Despite reporting lower earnings, revenue and same-store sales
in the first quarter, Sears Canada Inc. (SCC.T) declared a special
dividend of C$3.50 a share on its common shares.
The dividend will be payable June 4 to shareholders of record
May 10.
At Sears Canada's annual meeting last month, shareholders
questioned company executives about the company's net cash position
of about C$1 billion. The company said it had been wise to hang
onto the cash during the recession.
It said that, after payment of the special dividend and a C$200
million debt payment in early May, it will have about C$717 million
in cash and equivalents on a pro forma basis.
The big department-store operator had net income of C$7.2
million or 7 Canadian cents a share in the latest quarter, down
from C$10.3 million or 10 Canadian cents a year earlier.
On an operating basis, it earned 16 Canadian cents a year
earlier.
Revenue decreased 4.4% to C$1.07 billion. Same-store sales were
off 2.0%.
The company said sales were hurt by "a planned reduction in
catalog impressions of 16.6%" and the higher Canadian dollar. It
said it has responded by lowering prices and providing special
services, such as deferred financing and equal billing
payments.
Parent Sears Holdings Corp. (SHLD) recently agreed to pay about
US$560 million for an additional 17.6% stake in Toronto-based Sears
Canada, boosting its stake to about 90%. It paid C$30 a share. The
seller, hedge-fund operator Pershing Square Capital Management LP,
had thwarted Sears Holdings' 2006 attempt to buy out Sears Canada.
Some observers now expect Sears Holdings to move again to privatize
the Canadian subsidiary.
Tuesday in Toronto, Sears Canada closed at C$27.00,
unchanged.
-By Carolyn King, Dow Jones Newswires; 416-306-2100;
carolyn.m.king@dowjones.com