —  
  adjustment on
  cash equivalents              —                     — 
Gain on foreign                             —                     —  
  exchange
  derivatives            14         1.1                         1.1 
Reclassification                                0.1                     —  
  to net earnings
  (loss) of (gain)
  loss on foreign
  exchange
  derivatives                   —                     — 
                                                                                
Items that will                                                        
not be
subsequently
reclassified to
net income:                                                                         
Tax rate                                        1.3                         1.3  
  adjustment on
  pension
  remeasurement
  losses                        —                     — 
                                                                                
Total other                                       1.3                         1.3  
comprehensive
income                              1.1                         1.1 
Comprehensive                     153.9         (8.5)     $   122.7     $    84.5  
income (loss)                   $           $           
The accompanying notes are an integral part of these unaudited condensed 
consolidated financial statements. 
SEARS CANADA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the 13 and 26-week periods ended August 3, 2013 and July 28, 2012
Unaudited 


                                                                    Accumulated other comprehensive loss (income)       
              
                                                        Mark-to-
                                                          market
                                                       on short-        Foreign 
                                                            term        exchange
                                                                                                               Total
                                                     investments     derivatives                         accumulated
                                                     within cash     designated                                other


                       Capital      Retained        and cash         as cash     Remeasurement     comprehensive    
 Shareholders' 
(in CAD millions)  Notes     stock      earnings     equivalents     flow hedges              loss     loss (income)     
    equity 
Balance as at May                                                                                                        
          
4, 2013                    $  14.9     $ 1,177.0     $   —     $   —     $     (146.7)     $     (146.7)     $ 
1,045.2 
Net earnings                             152.8         —         —           —           —         152.8     
Other                     
comprehensive
income                                                                                                                   


              

  Gain on foreign                                                                                                     
  exchange
  derivatives, net
  of income tax
  expense of $0.4     14                                 —             1.1           —               1.1           
1.1    

Total other                                                                                           
comprehensive
income                     —       —         —             1.1           —               1.1           1.1    

Total                                                                                                 
comprehensive
income                     —         152.8         —             1.1           —               1.1         153.9  
    Balance as at                                                                                                           


          
August 3, 2013             $  14.9     $ 1,329.8     $   —     $       1.1     $     (146.7)     $     (145.6)     $ 
1,199.1 
                                                                                                                     
           
Balance as at                                                                                                            
           
April 28, 2012             $  15.0     $ 1,308.8     $       0.1     $       0.1     $     (141.7)     $     (141.5)    
 $ 1,182.3 
Net loss                                 (9.8)         —         —           —           —         (9.8)      
Other                     
comprehensive
(loss) income                                                                                                            
           
Mark-to-market                                                                                                      
  loss, net of
  income tax
  recovery of nil                                          (0.1)         —           —             (0.1)         
(0.1)      
Reclassification                                                                                                    
  of loss on
  foreign exchange
  derivatives, net
  of income tax
  recovery of nil                                        —             0.1           —               0.1           
0.1      
Tax rate                                                                                                            
  adjustment on
  pension
  remeasurement
  losses                                                 —         —               1.3               1.3           
1.3      
Total other                                                                                           
comprehensive
(loss) income              —       —           (0.1)             0.1               1.3               1.3           
1.3      
Total                                                                                                 
comprehensive
(loss) income              —         (9.8)           (0.1)             0.1               1.3               1.3        
 (8.5)      
Repurchases of                                                                                      
  common shares        8     (0.1)         (6.9)         —         —           —           —         (7.0)      
Balance as at July                                                                                                       
           
28, 2012                   $  14.9     $ 1,292.1     $   —     $       0.2     $     (140.4)     $     (140.2)     $ 
1,166.8 
                                                                                                                     
           
Balance as at                                                                                                            
           
February 2, 2013           $  14.9     $ 1,208.2     $   —     $   —     $     (146.7)     $     (146.7)     $ 
1,076.4 
Net earnings                             121.6         —         —           —           —         121.6      
Other                     
comprehensive
income (loss)                                                                                                            
           
Gain on foreign                                                                                                     
  exchange
  derivatives, net
  of income tax
  expense of $0.4     14                                 —             1.1           —               1.1           
1.1      
Total other                                                                                           
comprehensive
income                     —       —         —             1.1           —               1.1           1.1      
Total                                                                                                 
comprehensive
income                     —         121.6         —             1.1           —               1.1         122.7   

Balance as at                                                                                                            
           
August 3, 2013             $  14.9     $ 1,329.8     $   —     $       1.1     $     (146.7)     $     (145.6)     $ 
1,199.1 
                                                                                                                     
           
Balance as at                                                                                                            
           
January 28, 2012           $  15.0     $ 1,218.5     $   —     $       0.2     $     (141.7)     $     (141.5)     $ 
1,092.0 
Net earnings                              83.2         —         —           —           —          83.2      
Other comprehensive         
income                                                                                                                   
            
Tax rate                                                                                                            
  adjustment on
  pension
  remeasurement
  losses                                                 —         —               1.3               1.3           
1.3      
Total other                                                                                           
comprehensive
income                     —       —         —         —               1.3               1.3           1.3      
Total                                                                                                 
comprehensive
income                     —          83.2         —         —               1.3               1.3          84.5   

  Repurchases of                                                                                      
  common shares        8     (0.1)         (9.6)         —         —           —           —         (9.7)      
Balance as at July                                                                                                       
           
28, 2012                   $  14.9     $ 1,292.1     $   —     $       0.2     $     (140.4)     $     (140.2)     $ 
1,166.8 
The accompanying notes are an integral part of these unaudited condensed 
consolidated financial statements.     
SEARS CANADA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the 13 and 26-week periods ended August 3, 2013 and July 28, 2012
Unaudited 
                             13-Week Period          26-Week Period 
                                       2012                    2012 
(in CAD                                   (Note                   (Note
millions)         Notes        2013        2.4)        2013        2.4) 
Cash flow                                                  
generated from
(used for)
operating
activities                                                              
Net earnings            $           $           $           $        
  (loss)                    152.8       (9.8)       121.6        83.2 
Adjustments                                              
  for:                                                                  
Depreciation      11      30.0        32.0        60.2     
and 
amortization 
expense                                                       64.3   
Gain on                  (1.3)     —       (1.5)     
disposal of 
property, 
plant and 
equipment                                                  —   
Reversal of       12   —       (2.1)     —     
impairment 
losses                                                       (2.1)   
Gain on           12   (185.7)     —     (185.7)     
lease 
terminations 
and lease 
amendments                                                 (164.3)   
Finance        7, 17       2.8         4.6         5.1     
costs                                                          9.1   
Interest           5     (0.4)       (2.3)       (0.8)     
income                                                       (2.9)   
Retirement        10       6.9         8.0        13.8     
benefit 
plans 
expense                                                       15.8   
Short-term        10       1.8         1.8         4.3     
disability 
expense                                                        4.3   
Income tax        17      25.2         0.9        13.0     
expense                                                       13.3   
Interest            5       0.6         0.6         1.1    
  received                                                        1.1   
Interest paid       7     (1.5)       (1.5)       (3.0)       (3.4)   
Retirement         10     (9.7)       (7.6)      (19.4)    
  benefit plans
  contributions                                                (20.0)   
Income tax         17     (0.9)       (3.6)       (8.9)    
  (payments)
  refunds                                                         4.2   
Other income       17     (6.1)     —       (6.1)    
  tax deposits                                                —   
Changes in         19      19.7      (59.1)      (72.8)    
  non-cash
  working
  capital                                                     (120.8)   
Changes in         20     (2.4)        34.8       (8.7)    
  long-term
  assets and
  liabilities                                                    31.7   
                         31.8       (3.3)      (87.8)      (86.5)   
Cash flow                                                  
generated from
(used for)
investing
activities                                                              
Purchases of             (11.4)      (19.2)      (18.1)    
  property,
  plant and
  equipment and
  intangible
  assets                                                       (34.9)   
Proceeds from               1.1         0.4         1.4    
  sale of
  property,
  plant and
  equipment                                                       0.9   
Proceeds from      12     190.5     —       190.5    
  lease
  terminations                                                  170.0   
Proceeds from      13   —         3.5     —    
  sale of
  Cantrex
  operations                                                      3.5   
                        180.2      (15.3)       173.8       139.5   
Cash flow used                                             
for financing
activities                                                              
Interest paid       7     (0.7)       (0.4)       (1.3)    
  on finance
  lease
  obligations                                                   (0.9)   
Repayment of              (3.5)       (3.6)       (6.9)    
  long-term
  obligations                                                 (138.7)   
Proceeds from               1.2         1.3         2.3    
  long-term
  obligations                                                    33.0   
Repurchases         8   —       (7.0)     —    
  of common
  shares                                                        (9.8)   
                        (3.0)       (9.7)       (5.9)     (116.4)   
Effect of                     0.4     —         0.5    
exchange rate
on cash and
cash
equivalents at
end of period                                                   (0.2)   
Increase                    209.4      (28.3)        80.6    
(decrease) in
cash and cash
equivalents                                                    (63.6)   
Cash and cash             $           $           $           $        
equivalents at
beginning of
period                      109.7       364.9       238.5       400.2 
Cash and cash             $           $           $           $        
equivalents at
end of period               319.1       336.6       319.1       336.6 
The accompanying notes are an integral part of these unaudited condensed 
consolidated financial statements. 


