Sears rolls out plan to save face in light of Q3 results
It’s no secret that Sears has been struggling, but a less-than-robust Q3 earnings report may have prompted the retailer to make a few drastic moves in an effort to sustain itself.
For one, Sears Canada is selling five store leases to Cadillac Fairview Corporation Limited for a price tag of $400 million Canadian, one of which includes its flagship location in Toronto. The transaction, which is aimed at increasing the value of Sears Holdings’ 51% inerest in the branch, is slated to close within the next 10 business days.
"We are very supportive of Sears Canada’s actions to create value," said Sears Holdings chairman and CEO Edward Lampert. "It is clear that the Canadian market is becoming more competitive, but also more lucrative for those who can compete effectively. We believe that Sears Canada is well positioned to create value for its shareholders through a combination of operating performance improvements, business portfolio actions and leveraging its real estate footprint working with its mall and other partners."
The company will also be reviewing its locations and determining whether to renew leases that are set to expire. Unprofitable stores will likely be shuttered in an effort to bolster the operations at high-earning locations.
Lastly, and perhaps most notably, Sears Holdings is evaluating whether to lose Lands End and Sears Auto Center.
"We believe that Lands’ End is an iconic brand with the potential to become a more global brand, and we presently anticipate that any separation, if pursued, would not be structured as a sale but rather through a transaction that would allow existing shareholders the opportunity to benefit from the significant potential for value creation over the long term," said the company in a statement.
The actions were described in a company release as moves that are "intended to improve our financial flexibility and accelerate our transformation into a leading Integrated Retailer that fosters relationships with members through our Shop Your Way platform."
Trex posts $15.3 million net loss
Winchester, Va.-based Trex Co. posted a third-quarter net loss of $15.3 million for the period ended Sept. 30, 2013 — that compares with a loss of $14.3 million in the same quarter last year.
The losses were the result of non-operating charges, the company said. The consisted of a $1.8 million charge related to resetting its prices for certain products as the company transitions its product offerings exclusively to Transcend technology; a $20.0 million increase to its warranty reserve for decking material manufactured at its Nevada plant prior to 2007; and a $1.1 million charge related to subleased office space in Dulles, Va. During the 2012 third quarter, the company recognized a $20 million increase to its warranty reserve and $0.5 million related tax charge.
Net sales for the third quarter of 2013 totaled $72.2 million compared with net sales of $70.8 million for the 2012 third quarter, an increase of 2%.
“Operationally, it was another solid quarter for Trex,” said CEO Ronald Kaplan. “Our operating gross margin was strong despite operating at seasonally lower levels of capacity utilization, and our underlying EPS was better than anticipated at $0.45 per share.
“To further advance our industry-leading market share, we are continuing to expand our distribution network,” he added. “In the last couple of weeks, we added three major East Coast distributors, significantly increasing our presence in this strategically important region. We expect sales growth from our expansion strategies with all classes of customers to occur over the next several years with 2014 benefiting by $40 million to $60 million.”
Home Depot Canada pledges $10 million for homeless youth
Supplementing a $10 million three-year commitment aimed at helping homeless youth in Canada, Home Depot Canada has released a whitepaper on breaking the cycle of youth homelessness.
The funds will go toward renovation and repair projects, life skill development programs and research initiatives aimed at addressing the needs of the tens of thousands of Canadian youth who are affected by homelessness each year.
Additionally, the company will collaborate with stakeholders to help create access to safe housing for homeless youth, establish a thought leadership advisory council, support new research and create a youth advisory council based on parameters that are defined by homeless youth.
"Research shows that reaching homeless youth early with housing and life skills support solutions will decrease the likelihood they will become chronically homeless adults," said Peg Hunter, chair of the board with The Home Depot Canada Foundation. "By focusing our efforts on youth and housing, we can maximize our resources, help youth realize their potential and build brighter futures."
Home Depot Canada has been tackling the issue of affordable housing since the inception of the Home Depot Canada Foundation in 2009.