Deborah Baic/The Globe and Mail
Sears Canada Inc. is paying an unusual cash dividend - its first cash payout in almost three years - just weeks after its U.S. parent bought 17.3 per cent of the Canadian unit's shares from minority shareholder William Ackman.
Late Tuesday, Sears Canada said it will pay an extraordinary cash dividend of $3.50 a share, or about $376.7-million, on June 4 to shareholders of record on May 31. At the same time, the retailer reported weaker first-quarter results.
The company last shelled out a dividend of 6 cents a share in the second quarter of 2007, spokesman Vincent Power said.
The move comes soon after parent Sears Holdings Corp. accumulated just over 90 per cent of the shares of its Canadian division. It ended a four-year battle between two powerful U.S. hedge fund managers over the department store retailer: Edward Lampert, who controls the parent, bought the minority position of William Ackman, another hedge fund executive who blocked Mr. Lampert's attempt to buy out the Canadian division's minority shares several years ago for $18 a share. Last month, the parent agreed to buy Mr. Ackman's Pershing Square Capital management LP shares for $30 apiece.
Industry observers expect that Mr. Lampert will take Sears Canada private within months.
In its first quarter, Sears Canada's profit fell to $7.2-million, or 7 cents a share, from $10.3-million, or 10 cents a share a year earlier. Sales dropped to $1.07-billion from $1.12-billion. Same-store sales decreased 2 per cent. Those are sales at outlets open a year or more, and considered a key measure of retail health.