    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. General information

Sears Canada Inc. is incorporated in Canada. The address of its registered 
office and principal place of business is 290 Yonge Street, Suite 700, 
Toronto, Ontario, Canada M5B 2C3. The principal activities of Sears Canada 
Inc. and its subsidiaries (the "Company") include the sale of goods and 
services through the Company's Retail channel, which includes its Full-line, 
Sears Home, Hometown Dealer, Outlet, Appliances and Mattresses, Corbeil 
Electrique Inc. stores, and its Direct (catalogue/internet) channel. It also 
includes service revenue related to product repair and logistics. Commission 
revenue includes travel, home improvement services, insurance, and performance 
payments received from JPMorgan Chase Bank, N.A. (Toronto Branch) ("JPMorgan 
Chase") under the Company's long-term credit card marketing and servicing 
alliance with JPMorgan Chase. The Company has partnered with Thomas Cook 
Canada Inc. ("Thomas Cook") in a multi-year licensing arrangement, under which 
Thomas Cook manages the day-to-day operations of all Sears Travel offices and 
provides commissions to the Company. The Company has also partnered with SHS 
Services Management Inc. ("SHS") in a multi-year licensing arrangement, under 
which SHS oversees the day-to-day operations of all Sears Home Improvements 
Product Services business ("HIPS"). Licensee fee revenues are comprised of 
payments received from licensees, including Thomas Cook and SHS, that operate 
within the Company's stores. The Company is a party to a number of real estate 
joint arrangements which have been classified as joint operations and 
accounted for by recognizing the Company's share of the joint arrangements' 
assets, liabilities, revenues and expenses for financial reporting purposes.

The indirect parent of the Company is Sears Holdings Corporation ("Sears 
Holdings"), incorporated in the U.S. in the state of Delaware. The ultimate 
controlling party of the Company is ESL Investments, Inc. (incorporated in the 
U.S. in the state of Florida) through Sears Holdings.

2. Significant accounting policies

2.1 Statement of compliance

The unaudited condensed consolidated financial statements of the Company for 
the 13 and 26-week periods ended August3, 2013 (the "Financial Statements") 
have been prepared in accordance with IAS 34, Interim Financial Reporting 
("IAS 34") issued by the International Accounting Standards Board ("IASB"), 
and therefore, do not contain all disclosures required by International 
Financial Reporting Standards ("IFRS") for annual financial statements. 
Accordingly, these Financial Statements should be read in conjunction with the 
Company's most recently prepared annual consolidated financial statements for 
the 53-week period ended February 2, 2013 (the "2012 Annual Consolidated 
Financial Statements"), prepared in accordance with IFRS.

2.2 Basis of preparation and presentation

The principal accounting policies of the Company have been applied 
consistently in the preparation of these Financial Statements for all periods 
presented. These Financial Statements follow the same accounting policies and 
methods of application as those used in the preparation of the 2012 Annual 
Consolidated Financial Statements, except as noted below. The Company's 
significant accounting policies are described in Note 2 of the 2012 Annual 
Consolidated Financial Statements.

The Company adopted the following new standards and amendments which became 
effective "in" or "for" the 26-week period ended August 3, 2013:
    --  IAS 1, Presentation of Financial Statements ("IAS 1")
        The IASB has amended IAS 1 to require additional disclosures
        for items presented in Other Comprehensive Income ("OCI") on a
        before-tax basis and requires items to be grouped and presented
        in OCI based on whether they are potentially reclassifiable to
        earnings or loss subsequently (i.e. items that may be
        reclassified and those that will not be reclassified to
        earnings or loss). These amendments are effective for annual
        periods beginning on or after July 1, 2012 and require full
        retrospective application. As a result of the adoption of the
        IAS 1 amendment, the Company modified its presentation of OCI
        in these Financial Statements;
    --  IAS 28, Investments in Associates and Joint Ventures ("IAS 28")
        IAS 28 (as amended in 2011) supersedes IAS 28 (2003),
        Investments in Associates and outlines how to apply, with
        certain limited exceptions, the equity method to investments in
        associates and joint ventures. The standard also defines an
        associate by reference to the concept of "significant
        influence", which requires power to participate in financial
        and operating policy decisions of an investee (but not joint
        control or control of those policies). Based on the Company's
        assessment of this amendment, there is no impact on its
        Financial Statements;
    --  IFRS 7, Financial Instruments: Disclosures ("IFRS 7")
        The IASB has amended IFRS 7.  The amendment establishes
        disclosure requirements to help users better assess the effect
        or potential effect of offsetting arrangements on a company's
        financial position. These amendments are effective for annual
        periods beginning on or after January 1, 2013 and must be
        applied retrospectively. Based on the Company's assessment of
        this amendment, there is no impact on its Financial Statements.
        The Company is currently assessing the impact of these
        amendments on the Company's annual consolidated financial
        statements and related note disclosures;
    --  IFRS 10, Consolidated Financial Statements ("IFRS 10")
        IFRS 10 establishes the standards for the presentation and
        preparation of consolidated financial statements when an entity
        controls one or more entities. Based on the Company's
        assessment of this amendment, there is no impact on its
        Financial Statements;
    --  IFRS 11, Joint Arrangements ("IFRS 11")
        IFRS 11, along with IFRS 12 described below, replaces IAS 31,
        Interests in Joint Ventures ("IAS 31") and requires that a
        party in a joint arrangement assess its rights and obligations
        to determine the type of joint arrangement and account for
        those rights and obligations accordingly. The adoption of this
        standard has impacted the Company as described in Note 2.4;
    --  IFRS 12, Disclosure of Involvement with Other Entities ("IFRS
        12")
        IFRS 12, along with IFRS 11 described above, replaces IAS 31.
        IFRS 12 requires the disclosure of information that enables
        users of financial statements to evaluate the nature of and the
        risks associated with, the entity's interests in joint ventures
        and the impact of those interests on its financial position,
        financial performance and cash flows. These amendments are
        effective for annual periods beginning on or after January 1,
        2013 and must be applied retrospectively. The adoption of these
        amendments did not have an impact on the Financial Statements.
        The Company is currently assessing the impact of these
        amendments on the Company's annual consolidated financial
        statements and related note disclosures; and
    --  IFRS 13, Fair Value Measurement ("IFRS 13")
        IFRS 13 provides guidance to improve consistency and
        comparability in fair value measurements and related
        disclosures through a 'fair value hierarchy'. This standard
        applies when another IFRS requires or permits fair value
        measurements or disclosures. Disclosures required under IFRS 13
        for Financial Statements have been included in Note 14.5.

