Sears 2010 Annual Report Download - page 34

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Gain on Sales of Assets
Sears Canada recorded total gains on sales of assets of $14 million during 2010 and $45 million in 2009.
During 2009, Sears Canada recognized a previously deferred $44 million gain related to the August 2007 sale of
its former headquarters.
Operating Income
Sears Canada’s operating income decreased $157 million to $233 million in 2010 and includes a $42 million
increase due to the impact of foreign currency exchange rates. The decrease of $199 million on a Canadian dollar
basis reflects the above noted decreases in gross margin dollars given lower overall sales on a Canadian dollar
basis and reduced margin rate and decrease in gains on sales of assets.
2009 Compared to 2008
Revenues
Sears Canada’s revenues decreased 11.6% in 2009. The decrease in total revenues of $608 million includes
a $142 million decline due to the impact of exchange rates. On a Canadian dollar basis, revenues decreased by
$466 million, reflecting lower comparable stores sales across all major categories. The decline in comparable
store sales is mainly the result of lower sales in Sears Canada’s Full-line, Direct, Home, Dealer and Outlet
channels, partially offset by higher sales in Corbeil stores.
Gross Margin
Gross margin dollars decreased $149 million to $1.5 billion for 2009 and include a $50 million decline due
to the impact of exchange rates. Gross margin decreased $99 million on a Canadian dollar basis as a result of
lower overall sales. Sears Canada’s margin rate increased to 32.3% in 2009 from 31.4% in 2008 primarily as a
result of improved inventory management.
Selling and Administrative Expenses
Sears Canada’s selling and administrative expenses declined $141 million to $1 billion in 2009 and include
severance expenses of $8 million recorded during the year. The decrease in expenses primarily reflects a
reduction in advertising expenses during 2009, as well as a decline of $27 million due to the impact of exchange
rates. Sears Canada’s selling and administrative expense rate was 22.6% in 2009 and 22.7% in 2008, and
decreased primarily as a result of the noted decline in selling and administrative expenses.
Gain on Sales of Assets
Sears Canada recorded total gains on sales of assets of $45 million during 2009 and $31 million in 2008.
During 2009, Sears Canada recognized a previously deferred $44 million gain related to the August 2007 sale of
its former headquarters. During 2008, Sears Canada benefited from a $32 million gain from the sale of its
Calgary downtown full-line store.
Operating Income
Sears Canada’s operating income increased $23 million to $390 million in 2009. The increase in operating
income includes an $18 million decline due to the impact of foreign currency exchange rates. The increase of $41
million on a Canadian dollar basis reflects the above noted decreases in selling and administrative expenses and
increase in gains on sales of assets, which were partially offset by a decrease in gross margin dollars given lower
overall sales.
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