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Sears Canada widens Q2 loss to $21.3 million, same store sales drop 6.8 per cent

TORONTO - Sears Canada Inc. (TSX: SCC) lost $21.3 million in its latest quarter as it was hit by severance and impairment charges and an unseasonably cool spring that hurt sales.

The struggling retailer said Wednesday the loss amounted to 21 cents per share, in the second quarter, compared to a profit of $152.8 million, or $1.50 per share, in the same period last year when its results were boosted by early lease terminations.

Revenue for the 13-week period ended Aug. 2 totalled $845.8 million compared to $960.1 million year-over-year.

The drop came as same-store sales, a key measure in retail, dropped 6.8 per cent, which the company attributed partly to the unseasonably weather that it said deterred customers.

"We took aggressive markdowns to clear aged inventory and surplus spring merchandise, and ended the quarter with 20 per cent less spring/summer inventory than last year," said Sears president and CEO Douglas Campbell in a release.

"This puts us in an improved inventory quality position heading into the fall season, allowing us to devote more of our selling floor space to seasonally relevant items as we move forward."

Campbell also noted that the company cut costs by 13.3 per cent in the quarter compared with a year ago after excluding restructuring and other one-time items.

Sears Canada has struggled in the face of stiff competition from Hudson's Bay Co. and Walmart and worked to restructure its operations to survive.

With many shoppers looking for high-end luxury brands or super cheap deals, Sears has been caught in the middle with its focus on middle-class families.

The company announced earlier this year a plan to cut 2,200 jobs on top of thousands more it eliminated last year.

The company has also sold leases in some of its highest profile locations including the Toronto Eaton Centre as part of a move to reduce costs.

Earlier this month, Sears said it will receive $27.7 million from the sale of its 20 per cent stake in the Kildonan Place shopping centre in Winnipeg.

The move is part of a sale of the property with partner Ivanhoe Cambridge, which owns the remaining 80 per cent of the interest.

The Canadian Press

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