2.2.1 Basis of consolidation

The Financial Statements incorporate the financial statements of the Company 
as well as all of its subsidiaries. Real estate joint arrangements are 
accounted for by recognizing the Company's share of the joint arrangements' 
assets, liabilities, revenues and expenses. Subsidiaries include all entities 
where the Company has the power to govern the financial and operating policies 
of the entity so as to obtain benefits from its activities. All intercompany 
balances and transactions, and any unrealized income and expenses arising from 
intercompany transactions, are eliminated in the preparation of these 
Financial Statements.

The fiscal year of the Company consists of a 52 or 53-week period ending on 
the Saturday closest to January31. The 13 and 26-week periods presented in 
these Financial Statements are for the periods ending August3, 2013 and 
July28, 2012.

These Financial Statements are presented in Canadian dollars, which is the 
Company's functional currency. The Company is comprised of two reportable 
segments, Merchandising and Real Estate Joint Arrangements (see Note 18).

2.3 Seasonality

The Company's operations are seasonal in nature. Accordingly, merchandise and 
service revenues, as well as performance payments received from JPMorgan Chase 
under the long-term credit card marketing and servicing alliance, will vary by 
quarter based on consumer spending behaviour. Historically, the Company's 
revenues and earnings are highest in the fourth quarter due to the holiday 
season. The Company is able to adjust certain variable costs in response to 
seasonal revenue patterns; however, costs such as occupancy are fixed, causing 
the Company to report a disproportionate level of earnings in the fourth 
quarter. This business seasonality results in quarterly performance that is 
not necessarily indicative of the year's performance.

2.4 Changes in accounting policy

IFRS 11, Joint Arrangements

The Company adopted IFRS 11 in the 13-week period ended May 4, 2013 ("Q1 
2013"). On May 12, 2011, the IASB issued IFRS 11 which replaced IAS 31, 
Interests in Joint Ventures, and required that a party in a joint arrangement 
assess its rights and obligations to determine the type of joint arrangement 
and account for those rights and obligations accordingly. The Company has 
determined that its real estate joint arrangements are joint operations and 
will be recognized in proportion to the Company's ownership percentage in 
these arrangements.

IFRS 11 is effective for annual periods beginning on or after January1, 2013 
with early adoption permitted. The amendments are required to be applied 
retrospectively in accordance with IAS 8, Accounting Policies, Changes in 
Accounting Estimates and Errors.

As the Company implemented IFRS 11 in Q1 2013, the Company has retrospectively 
adjusted the assets and liabilities as at February 2, 2013 and January 28, 
2012 and the income, expenses and cash flows for the 53-week period ended 
February 2, 2013.

A summary of the impact arising from the application of the change in 
accounting policy is as follows:

Consolidated Statements of Financial Position

(Increase                    As at           As at              As at  
(decrease) in
CAD millions)     February 2, 2013   July 28, 2012   January 28, 2012

  Cash and cash   $            1.5     $       3.1     $          2.8  
  equivalents

  Accounts                     1.5             1.6                1.4  
  receivable,
  net

  Prepaid                    (1.5)           (1.2)            —  
  expenses

Net change to                  1.5             3.5                4.2  
current assets
                                                                       

  Property,                  278.5           318.9              324.1  
  plant and
  equipment

  Investment in            (263.4)         (297.0)            (301.4)  
  joint
  arrangements

  Other                        9.0             9.6                9.8  
  long-term
  assets

Net change to                 25.6            35.0               36.7  
total assets
                                                                       

  Accounts                     1.7             4.4                4.0  
  payable and
  accrued
  liabilities

  Deferred                     0.3             0.2            —  
  revenue

  Other taxes                  0.1             0.1                0.1  
  payable

  Current                      4.0             4.3                4.1  
  portion of
  long term
  obligations

Net change to                  6.1             9.0                8.2  
current
liabilities
                                                                       

  Long-term                   19.3            24.9               27.2  
  obligations

  Deferred tax                 0.2             0.2                0.3  
  liabilities

  Other                    —             0.9                1.0  
  long-term
  liabilities

Net change to                 25.6            35.0               36.7  
total
liabilities
                                                      
                                                    

Consolidated Statements of Net (Loss) Earnings                         
                              13-Week         26-Week            53-Week  

(Increase             Period Ended    Period Ended       Period Ended
(decrease) in
CAD millions)        July 28, 2012   July 28, 2012   February 2, 2013

Revenue           $           11.8     $      24.7     $         45.8  

Selling,                       8.5            17.5               34.7  
administrative
and other
expenses

Finance costs                  0.4             0.9                1.8  

Interest income            —             0.1                0.2  

Share of income              (2.9)           (6.4)              (9.5)  
from joint
arrangements  
                                                                       
                                                                       

Consolidated Statements of Cash Flows            

(Increase                  13-Week         26-Week            53-Week  
(decrease) in
cash flow             Period Ended    Period Ended       Period Ended
arising


                 July 28, 2012   July 28, 2012   February 2, 2013
from items
noted below in
CAD millions) 
Depreciation      $            3.7     $       7.2     $         13.2  
and
amortization 
Impairment loss            —         —                2.2   
Share of income                2.9             6.4                9.5  
from joint
arrangements 
Finance costs                  0.4             0.9                1.8   
Interest income            —           (0.1)              (0.2)   
Interest paid                (0.5)           (0.9)              (1.8)   
Changes in                   (2.2)             1.6               18.0  
non-cash
working capital 
Changes in                     1.3             0.7             (17.6)  
long-term
assets and
liabilities 
Additions of                 (0.1)           (2.6)              (4.0)  
property, plant
& equipment and
intangible
assets 
Repayment on                 (1.0)           (1.9)              (4.0)  
long-term
obligations 
Dividends                    (4.7)          (11.0)             (18.4)
received from
joint
arrangements 
                                                 
As a result of the adoption of IFRS 11 in Q1 2013, the Company has two 
reportable segments: Merchandising and Real Estate Joint Arrangement 
operations. Refer to Note 18 for segmented information disclosure. 
3. Issued standards not yet adopted 
The Company monitors the standard setting process for new standards and 
interpretations issued by the IASB that the Company may be required to adopt 
in the future. Since the impact of a proposed standard may change during the 
review period, the Company does not comment publicly until the standard has 
been finalized and the effects have been determined. 
On December16, 2011, the IASB issued amendments to two previously released 
standards. They are as follows: 
IAS 32, Financial Instruments: Presentation ("IAS 32") 
 The IASB amended IAS 32 to address inconsistencies in current
  practice in the application of offsetting criteria. The amendments
  provide clarification with respect to the meaning of 'currently has a
  legally enforceable right of set-off' and that some gross settlement
  systems may be considered equivalent to net settlement. These
  amendments are effective for annual periods beginning on or after
  January 1, 2014. The Company is currently assessing the impact of
  these amendments on the Company's consolidated financial statements
  and related note disclosures. 
 IFRS 9, Financial Instruments ("IFRS 9") 
 This standard will ultimately replace IAS 39, Financial Instruments:
  Recognition and Measurement in phases. The first phase of IFRS 9 was
  issued on November 12, 2009 and addresses the classification and
  measurement of financial assets.  The second phase of IFRS 9 was
  issued on October 28, 2010 incorporating new requirements on
  accounting for financial liabilities.  On December 16, 2011, the IASB
  amended the mandatory effective date of IFRS 9 to fiscal years
  beginning on or after January 1, 2015. The amendment also provides
  relief from the requirement to recast comparative financial
  statements for the effect of applying IFRS 9. In subsequent phases,
  the IASB will address hedge accounting and impairment of financial
  assets. The Company is monitoring the impact of amendments to this
  standard and is currently assessing the impact on the Company's
  consolidated financial statements and related note disclosures. 


    4. Critical accounting judgments and key sources of estimation uncertainty

In the application of the Company's accounting policies, management is 
required to make judgments, estimates and assumptions about the carrying 
amounts of assets and liabilities that are not readily apparent from other 
sources. The estimates and underlying assumptions are based on historical 
experience and other factors that are considered to be relevant. Actual 
results may differ from these estimates. The estimates and underlying 
assumptions are reviewed on an ongoing basis. Revisions to accounting 
estimates are recognized in the period in which the estimate is revised, if 
the revision affects only that period, or in the period of the revision and 
future periods, if the revision affects both current and future periods.

