Is Sears Canada Worse Than Sears USA?

When is a $59.1 million loss and a 4.3% percent decline in same-store sales good news for a retailer? When the company is Sears Canada (NASDAQ: SRSC), that’s when.

Sears Canada CEO Ron Boire even had the nerve to try to spin the decline as “good news.” Boire’s bizarre thinking is that the numbers are somehow a good thing because the same-store sales losses for the first quarter of 2015 were lower than for any quarter in 2014. If that’s the case, perhaps it is time to hang up the going out of business sign at Sears Canada.

The numbers show that Sears Canada could be in even worse shape than its flagship, Sears Holdings (NASDAQ: SHLD). Some of the sorry lowlights at Sears Canada include:

• TTM revenue fell by 24.56% over the past year.
• A diluted EPS of -2.956
• A net income of -$301.35
• A profit margin of -12.71%
• A return on equity of -38.09%
• A $59.1 million loss for the first quarter of 2015, which meant that investors lost 58¢ a share, according to the Canadian Press.

If this is not a company in the death spiral, I do not know what is. The question we need to ask: Is Sears Canada worse than Sears Holdings? The sorry and very unfortunate answer is, incredibly, no, Sears Holdings is still worse than Sears Canada.

Believe It or Not, Sears Holdings Is Worse Than Sears Canada

The astoundingly terrible financial numbers for Sears Holdings include:

• A return on equity of -340.2%!
• A return on equity of -340.2%!
• Quarterly year to year revenue that fell by 23.54%
• A diluted earnings per share of -15.33
• A net income of -$1.682 billion.
• A debt to equity ratio of -3.996.
• A drop in revenue of $4.99 billion between January 2014 and January 2015; in other words, a loss of $5 billion in the last fiscal year
• A loss of $2.56 billion in the fourth quarter of 2014, the period that includes the holiday season
• The truly incredible thing about both Sears Holding and Sears Canada is that either company is still in business. The only thing either company seems to be shedding faster than money is customers.

My prediction is that our friend Eddie Lampert will liquidate both companies in the next year or so. His latest series of real estate deals is probably the beginning of the end for Sears as a brick and mortar store.
So some of Sears’ assets, such as Sears Hometown, Sears.com, Craftsman, Diehard, and Kenmore will survive in some form or another. Its stores will not because there is no way they can survive losing that much money. Instead, he’ll probably take advantage of the recent retail recovery to sell off Sears’ real estate holdings and possibly Kmart.

Both Sears and Sears Canada will probably be history by the year 2018. Like Montgomery Ward and Woolworth, Sears will be nothing but a memory or a popular website.