Sears Canada Inc. dipped into the red ink in the second quarter as the department store chain suffered a drop in revenue and same-store sales.
Sears said Tuesday it lost $2.7-million or 3 cents a share for the three months ended July 30. That compared with a profit of $20.5-million or 19 cents per share in the same 2010 quarter.
Total revenues for the 13-week period were $1.15-billion, a 5.3 per cent decline from $1.21-billion for the same year-ago period.
Same-store sales decreased 5.8 per cent, Sears said.
Like all retailers, Sears Canada has been squeezed by tighter consumer spending and a highly competitive retail economy.
But the Toronto-based department store operator has also been losing business to competitors such as Wal-Mart, The Bay and others who have retail strategies focused either on discounting in the case of Wal-Mart or women's fashion at The Bay.
And with new U.S.-based chains such as Target and Marshalls entering Canada, the competition will become even more intense.
President and CEO Calvin McDonald said in a statement that management was “disappointed” with the results and said the company plans new strategies to re-energize the company and become more profitable.
“We have enormous potential to improve and deliver value to Canadians by delivering a more compelling customer-driven proposition,” Mr. McDonald said.
“The leadership team and I are working on longer-term initiatives planned to bring out the potential in Sears Canada to re-energize and transform the company into a more meaningful shopping choice for Canadians coast to coast.”
In its financial report, Sears Canada said operating EBITDA, or earnings before interest, taxes, depreciation and amortization, for the quarter dropped to $26.7-million versus $68.5-million last year.
For the six-month period, Sears Canada posted a net loss of $52.2-million or 50 cents a share, reversing a net profit of $11.7-million or 11 cents a year earlier.
Six-month sales fell 6.2 per cent to $2.14-billion from just under $2.3-billion, with same store sales dropping 7.4 per cent.
Sears Canada has 196 corporate stores, 280 hometown dealer stores and 1,700 catalogue merchandise pick-up locations across Canada.
The company, 92 per cent owned by U.S. retail giant Sears Holdings Corp., also operates 108 Sears Travel offices and a country-wide home maintenance, repair, and installation network.
Sears Canada had more than 31,000 employees at the end of 2010.