Critical judgments that management has made in the process of applying the 
Company's accounting policies, key assumptions concerning the future and other 
key sources of estimation uncertainty that have the potential to materially 
impact the carrying amounts of assets and liabilities within the next 
financial year are described in Note 4 of the 2012 Annual Consolidated 
Financial Statements and are consistent with those used in the preparation of 
these Financial Statements.

5. Cash and cash equivalents and interest income

Cash and cash equivalents

The components of cash and cash equivalents were as follows:
                                                As at           As at
                             As at   February 2, 2013   July 28, 2012

(in CAD millions)   August 3, 2013         (Note 2.4)      (Note 2.4)  

Cash                $         89.8     $         49.1     $      53.2  

Cash equivalents                                                       

  Government               —              159.9           229.9  
  treasury bills

  Bank term                  209.0            —            25.0  
  deposits

  Investment                  10.3               20.5            20.4  
  accounts

Restricted cash               10.0                9.0             8.1  
and cash
equivalents

Total cash and      $        319.1     $        238.5     $     336.6  
cash equivalents
                                                             

The components of restricted cash and cash equivalents are further discussed 
in Note 15.

Interest income

Interest income related primarily to cash and cash equivalents for the 13 and 
26-week period ended August 3, 2013 totaled $0.4 million and $0.8 million 
(2012: $2.3 million and $2.9 million), respectively. For the same 13 and 
26-week periods, the Company received $0.6 million and $1.1 million (2012: 
$0.6 million and $1.1 million), respectively, in cash related to interest 
income.

6. Inventories

The amount of inventory recognized as an expense during the 13 and 26-week 
period ended August 3, 2013 was $550.6 million (2012: $615.4 million) and 
$1,039.6 million (2012: $1,142.8 million), respectively, which includes $19.1 
million (2012: $19.7 million) and $43.5 million (2012: $42.3 million) of 
inventory write-downs. These expenses are included in "Cost of goods and 
services sold" in the unaudited Condensed Consolidated Statements of Net 
Earnings (Loss) and Comprehensive Income (Loss). Reversals of prior period 
inventory write-downs for the 13 and 26-week period ended August 3, 2013 were 
$0.4 million (2012: nil) and $3.9 million (2012: nil), respectively.

Inventory is pledged as collateral under the Company's revolving credit 
facility.

7. Long-term obligations and finance costs

Long-term obligations

Total outstanding long-term obligations were as follows:
                                                As at           As at
                             As at   February 2, 2013   July 28, 2012

(in CAD millions)   August 3, 2013         (Note 2.4)      (Note 2.4)  

Real estate joint   $          4.2     $          4.0     $       4.3  
arrangement
obligations -
Current

Finance lease                  5.1                5.2             4.7  
obligations -
Current

Total current       $          9.3     $          9.2     $       9.0  
portion of
long-term
obligations

Real estate joint             17.2               19.3            24.9  
arrangement
obligations -
Non-current

Finance lease                 28.7               30.9            22.2  
obligations -
Non-current

Total non-current   $         45.9     $         50.2     $      47.1  
long-term
obligations
                                                                       

The Company's debt consists of a secured credit facility, finance lease 
obligations and the Company's share of its real estate joint arrangements' 
assets, liabilities, revenues and expenses. In September 2010, the Company 
entered into an $800.0 million senior secured revolving credit facility (the 
"Credit Facility") with a syndicate of lenders with a maturity date of 
September10, 2015. The Credit Facility is secured with a first lien on 
inventory and credit card receivables. Availability under the Credit Facility 
is determined pursuant to a borrowing base formula. Availability under the 
Credit Facility was $550.9 million as at August 3, 2013 (February 2, 2013: 
$501.5 million, July 28, 2012: $544.7 million). The current availability may 
be reduced by reserves currently estimated by the Company to be approximately 
$262.0 million, which may be applied by the lenders at their discretion 
pursuant to the Credit Facility agreement. As a result of judicial 
developments relating to the priorities of pension liability relative to 
certain secured obligations, the Company has executed an amendment to its 
Credit Facility agreement which would provide additional security to the 
lenders by pledging certain real estate assets as collateral, thereby 
partially reducing the potential reserve amount the lenders could apply by up 
to $150.0 million. The additional reserve amount may increase or decrease in 
the future based on changes in estimated net pension deficits in the event of 
a wind-up.

The Credit Facility contains covenants which are customary for facilities of 
this nature and the Company was in compliance with all covenants as at August 
3, 2013.

As at August 3, 2013, the Company had no borrowings on the Credit Facility and 
had unamortized transaction costs incurred to establish the Credit Facility of 
$5.4 million included in "Other long-term assets" in the unaudited Condensed 
Consolidated Statements of Financial Position (February 2, 2013: no borrowings 
and unamortized transaction costs of $6.2 million included in "Other long-term 
assets", July 28, 2012: no borrowings and unamortized transaction costs of 
$7.2 million included in "Other long-term assets". In addition, the Company 
had $24.2 million (February 2, 2013: $19.7 million, July 28, 2012: $14.3 
million) of standby letters of credit outstanding against the Credit Facility. 
These letters of credit cover various payments including third party payments, 
utility commitments and defined benefit plan deficit funding. Interest on 
drawings under the Credit Facility is determined based on bankers' acceptance 
rates for one to three month terms or the prime rate plus a spread. Interest 
amounts on the Credit Facility are due monthly and are added to principal 
amounts outstanding.

As at August 3, 2013, the Company had outstanding merchandise letters of 
credit of U.S. $9.1 million (February 2, 2013: U.S. $7.9 million, July 28, 
2012: U.S. $6.7 million) used to support the Company's offshore merchandise 
purchasing program with restricted cash and cash equivalents pledged as 
collateral.

Finance costs

Interest expense on long-term obligations, including the Company's share of 
interest on long-term obligations of its real estate joint arrangements, 
finance lease obligations, the current portion of long-term obligations, 
amortization of transaction costs and commitment fees on the unused portion of 
the Credit Facility for the 13 and 26-week period ended August 3, 2013 totaled 
$2.7 million (2012: $2.5 million) and $5.4 million (2012: $5.4 million), 
respectively. Interest expense is included in "Finance costs" in the unaudited 
Condensed Consolidated Statements of Net Earnings (Loss) and Comprehensive 
Income (Loss). Also included in "Finance costs" for the 13 and 26-week period 
ended August 3, 2013 was an expense of $0.1 million and a recovery of $0.3 
million (2012: expense of $2.1 million and $3.7 million), respectively, for 
interest on accruals for uncertain tax positions.

The Company's cash payments for interest on long-term obligations, including 
the Company's share of interest on long-term obligations of its real estate 
joint arrangements, finance lease obligations, the current portion of 
long-term obligations and commitment fees on the unused portion of the Credit 
Facility for the 13 and 26-week period ended August 3, 2013 totaled $2.2 
million (2012: $1.9 million) and $4.3 million (2012: $4.3 million), 
respectively.

8. Capital stock

On May 22, 2013, the Toronto Stock Exchange ("TSX") accepted the Company's 
Notice of Intention to make a Normal Course Issuer Bid ("2013 NCIB"). The 2013 
NCIB permits the Company to purchase for cancellation up to 5% of its issued 
and outstanding common shares, representing 5,093,883 of the issued and 
outstanding common shares as at May 10, 2013. Under the 2013 NCIB, purchases 
were allowed to commence on May 24, 2013 and must terminate by May 23, 2014 or 
on such earlier date as the Company may complete its purchases pursuant to the 
2013 NCIB. The total purchase of common shares by the Company pursuant to 
the 2013 NCIB will not exceed, in the aggregate, 5% of all outstanding common 
shares, and is subject to the limits under the TSX rules, including a daily 
limit of 25% of the average daily trading volume (which, based on the prior 
six months trading volumes, cannot exceed 19,689 common shares a day), and a 
limit of one block purchase per week.

