Sears Canada Company Profile

Published on June 2016 | Categories: Types, School Work | Downloads: 102 | Comments: 0 | Views: 336
of 39
Download PDF   Embed   Report

company profile, history, financials and strategic positioning

Comments

Content

Sears Canada, Inc.

www.canadean-winesandspirits.com

Sears Canada, Inc.

TABLE OF CONTENTS

1

Sears Canada, Inc. ................................................................................................................................. 6

2

Sears Canada, Inc. - Key Employees ..................................................................................................... 7

3

Sears Canada, Inc. - Key Employees Biographies................................................................................. 8

4

Sears Canada, Inc. - Major Products and Services................................................................................ 9

5

Sears Canada, Inc. - History................................................................................................................. 10

6

Sears Canada, Inc. - Company Statement ........................................................................................... 13

7

Sears Canada, Inc. - Locations and Subsidiaries ................................................................................ 16
7.1

Sears Canada, Inc. - Head Office ........................................................................................................................ 16

7.2

Sears Canada, Inc. - Other Locations and Subsidiaries ....................................................................................... 16

8

Sears Canada, Inc. - Business Analysis .............................................................................................. 17
8.1

Sears Canada, Inc. - Company Overview ............................................................................................................ 17

8.2

Sears Canada, Inc. - Business Description.......................................................................................................... 17

9

Sears Canada, Inc. - SWOT Analysis ................................................................................................... 18
9.1

Sears Canada, Inc. - SWOT Analysis - Overview ................................................................................................ 18

9.2

Sears Canada, Inc. - Strengths ........................................................................................................................... 18

9.2.1

Strength - Strong Financial Leverage .......................................................................................................... 18

9.2.2

Strength - Strong Store Network .................................................................................................................. 18

9.2.3

Strength - Specialized Service Offerings...................................................................................................... 18

9.2.4

Strength - Multiple Channels Selling Strategy .............................................................................................. 18

9.3

9.3.1

Weakness - Declining Operational Performance .......................................................................................... 18

9.3.2

Weakness - Product Recall ......................................................................................................................... 18

9.4

Opportunity - Growth in E-Retail .................................................................................................................. 19

9.4.2

Opportunity - Private Labels Gaining Momentum ......................................................................................... 19

9.4.3

Opportunity - Strategic Agreements/Contract............................................................................................... 19

Sears Canada, Inc. - Threats .............................................................................................................................. 19

9.5.1

Threat - Shortage of Manpower ................................................................................................................... 19

9.5.2

Threat - Increase in Organized Retail Crime ................................................................................................ 19

9.5.3

Threat - Expansion by Competitor ............................................................................................................... 20

Sears Canada, Inc. - Company Financial Analysis .............................................................................. 21

10.1

11

Sears Canada, Inc. - Opportunities ..................................................................................................................... 19

9.4.1

9.5

10

Sears Canada, Inc. - Weaknesses ...................................................................................................................... 18

Sears Canada, Inc. - Five Year Snapshot: Overview of Financial and Operational Performance Indicators .......... 21

Sears Canada, Inc. - Interim ratios ....................................................................................................... 23
11.1.1

11.2

Sears Canada, Inc. - Financial Performance and Ratio Charts ............................................................................ 24

11.2.1

Sears Canada, Inc. - Revenue and Operating margin .................................................................................. 24

11.2.2

Sears Canada, Inc. - Asset and Liabilities .................................................................................................... 25

11.2.3

Sears Canada, Inc. - Net Debt vs. Gearing Ratio ......................................................................................... 26

11.2.4

Sears Canada, Inc. - Operational Efficiency................................................................................................. 27

11.2.5

Sears Canada, Inc. - Solvency .................................................................................................................... 28

11.3

12

Sears Canada, Inc. - Financial ratios: Capital Market Ratios ........................................................................ 23

Sears Canada, Inc. - Key Competitors ................................................................................................................ 29

Sears Canada, Inc. - Mergers & Acquisitions and Partnerships.......................................................... 30

12.1

Sears Canada, Inc. - M&A and Partnerships Strategy ......................................................................................... 30

2
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

TABLE OF CONTENTS

1

Sears Canada, Inc. ................................................................................................................................. 6

2

Sears Canada, Inc. - Key Employees ..................................................................................................... 7

3

Sears Canada, Inc. - Key Employees Biographies................................................................................. 8

