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A graphic t-shirts on display at the Sears Canada store at Upper Canada Mall store in Newmarket, Ont.

Peter Power/Peter Power/The Globe and Mail

Sears Canada Inc. posted a $31.2-million loss as well as lower revenue in its latest quarter but says its transformation program is showing positive results that have improved margins and boosted some categories.

Calvin McDonald, Sear Canada's president and chief executive officer, said the company had growth in its apparel and accessories segment for the second quarter in a row – the first time that has happened in more than six years.

In addition, there was an improvement in the bed and bath category but Sears had more trouble in its "hard goods" categories – usually an area of comparative strength for the company.

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"Our major appliances business maintained market share but experienced sales declines, as did our furniture and mattress businesses all of which suffered in a very tough quarter of trading because of unfavourable economic conditions and low consumer confidence," McDonald said.

"The unseasonable cool spring in most parts of the country had an adverse impact on sales of outdoor power equipment, patio, and other seasonal lines."

Same-store sales – an important measure for retailers – fell by 2.6 per cent while total revenue for the 13-weeks ended May 4 fell to $867.1-million.

The revenue was down about 6.5 per cent from $928.0-million in the year-earlier quarter.

The loss amounted to 31 cents per share and contrasted with a year-earlier profit of $93.1-million or 91 cents per share. Excluding unusual items, however, Sears (TSX:SCC) would have had a loss of $44.9-million in last year's first quarter.

The national retailer's bottom line was boosted a year earlier by an unusual gain due to the termination of leases for three stores, which have been closed.

"We are continuing to make progress in our transformation, and we believe the growth in apparel and accessories is an indicator that we are on the right track," McDonald said.

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"At the same time our rate management initiatives have positively impacted gross margin by 50 basis points, while our focus on controlling costs has reduced expenses by 7.9 per cent compared to the same period last year.

"Factoring out the gains from the return of the three leases to the landlord last year, we are seeing an overall improvement in our bottom line for the quarter as compared to the first quarter last year."

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