There were no share purchases during the 13 and 26-week period ended August 3, 
2013 (2012: 634,870 shares and 870,633 shares were purchased for $7.0 million 
and $9.8 million, respectively, as part of a normal course issuer bid in place 
for the period of May 25, 2011 to May 24, 2012, and cancelled). The impact of 
the share repurchases in 2012 was a decrease to "Capital stock" of $0.1 
million and $0.1 million, respectively, and a decrease to "Retained earnings" 
of $6.9 million and $9.6 million in the unaudited Condensed Consolidated 
Statements of Financial Position, respectively.

During the fourth quarter of the 53-week period ended February 2, 2013, the 
Company distributed $101.9 million to holders of common shares as an 
extraordinary cash dividend. Payment in the amount of $1.00 per common share 
was made on December 31, 2012 to shareholders of record as at the close of 
business on December 24, 2012.

In 2012, Sears Holdings distributed on a pro rata basis to its shareholders, a 
portion of its holdings in the Company such that, immediately following the 
distribution, Sears Holdings retained approximately 51% of the issued and 
outstanding shares of the Company. The distribution was made on November 13, 
2012 to Sears Holdings' shareholders of record as of the close of business on 
November 1, 2012, the record date for the distribution. Every share of Sears 
Holdings common stock held as of the close of business on the record date 
entitled the holder to a distribution of 0.4283 of the Company's common 
shares. In connection with the distribution, the Company filed documents with 
the United States Securities and Exchange Commission.

ESL Investments, Inc., and investment affiliates including Edward S. Lampert, 
collectively "ESL", together form the ultimate controlling party of the 
Company. ESL is the beneficial holder of 28,158,368 or 27.6%, of the common 
shares of the Company as at August 3, 2013 (February 2, 2013: 28,158,368 or 
27.6%, July 28, 2012: nil). Sears Holdings, the controlling shareholder of the 
Company, is the beneficial holder of 51,962,391 or 51.0%, of the common shares 
of the Company as at August 3, 2013 (February2, 2013: 51,962,391 or 51.0%, 
July 28, 2012: 97,341,670 or 95.5%). The issued and outstanding shares are 
fully paid and have no par value.

The authorized common share capital of the Company consists of an unlimited 
number of common shares without nominal or par value and an unlimited number 
of class 1 preferred shares, issuable in one or more series (the "Class 1 
Preferred Shares").

As at August3, 2013, the only shares outstanding were common shares of the 
Company

.9. Revenue

The components of the Company's revenue were as follows:
                               13-Week
                13-Week                                       26-Week
                          Period Ended        26-Week
                 Period                                  Period Ended
                  Ended       July 28,   Period Ended


                              2012                  July 28, 2012
(in CAD       August 3,                     August 3,
millions)          2013     (Note 2.4)           2013      (Note 2.4)   
Apparel and   $   324.4     $    330.9     $    608.0     $     619.8  
Accessories 
Home and          245.2          282.0          463.2           520.5  
Hardlines 
Major             212.6          211.2          404.6           414.7  
Appliances 
Other              56.5          115.0          113.6           182.0  
merchandise
revenue 
Services           88.4           89.9          172.1           187.0  
and other 
Commission         33.0           32.9           65.7            65.9  
and
licensee
revenue 
          $   960.1     $  1,061.9     $  1,827.2     $   1,989.9   


                                                                       

10. Retirement benefit plans

In July 2008, the Company amended its defined benefit plan by introducing a 
defined contribution component and closing the defined benefit component to 
new participants. As such, the defined benefit plan continues to accrue 
benefits related to future compensation increases but no further service 
credit is earned, and no contributions are made by employees.

The expense for the defined benefit, defined contribution and other benefit 
plans for the 13-week period ended August 3, 2013 was $2.0 million (2012: $2.5 
million), $2.1 million (2012: $2.5 million) and $2.8 million (2012: $3.0 
million), respectively. The expense for the defined benefit, defined 
contribution and other benefit plans for the 26-week period ended August 3, 
2013 was $4.0 million (2012: $5.0 million), $4.3 million (2012: $4.7 million), 
$5.5 million (2012: $6.1 million), respectively. Not included in total 
retirement benefit plans expense for the 13 and 26-week period are short-term 
disability expenses of $1.8 million and $4.3 million (2012: $1.8 million and 
$4.3 million), respectively, that were paid from the other benefit plan. These 
expenses are included in "Selling, administrative and other expenses" in the 
unaudited Condensed Consolidated Statements of Net Earnings (Loss) and 
Comprehensive Income (Loss).

Total cash contributions by the Company to its defined benefit, defined 
contribution and other benefit plans for the 13 and 26-week period ended 
August 3, 2013 were $9.7 million and $19.4 million (2012: $7.6 million and 
$20.0 million), respectively.

In the fourth quarter of 2012, the Company made a voluntary offer to settle 
health and dental benefits of eligible members covered under the non-pension 
post-retirement plan. Based on the accepted offers, the Company paid $18.1 
million and recorded a pre-tax settlement gain of $21.1 million ($21.9 
million, net of $0.8 million of expenses). Refer to the 2012 Annual 
Consolidated Financial Statements for more details.

11. Depreciation and amortization expense

The components of the Company's depreciation and amortization expense, 
included in "Selling, administrative and other expenses", were as follows:
                                13-Week                       26-Week
                 13-Week
                           Period Ended        26-Week   Period Ended
                  Period
                   Ended       July 28,   Period Ended       July 28,


                               2012                          2012
(in CAD        August 3,                     August 3,
millions)           2013     (Note 2.4)           2013     (Note 2.4)   
Depreciation   $    27.5     $     29.7     $     54.9     $     59.6  
of property,
plant and
equipment 
Amortization         2.5            2.3            5.3            4.7  
of
intangible
assets 
Total          $    30.0     $     32.0     $     60.2     $     64.3  
depreciation
and
amortization
expense 


                                                                       

12. Gain on lease terminations and lease amendments

On June 14, 2013, the Company announced its intention to enter into a series 
of transactions related to its leases on two properties: Yorkdale Shopping 
Centre (Toronto) and Square One Shopping Centre (Mississauga). The landlords 
approached the Company with a proposal to enter into a series of lease 
amendments for a total consideration of $191.0 million, being the amount the 
landlords were willing to pay for the right to require the Company to vacate 
the two locations.

On June 24, 2013, the Company received proceeds of $191.0 million upon closing 
of the transaction which gave the landlords the right to require the Company 
to vacate the two locations by March 31, 2014. The landlords exercised such 
right on July 25, 2013. The transaction resulted in a pre-tax gain of $185.7 
million, net of the de-recognition of leasehold improvements of $5.1 million .

The Company also granted the owners of the Scarborough Town Centre (Toronto) 
property an option to enter into certain lease amendments in exchange for $1.0 
million, which was paid on June 24, 2013. The option may be exercised at any 
time up to and including June 20, 2018, and would require the Company to 
complete such lease amendments in exchange for $53.0 million. Such lease 
amendments would allow the owners to require the Company to close its store.

On March2, 2012, the Company entered into an agreement to surrender and 
terminate early the operating leases on three properties: Vancouver Pacific 
Centre, Chinook Centre (Calgary) and Rideau Centre (Ottawa). The Company was a 
long-term and important anchor tenant in the three properties, and the 
landlord approached the Company with a proposal to terminate early the three 
leases and vacate the premises in exchange for $170.0 million. The payment 
represented the amount the landlord was willing to pay for the right to 
redevelop the property based upon their analysis of the potential returns from 
redevelopment.

On the closing date, April20, 2012, the Company received cash proceeds of 
$170.0 million for the surrender of the three leases, resulting in a pre-tax 
gain of $164.3 million, net of the de-recognition of leasehold improvements of 
$5.7 million. The Company exited all three properties on October31, 2012 and 
has no further financial obligation related to the transaction.