4

Sears Canada, Inc. - Major Products and Services................................................................................ 9

5

Sears Canada, Inc. - History................................................................................................................. 10

6

Sears Canada, Inc. - Company Statement ........................................................................................... 13

7

Sears Canada, Inc. - Locations and Subsidiaries ................................................................................ 16
7.1

Sears Canada, Inc. - Head Office ........................................................................................................................ 16

7.2

Sears Canada, Inc. - Other Locations and Subsidiaries ....................................................................................... 16

8

Sears Canada, Inc. - Business Analysis .............................................................................................. 17
8.1

Sears Canada, Inc. - Company Overview ............................................................................................................ 17

8.2

Sears Canada, Inc. - Business Description.......................................................................................................... 17

9

Sears Canada, Inc. - SWOT Analysis ................................................................................................... 18
9.1

Sears Canada, Inc. - SWOT Analysis - Overview ................................................................................................ 18

9.2

Sears Canada, Inc. - Strengths ........................................................................................................................... 18

9.2.1

Strength - Strong Financial Leverage .......................................................................................................... 18

9.2.2

Strength - Strong Store Network .................................................................................................................. 18

9.2.3

Strength - Specialized Service Offerings...................................................................................................... 18

9.2.4

Strength - Multiple Channels Selling Strategy .............................................................................................. 18

9.3

9.3.1

Weakness - Declining Operational Performance .......................................................................................... 18

9.3.2

Weakness - Product Recall ......................................................................................................................... 18

9.4

Opportunity - Growth in E-Retail .................................................................................................................. 19

9.4.2

Opportunity - Private Labels Gaining Momentum ......................................................................................... 19

9.4.3

Opportunity - Strategic Agreements/Contract............................................................................................... 19

Sears Canada, Inc. - Threats .............................................................................................................................. 19

9.5.1

Threat - Shortage of Manpower ................................................................................................................... 19

9.5.2

Threat - Increase in Organized Retail Crime ................................................................................................ 19

9.5.3

Threat - Expansion by Competitor ............................................................................................................... 20

Sears Canada, Inc. - Company Financial Analysis .............................................................................. 21

10.1

11

Sears Canada, Inc. - Opportunities ..................................................................................................................... 19

9.4.1

9.5

10

Sears Canada, Inc. - Weaknesses ...................................................................................................................... 18

Sears Canada, Inc. - Five Year Snapshot: Overview of Financial and Operational Performance Indicators .......... 21

Sears Canada, Inc. - Interim ratios ....................................................................................................... 23
11.1.1

11.2

Sears Canada, Inc. - Financial Performance and Ratio Charts ............................................................................ 24

11.2.1

Sears Canada, Inc. - Revenue and Operating margin .................................................................................. 24

11.2.2

Sears Canada, Inc. - Asset and Liabilities .................................................................................................... 25

11.2.3

Sears Canada, Inc. - Net Debt vs. Gearing Ratio ......................................................................................... 26

11.2.4

Sears Canada, Inc. - Operational Efficiency................................................................................................. 27

11.2.5

Sears Canada, Inc. - Solvency .................................................................................................................... 28

11.3

12

Sears Canada, Inc. - Financial ratios: Capital Market Ratios ........................................................................ 23

Sears Canada, Inc. - Key Competitors ................................................................................................................ 29

Sears Canada, Inc. - Mergers & Acquisitions and Partnerships.......................................................... 30

12.1

Sears Canada, Inc. - M&A and Partnerships Strategy ......................................................................................... 30

2
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.
13

Sears Canada, Inc. - Recent Developments ......................................................................................... 31

14

Appendix .............................................................................................................................................. 33

14.1

Methodology ....................................................................................................................................................... 33

14.2

Sears Canada, Inc. - Ratio Definitions ................................................................................................................. 33

14.3

Disclaimer........................................................................................................................................................... 38

3
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

List of Tables
Table 1: Sears Canada, Inc. - Key Employees ..................................................................................................................... 7
Table 2: Sears Canada, Inc. - Key Employees Biographies ................................................................................................. 8
Table 3: Sears Canada, Inc. - Major Products and Services ................................................................................................ 9
Table 4: Sears Canada, Inc. - History ................................................................................................................................ 10
Table 5: Sears Canada, Inc. - Subsidiaries ........................................................................................................................ 16
Table 6: Sears Canada, Inc. - