TORONTO – Sears Canada says it’s planning to cut its overhead costs by a further $100 million to $127 million this year, on top of about $125 million in expense reductions it made last year.
The national retail chain (TSX:SCC) didn’t provide details of how it will cut more sales and administrative costs but it expects to have most of the plan implemented within the first quarter of 2016.
“It’s really just back office stuff,” said Brandon Stranzl, the company’s executive chairman. “That’s the vast majority of it.”
The cuts will affect 16 different functions in the company, and over 80 per cent of them relate to corporate overhead functions, like human resources and IT, he said.
Sears did announce it’s negotiating details of an agreement for Easyfinancial Services Inc. to take over support of financing for Sears Canada customers who purchase large ticket items.
The Toronto-based company also announced it will sell its national logistics centre in Calgary but continue to use the facility under an $84-million sale-leaseback agreement that’s expected to close in the first quarter.
The announcements were included with Sear Canada’s fourth-quarter financial report, which showed an 8.7 per cent decline in overall revenue — to $887.6 million from $972.5 million — and 1.6 per cent decline in sales at stores open for more than a year.
The warm winter weather affected the company’s seasonal business. Snowblowers, as well as winter boots and jackets, did not sell well, said Stranzl.
The company reported a $30.9 million net profit, or 30 cents per share, for the quarter ended Jan. 30 mainly because of a $170.7 million gain from the termination of a credit card agreement with JPMorgan Chase Bank in November.
In the comparable period a year earlier, Sears Canada had a net loss of $123.6 million or $1.21 per share.