On June20, 2012, the Company entered an agreement to surrender and terminate 
early the operating lease on its Deerfoot (Calgary) property. The landlord 
approached the Company with a proposal to terminate early the lease in 
exchange for cash proceeds of $5.0 million, subject to certain closing 
conditions, on the closing date of October26, 2012. In Fiscal 2010, the 
Company incurred an impairment loss of $2.9 million relating to the property, 
plant and equipment at its Deerfoot property. As a result of the agreement and 
expected proceeds, the Company recorded an impairment loss reversal (net of 
accumulated amortization) of $2.1 million in "Selling, administrative and 
other expenses". On the closing date of October 26, 2012, the Company vacated 
the property and received cash proceeds of $5.0 million, resulting in a 
pre-tax gain of $2.8 million, net of the de-recognition of leasehold 
improvements and furniture and fixtures of $2.2 million. The Company has no 
further financial obligation related to the transaction.

13. Sale of Cantrex Group Inc. ("Cantrex")

On April24, 2012, the Company entered into an agreement to sell the 
operations of its subsidiary, Cantrex, to Nationwide Marketing Group, LLC for 
$3.5 million, equal to the net carrying amount of specified Cantrex assets and 
liabilities. On April 29, 2012, the Company received the proceeds on the sale, 
de-recognized the assets and liabilities sold and recorded a gain on sale of 
nil.

14. Financial instruments

In the ordinary course of business, the Company enters into financial 
agreements with banks and other financial institutions to reduce underlying 
risks associated with interest rates and foreign currency. The Company does 
not hold or issue derivative financial instruments for trading or speculative 
purposes.

Financial instrument risk management

The Company is exposed to credit, liquidity and market risk as a result of 
holding financial instruments. Market risk consists of foreign exchange and 
interest rate risk.

14.1 Credit risk

Credit risk refers to the possibility that the Company can suffer financial 
losses due to the failure of the Company's counterparties to meet their 
payment obligations. Exposure to credit risk exists for derivative 
instruments, cash and cash equivalents, accounts receivable and other 
long-term assets.

Cash and cash equivalents, accounts receivable, derivative instruments and 
investments included in other long-term assets totaling $399.3 million as at 
August 3, 2013 (February2, 2013: $317.7 million, July 28, 2012: $428.7 
million) expose the Company to credit risk should the borrower default on 
maturity of the investment. The Company manages this exposure through policies 
that require borrowers to have a minimum credit rating of A, and limiting 
investments with individual borrowers at maximum levels based on credit rating.

The Company is exposed to minimal credit risk from customers as a result of 
ongoing credit evaluations and review of accounts receivable collectability. 
As at August 3, 2013, two customers represented 29.0% of the Company's 
accounts receivable (February2, 2013: no customer represented greater than 
10.0% of the Company's accounts receivable, July 28, 2012: one customer 
represented 19.0% of the Company's accounts receivable).

14.2 Liquidity risk

Liquidity risk is the risk that the Company may not have cash available to 
satisfy financial liabilities as they come due. The Company actively maintains 
access to adequate funding sources to ensure it has sufficient available funds 
to meet current and foreseeable financial requirements at a reasonable cost.

The following table summarizes the carrying amount and the contractual 
maturities of both the interest and principal portion of significant financial 
liabilities as at August 3, 2013:
                                                   Contractual Cash Flow Maturities


          Carrying                    Within     1 year to    3 years to          Beyond
(in CAD
millions)       Amount         Total      1 year       3 years       5 years         5 years 
Accounts         505.7     $                           —     $ —     $ —  
payable and
accrued
liabilities   $                505.7     $ 505.7     $             
Finance
lease
obligations
including
payments
due within
one year
(1)               33.8          45.0         7.4          10.7           9.9          17.0   
Real estate                                                                                 
joint
arrangement
obligations
including
payments
due within
one year
(2)               21.4          25.5         5.5          10.9           4.6           4.5 
Operating                                                                       
lease
obligations
(3)                n/a         503.5        99.0         162.9         110.5         131.1   
Royalties                                                                       
(3)                n/a           1.4         0.9           0.5       —       —   
Purchase                                                                        
agreements
(3,5)              n/a          19.9         7.9          12.0       —       —   
Retirement                                                                                  
benefit
plans
obligations
(4)              414.5         100.2        29.3          58.7          12.2       — 
          $  975.4     $ 1,201.2     $ 655.7     $   255.7     $   137.2     $   152.6   
1 Cash flow maturities related to finance lease obligations, including
  payments due within one year, include annual interest on
  finance lease obligations at a weighted average rate of 7.6%. The
  Company had no borrowings on the Credit Facility at August 3, 2013. 
2 Cash flow maturities related to real estate joint arrangement
  obligations, including payments due within one year, include annual
  interest on mortgage obligations at a weighted average rate of 7.9%. 
3 Purchase agreements, operating lease obligations, and royalties are
  not reported in the unaudited Condensed Consolidated Statements of
  Financial Position. 
4 Payments beyond 2013 are subject to a funding valuation to be
  completed as at December 31, 2013. Until then, the Company
  is obligated to fund in accordance with the most recent valuation
  completed as at December 31, 2010. 
5 Certain vendors require minimum purchase commitment levels over the
  term of the contract. 

Of the $503.5 million of operating lease commitments disclosed in the table 
above, $7.1 million relates to the Company's share of the commitments of its 
real estate joint arrangements. 
Management believes that cash on hand, future cash flow generated from 
operations and availability of current and future funding will be adequate to 
support these financial liabilities. As at August 3, 2013, the Company does 
not have any significant capital expenditure commitments. 
Market risk 
Market risk exists as a result of the potential for losses caused by changes 
in market factors such as foreign currency exchange rates, interest rates and 
commodity prices. 
14.3 Foreign exchange risk 
The Company enters into foreign exchange contracts to reduce the foreign 
exchange risk with respect to U.S. dollar denominated assets and liabilities 
and purchases of goods or services. As at August 3, 2013 there were forward 
contracts outstanding with a notional value of US $165 million (February2, 
2013: nil, July 28, 2012: nil) and a fair value of $1.5 million included in 
"Derivative Financial Assets" (February2, 2013: nil, July 28, 2012: nil) in 
the unaudited Condensed Consolidated Statements of Financial Position. These 
derivative contracts have settlement dates extending to July 2014. The 
intrinsic value portion of these derivatives has been designated as a cash 
flow hedge for hedge accounting treatment under IAS 39. These contracts are 
intended to reduce the foreign exchange risk with respect to anticipated 
purchases of U.S. dollar denominated goods and services, including goods 
purchased for resale ("hedged item"). As at August 3, 2013, the designated 
portion of these hedges was considered effective. 
While the notional principal of these outstanding financial instruments is not 
recorded in the unaudited Condensed Consolidated Statements of Financial 
Position, the fair value of the contracts is included in "Derivative financial 
assets" or "Derivative financial liabilities", depending on the fair value, 
and classified as current or long-term, depending on the maturities of the 
outstanding contracts. Changes in the fair value of the designated portion 
of contracts are included in OCI for cash flow hedges, to the extent the 
designated portion of the hedges continues to be effective, with any 
ineffective portion included in "Cost of goods and services sold" in the 
unaudited Condensed Consolidated Statements of Net Earnings (Loss) and 
Comprehensive Income (Loss). Amounts previously included in OCI are 
reclassified to "Cost of goods and services sold" in the same period in which 
the hedged item impacted Net Earnings (Loss). 
During the 13 and 26-week periods ended August 3, 2013, the Company recorded a 
loss of $2.3 million and a loss of $3.1 million (2012: loss of $2.8 million 
and loss of $1.0 million), respectively, in "Selling, administrative and other 
expenses", relating to the translation or settlement of U.S. dollar 
denominated monetary items consisting of cash and cash equivalents, accounts 
receivable and accounts payable. 
The period end exchange rate was 0.9625 U.S. dollar to Canadian dollar. A 10% 
appreciation or depreciation of the U.S. and or the Canadian dollar exchange 
rate was determined to have an after-tax impact on net earnings (loss) of $4.7 
million for U.S. dollar denominated balances included in cash and cash 
equivalents, accounts receivable and accounts payable. 
14.4 Interest rate risk 
From time to time, the Company enters into interest rate swap contracts with 
approved financial institutions to manage exposure to interest rate risks. As 
at August 3, 2013, the Company had no interest rate swap contracts in place. 
Interest rate risk reflects the sensitivity of the Company's financial 
condition to movements in interest rates. Financial assets and liabilities 
which do not bear interest or bear interest at fixed rates are classified as 
non-interest rate sensitive. 
Cash and cash equivalents and borrowings under the secured revolving credit 
facility are subject to interest rate risk. The total subject to interest rate 
risk as at August 3, 2013 was a net asset of $320.4 million (February 2, 2013: 
net asset of $239.8 million, July 28, 2012: net asset of $337.9 million). An 
increase or decrease in interest rates of 0.25% would cause an immaterial 
after-tax impact on net earnings (loss). 
14.5 Classification and fair value of financial instruments 
The estimated fair values of financial instruments presented are based on 
relevant market prices and information available at those dates. The following 
table summarizes the classification and fair value of certain financial 
instruments as at the specified dates. The Company determines the 
classification of a financial instrument when it is initially recorded, based 
on the underlying purpose of the instrument. As a significant number of the 
Company's assets and liabilities, including inventories and capital assets, do 
not meet the definition of financial instruments, values in the tables below 
do not reflect the fair value of the Company as a whole. 
The fair value of financial instruments are classified and measured according 
to the following three levels, based on the fair value hierarchy. 


