By Shannon Moore
Despite efforts to improve its business, Sears Canada continues to struggle financially.
In its most recent quarterly report, diminishing sales, lost revenue and reduced profit revealed a continuous struggle for the company. Year after year, quarter-by-quarter, Sears Canada is losing money.
The company’s year-to-date earnings were down $357 million (or 12.7%) from 2013. Its third quarter revenue was just as disappointing, having dropped $147 million (or 15%) from this time last year.
At first glance, this drop in revenue can be attributed to the large number of store closures that occurred this year. Sears Canada is said to have lost $38 million in revenue from this move alone; but the report reveals that earnings dropped 9.5% in its existing stores. This is primarily due to disappointing sales in all of its major departments including apparel, appliances, electronics and more. The company’s net income also experienced a significant hit. Last year, Sears Canada made a profit of $72.8 million. This year, the company lost $215.2 million. To put this into perspective, its profit is down 395.6%.
Carleton University business professor Emily Gray says that this can be attributed to fewer sales, and in some cases, lower sale prices.
In addition to this, the company’s gross margin dropped from 37.2% in 2013 to 34.3% this quarter. This means that Sears Canada is earning almost four cents less on every dollar sold.
Not surprisingly, Sears Canada’s shares are also down, with the average transactions jumping from 69,051 in 2013 to only 26,728 this year.
Each of these numbers points to a continuous struggle for the company. Despite closing stores and losing employees, Sears Canada’s finances are dropping at an alarming rate. Previous financial reports confirm that this decline has been occurring for several years.
Ronald D. Boire was recently appointed president and CEO of the company. In a media release this week, Chairman of the Board William C. Crowley said, “The Board of Directors believes Ron has the capabilities, experience, and leadership that Sears Canada needs at this time. He is assembling a team, developing an approach, and instilling a culture that is necessary to improve business.”
Boire is Sears Canada’s third president in four years.
In response, Boire noted that he is prepared to address the company’s financial “challenges” and lead it to “future success.” He said, “I am aware of the challenges facing the evolving Canadian retail marketplace, and Sears Canada in particular.”
“I am confident that our associates are engaged and focused on the drivers of our future success.”
Regarding the third quarter statement, Boire said, “These results are disappointing, and the management team is focused on making Sears Canada successful.”
“The Company has done well at managing expenses year to date and maintaining a strong balance sheet,” he said. “We are now working at growing our top line to have our sales match the high level of loyalty and support that Canadians have for the Sears brand.”
In the wake of these challenges, it comes as a surprise to many that the company is offering discounts and job opportunities to axed Target employees. Sears Canada’s own lease terminations are still fresh, and have cost the jobs of several of its employees.
Target has been a major competitor of the company since its arrival in 2013.
With sales on the decline and more and more stores shutting their doors, the future of Sears Canada remains uncertain. To date, its efforts to turn a profit have been unfulfilling.
But the company is hopeful.
As Boire stated, “We are all working together to deliver the level of value and service that have made us successful for six decades while operating within an increasingly competitive retail marketplace.”