TORONTO -- Sears Canada says sales of clothing and accessories -- an area where it competes with U.S. retailer Target -- picked up in the latest quarter, while categories that have traditionally driven the company's results, such as mattresses and furniture, slipped.
"If you think back through 18 months of our transformation, it was the big-ticket businesses that really helped and grew through the first 12 months," chief executive Calvin McDonald said in an interview Tuesday after the company reported disappointing second-quarter results.
"We now have momentum in our apparel business, three quarters in a row. I don't think that's happened for over seven years, where we've put that consistent trend together. And big-ticket has slowed a little bit."
Sears reported second-quarter revenue was down 9.6 per cent from the same time last year. The national retailer's overall revenue for the 13 weeks ended Aug. 3 was $960.1 million, down from $1.06 billion a year earlier.
Part of the revenue decline was a reduced number of locations, but same-store sales were also down 2.5 per cent.
Sears would have posted an $11-million loss in the quarter except for an agreement to vacate two Toronto-area stores by March.
Sears reported Wednesday its net income was $152.8 million or $1.50 per share, including an after-tax gain of $164.0 million.
Excluding the one-time gain related to giving up leases at two stores in Toronto and Mississauga, Sears would have lost 11 cents per share. Its loss a year earlier was $9.8 million or 10 cents per share.
McDonald attributed the slowdown in furniture and mattress sales to a weaker housing market and the company's transition to a new furniture program Sears hopes will be more profitable.
Meanwhile, the pickup in same-store apparel sales indicates the company's transformation strategy -- which has included a shift to higher-quality clothing items away from electronics -- is resonating with customers, McDonald said.
But retail analyst Wendy Evans said the fact the retailer is struggling in what has traditionally been its strong suit means its hopes of turning the struggling business around are fading.
"I think it's looking very bad," said the Toronto-based founder of Evans and Company Consultants Inc.
"Their apparel sales and accessory sales were up a little bit, but the core business -- the hard lines -- lost ground.
-- The Canadian Press