    --  Level 1: Quoted prices in active markets for identical assets
        or liabilities
    --  Level 2: Inputs other than quoted prices in active markets that
        are observable for the asset or liability either directly (i.e.
        as prices) or indirectly (i.e. derived from prices)
    --  Level 3: Inputs for the asset or liability that are not based
        on observable market data

(in CAD                                               
millions)                                                                   
                                    Fair
                                   Value     As at       As at       As at
                 Balance


             Sheet         Hierarchy    August    February    July 28,
Classification   Category            (1)   3, 2013     2, 2013        2012   
Available for                                         
sale                                                                         
Cash           Cash and                                                   
  equivalents    cash 
             equivalents 


                 (1)             Level 1   —       159.9       229.9

  Cash           Cash and                                                   
  equivalents    cash
                 equivalents
                 (1)             Level 2      10.3        20.5        20.4

Fair value                                            
through profit
or loss                                                                     

  Long-term      Other                                                      
  investments    long-term
                 assets          Level 1       0.2         0.2         0.2

  U.S. $         Derivative                                                 
  derivative     financial
  contracts      assets          Level 2       1.5     —     —

  Long-term      Other                                                      
  investments    long-term
                 assets          Level 3       1.3         1.3         1.3

(1)   Interest income related to cash and cash equivalents is disclosed
      in Note 5.
       

All other assets that are financial instruments not listed in the chart above 
have been classified as "Loans and receivables". All other financial 
instrument liabilities have been classified as "Other liabilities" and are 
measured at amortized cost in the unaudited Condensed Consolidated Statements 
of Financial Position. The carrying value of these financial instruments 
approximate fair value given that they are short-term in nature.

Effective March 3, 2013, the Company finalized an exclusive, multi-year 
licensing arrangement with SHS, which will result in SHS overseeing the 
day-to-day operations of all HIPS. The Company provided SHS an 
interest-bearing loan which allows SHS to pay the final purchase price of $5.3 
million over 6 years. The Loans and receivables asset is included in "Other 
long-term assets" in the unaudited Condensed Consolidated Statements of 
Financial Position. As part of the transaction, SHS granted the Company a call 
option which, if exercised would require SHS to sell the Company a 20% 
interest in the HIPS business. The call option can be exercised beginning 
March 3, 2013 until March 2, 2023.

15. Contingent liabilities

15.1 Legal proceedings

The Company is involved in various legal proceedings incidental to the normal 
course of business. The Company takes into account all available information, 
including guidance from experts (such as internal and external legal counsel) 
at the time of reporting to determine if it is probable that a present 
obligation (legal or constructive) exists, if it is probable that an outflow 
of resources embodying economic benefit will be required to settle such 
obligation and whether the Company can reliably measure such obligation at the 
end of the reporting period. The Company is of the view that, although the 
outcome of such legal proceedings cannot be predicted with certainty, the 
final disposition is not expected to have a material adverse effect on the 
Financial Statements.

15.2 Commitments and guarantees

Commitments

As at August 3, 2013, cash and cash equivalents that are restricted represent 
cash and investments pledged as collateral for letter of credit obligations 
issued under the Company's offshore merchandise purchasing program of $10.0 
million (February2, 2013: $9.0 million, July 28, 2012: $8.1 million), which 
is the Canadian equivalent of U.S. $9.6 million (February2, 2013: U.S. $9.0 
million, July 28, 2012: U.S. $8.0 million).

The Company has certain vendors which require minimum purchase commitment 
levels over the term of the contract. Refer to Note 14.2 "Liquidity risk".

Guarantees

The Company has provided the following significant guarantees to third parties:

Royalty License Agreements

The Company pays royalties under various merchandise license agreements, which 
are generally based on the sale of products. Certain license agreements 
require a minimum guaranteed payment of royalties over the term of the 
contract, regardless of sales. Total future minimum royalty payments under 
such agreements were $1.4 million as at August 3, 2013 (February2, 2013: 
$2.3 million, July 28, 2012: $2.6 million).

Other Indemnification Agreements

In the ordinary course of business, the Company has provided indemnification 
commitments to counterparties in transactions such as leasing transactions, 
royalty agreements, service arrangements, investment banking agreements and 
director and officer indemnification agreements. The Company has also provided 
certain indemnification agreements in connection with the sale of the credit 
and financial services operations in November 2005. The foregoing 
indemnification agreements require the Company to compensate the 
counterparties for costs incurred as a result of changes in laws and 
regulations, or as a result of litigation or statutory claims, or statutory 
sanctions that may be suffered by a counterparty as a consequence of the 
transaction. The terms of these indemnification agreements will vary based on 
the contract and typically do not provide for any limit on the maximum 
potential liability. Historically, the Company has not made any significant 
payments under such indemnifications and no amounts have been accrued in the 
Financial Statements with respect to these indemnification commitments.

16. Net earnings (loss) per share

A reconciliation of the number of shares used in the net earnings (loss) per 
share calculation is as follows:
                  13-Week         13-Week         26-Week         26-Week  
                   Period    Period Ended    Period Ended    Period Ended
                    Ended


                        July 28, 2012       August 3,   July 28, 2012
(Number of      August 3,                            2013
shares)              2013 
Weighted      101,877,662     102,015,388     101,877,662     102,287,015  
average
number of
shares per
basic net
earnings
(loss) per
share
calculation 
Effect of         —         —         —         —  
dilutive
instruments
outstanding 
Weighted      101,877,662     102,015,388     101,877,662     102,287,015  
average
number of
shares per
diluted net
earnings
(loss) per
share
calculation 


                                                                           

"Net earnings (loss)" as disclosed in the unaudited Condensed Consolidated 
Statements of Net Earnings (Loss) and Comprehensive Income (Loss) was used as 
the numerator in calculating the basic and diluted net earnings (loss) per 
share. For both the 13 and 26-week period ended August 3, 2013, 5,080 
outstanding options were excluded from the calculation of diluted net earnings 
(loss) per share as they were anti-dilutive. For both the 13 and 26-week 
period ended July 28, 2012, 9,560 outstanding options were excluded from the 
calculation of diluted net earnings (loss) per share as they were 
anti-dilutive.

17. Income taxes

The Company's total net cash refunds or payments of income taxes for the 13 
and 26-week period ended August3, 2013 were a net payment of $7.0 million 
and net payment of $15.0 million (2012: net payment of $3.6 million and net 
refund of $4.2 million).

