SHLDQ Sears Holdings Corporation (CE)

TORONTO—Sears Canada Inc. on Wednesday reported a second-quarter profit, fueled by a gain related to property sales, while revenue and same-store sales fell.

The Canadian department-store chain, which has posted a string of quarterly losses amid efforts to turn around its operations in a competitive retail landscape, also announced additional cost-cutting plans and real-estate sales.

"Over many years, the company has accumulated an expense structure that is unsustainable. Although we have had significant cost reductions in the past two years, we still have an inefficient cost structure," the company said in its earnings statement.

Sears Canada said it plans to cut operating expenses by between 100 million Canadian dollars ($75.6 million) and C$125 million from 2014 levels. The retailer didn't provide details of its cost-cutting plan, but said it would result in one-time costs of between C$15 million and C$20 million.

The company has also agreed to sell another C$28 million of noncore, non-mall real-estate properties and said it would continue to look at other potential real-estate sales. It noted it doesn't plan to sell or exit any of its full-line stores.

Sears Canada sold three Canadian properties in its latest quarter for proceeds of about C$130 million, which contributed to a second-quarter profit of C$13.5 million, or 13 Canadian cents a share. The gain on the real-estate transaction totaled C$67.2 million pretax, it said. A year earlier, it lost C$21.3 million, or 21 Canadian cents a share.

Revenue for the quarter ended Aug. 1 fell 9% to C$768.8 million and overall same-store sales declined 3.9%.

Still, the company said it is seeing signs of improvement, with same-store sales in its core retail network up 4% in June and up 4.1% in July.

"In all, I am very pleased with the positive momentum we are now seeing in the business and I am confident that Sears Canada is back on the right track," said Executive Chairman Brandon G. Stranzl.

Mr. Stranzl has been leading the retailer since the company announced the departure of former Chief Executive Ronald D. Boire in July. Mr. Boire left to lead the retail business of Barnes & Noble Inc. Sears Canada said Wednesday its search for a new chief executive continues.

Sears Canada has struggled to stay relevant in a competitive Canadian retail landscape, facing in recent years the arrival and departure of major U.S. retailers, including Target Corp. On Wednesday, it announced it will open more than 200 branded shops within its stores by November under partnerships with suppliers such as Levi's and U.S. Polo Assn. This week it reached a deal with designer Debbie Travis for a new line of home products exclusive to the retailer.

Sears Holdings Corp. last year sold down much of its 51% stake in the Canadian retailer to bolster its cash position amid its own performance struggles. It now owns about 12% of Sears Canada.

Write to Judy McKinnon at judy.mckinnon@wsj.com

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(END) Dow Jones Newswires

September 02, 2015 09:25 ET (13:25 GMT)

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