A big pre-tax gain on lease terminations allowed Sears Canada Inc. to post a healthy net profit in the first quarter despite declining sales.
Sears said Wednesday that net earnings in the 13 weeks ended April 28 were $93.1-million or 91 cents per share compared with a net loss of $47-million or 45 cents per share for the same period last year.
Included in earnings for the quarter was a $164.3-million pre-tax gain on lease terminations of three stores that was announced March 2.
Total revenue was $915.1-million, down 7.8 per cent from $992.5-million in the same 2011 period, including a decrease of 6.3 per cent in same store sales.
EBITDA, or earnings before interest, taxes, depreciation, amortization and non-operating activities, showed a loss of $30.1-million in the quarter compared with a loss of $22.3-million for the same period last year.
"Although not reflected in our top line sales, there are positive signs of progress in many areas of our business," president and CEO Calvin McDonald said in a statement accompanying the results.
"We are making progress on our transformation, having executed two major initiatives during the quarter," Mr. McDonald said, including the lowering of more than 5,000 prices to provide consistently increased value to customers.
"Balancing our value program has had a positive effect on our Monday to Friday sales, with weekday sales increasing and sales of our regular-priced items in our full-line, Sears Home and hometown dealer stores up significantly compared to the first quarter of last year," he said.
In addition, major appliances and mattresses, two categories that have been aggressively marketed, continue to perform better than last year, he said.
As expected, total-week net sales for the quarter were impacted negatively by the price rebalancing initiative as well as a reduction of merchandise offerings in non-strategic categories and lower sales of clearance merchandise.