In the ordinary course of business, the Company is subject to ongoing audits 
by tax authorities. While the Company believes that its tax filing positions 
are appropriate and supportable, periodically, certain matters are challenged 
by tax authorities. During the 13 and 26-week period ended August3, 2013, 
the Company recorded benefits for interest on prior period tax re-assessments 
and accruals for uncertain tax positions as described in the table below, all 
included in the unaudited Condensed Consolidated Statements of Net Earnings 
(Loss) and Comprehensive Income (Loss) as follows:
               13-Week         13-Week        26-Week         26-Week  
                Period    Period Ended   Period Ended    Period Ended
                 Ended


                     July 28, 2012      August 3,   July 28, 2012
(in CAD      August 3,                           2013
millions)         2013 
Finance      $   (0.1)     $     (2.1)     $      0.3     $     (3.7)  
costs
(increase)
recovery 
Income tax                                                             
(expense)
recovery: 
Current    $   (0.1)     $     (3.9)     $      0.5     $     (5.5)   
Deferred   $     0.1     $       1.9     $    (0.1)     $       2.3   
Net          $   (0.1)     $     (4.1)     $      0.7     $     (6.9)  
(charges)
benefits
on
uncertain
tax
positions 


                                                       

The Company routinely evaluates and provides for potentially unfavourable 
outcomes with respect to any tax audits, and believes that the final 
disposition of tax audits will not have a material adverse effect on its 
liquidity.

Included in "Other long-term assets" in the unaudited Condensed Consolidated 
Statements of Financial Position as at August 3, 2013, were receivables of 
$19.9 million (February 2, 2013: $13.9 million, July 28, 2012: $2.1 million) 
related to deposits made with tax authorities by the Company for disputed tax 
assessments.

18. Segmented information

In order to identify the Company's reportable segments, the Company uses the 
process outlined in IFRS 8, Operating Segments which includes the 
identification of the Chief Operating Decision Maker, the identification of 
operating segments, which has been done based on Company formats, and the 
aggregation of operating segments. The Company has aggregated its operating 
segments into two reportable segments: Merchandising and Real Estate Joint 
Arrangement operations. The Merchandising segment includes revenues from the 
sale of merchandise and related services to customers. The Real Estate Joint 
Arrangement segment includes income from the Company's joint arrangement 
interests in shopping centres across Canada, most of which contain a Sears 
store.

18.1 Segmented statements of earnings
                                13-Week                       26-Week  
                  13-Week        Period                  Period Ended
                                  Ended        26-Week
                   Period                                    July 28,
                    Ended      July 28,   Period Ended           2012


                               2012
(in CAD         August 3,                    August 3,     (Note 2.4)
millions)            2013    (Note 2.4)           2013 
Total revenue                                                           
Merchandising $   949.0     $ 1,050.1     $  1,805.4     $  1,965.2   
Real Estate                      11.8           21.8           24.7  
  Joint
  Arrangements       11.1                 
Total revenues  $   960.1     $ 1,061.9     $  1,827.2     $  1,989.9   
Segmented                                                              
operating loss                                           
Merchandising $   (8.8)     $   (9.4)     $   (53.2)     $   (68.2)   
Real Estate                       2.8            6.4            6.6  
  Joint
  Arrangements        3.5                 
Total segmented     (5.3)         (6.6)     $   (46.8)     $   (61.6)  
operating loss  $             $ 
Finance Costs                                                           
Merchandising $     2.5     $     4.2     $      4.4     $      8.2   
Real Estate                       0.4            0.7            0.9  
  Joint
  Arrangements        0.3                 
Total finance         2.8           4.6     $      5.1     $      9.1  
costs           $             $ 
Interest Income                                                         
Merchandising $     0.5     $     2.3     $      0.7     $      2.8   
Real Estate                   —            0.1            0.1  
  Joint
  Arrangements      (0.1)                 
Total interest        0.4           2.3     $      0.8     $      2.9  
income          $             $ 
Gain on lease                                                          
terminations
and lease
amendments                                               
Merchandising $   185.7     $ —     $    185.7     $    164.3   
Real Estate                   —        —        —  
  Joint
  Arrangements    —                 
Total gain on       185.7       —     $    185.7     $    164.3  
lease
terminations
and lease
amendments      $             $ 
Income taxes                                                            
Merchandising $  (25.2)     $   (0.9)     $   (13.0)     $   (13.3)   
Real Estate                   —        —        —  
  Joint
  Arrangements    —                 
Total income       (25.2)         (0.9)     $   (13.0)     $   (13.3)  
tax expense     $             $ 
Net earnings        152.8         (9.8)     $    121.6     $     83.2  
(loss)          $             $ 


                                                              

18.2 Segmented statements of total assets
                                              As at           As at
                           As at   February 2, 2013   July 28, 2012

(in CAD millions) August 3, 2013         (Note 2.4)      (Note 2.4)  

Merchandising     $      2,320.2     $      2,210.8     $   2,330.6  

Real Estate Joint                             293.9           336.9  
Arrangements               296.5                     

Total assets      $      2,616.7     $      2,504.7     $   2,667.5  

18.3 Segmented statements of total liabilities
                                              As at           As at
                           As at   February 2, 2013   July 28, 2012

(in CAD millions) August 3, 2013         (Note 2.4)      (Note 2.4)  

Merchandising     $      1,388.1     $      1,402.3     $   1,465.3  

Real Estate Joint                              26.0            35.4  
Arrangements                29.5                     

Total liabilities $      1,417.6     $      1,428.3     $   1,500.7  
                                      

19. Changes in non-cash working capital balances

Cash generated from (used for) non-cash working capital balances were 
comprised of the following:
                               13-Week                 
                13-Week                                       26-Week
                          Period Ended        26-Week
                 Period                                  Period Ended
                  Ended       July 28,   Period Ended


                              2012                  July 28, 2012
(in CAD       August 3,                     August 3,
millions)          2013     (Note 2.4)           2013      (Note 2.4)   
Accounts            2.5           40.2     $      1.0     $      23.6  
receivable,
net           $             $            
Inventories      (24.2)           36.6         (63.9)          (23.4)   
Prepaid                          (5.5)                         (12.4)  
expenses          (8.5)                         (8.4) 
Accounts                        (87.1)                         (51.4)  
payable and
accrued
liabilities        39.7                          13.8 
Deferred                        (20.9)                         (15.2)  
revenue          (17.8)                        (15.5) 
Provisions        (2.0)          (2.2)         (15.5)          (12.6)   
Income and                      (20.2)                         (29.9)  
other taxes
payable and
recoverable        30.4                          16.2 
Effect of                      —                            0.5  
foreign
exchange
rates             (0.4)                         (0.5) 
Cash               19.7         (59.1)     $   (72.8)     $   (120.8)
generated
from (used
for)
non-cash
working
capital
balances      $             $            


                                                             

20. Changes in long-term assets and liabilities

Cash (used for) generated from long-term assets and liabilities were comprised 
of the following:
                               13-Week
                13-Week                                       26-Week
                          Period Ended        26-Week
                 Period                                  Period Ended
                  Ended       July 28,   Period Ended


                              2012                  July 28, 2012
(in CAD       August 3,                     August 3,
millions)          2013     (Note 2.4)           2013      (Note 2.4)   
Other         $     2.8     $     32.0     $      3.0     $      31.6  
long-term
assets 
Other             (5.6)            1.6         (11.5)           (0.5)  
long-term
liabilities 
Other               0.4            1.2          (0.2)             0.6   
Cash (used    $   (2.4)     $     34.8     $    (8.7)     $      31.7  
for)
generated
from
long-term
assets and
liabilities 
                                                                    
21. Event after the reporting period 
Subsequent to quarter end, the Company entered into agreements with third 
parties to outsource some of the work currently performed by internal Sears 
resources in portions of Information Technology, Finance and Accounting, and 
Payroll. This change was announced to associates on August 19, 2013 and will 
result in a reduction of 245 associates and approximately $11 to $15 million 
in transformation costs between the announcement date and the first half of 
2014.
 

SOURCE  Sears Canada Inc. 
Contact for Media: Vincent Power Sears Canada, Corporate Communications 
416-941-4422 vpower@sears.ca 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/August2013/21/c7231.html 
CO: Sears Canada Inc.
ST: Ontario
NI: RET ERN  
-0- Aug/21/2013 11:00 GMT
 
 
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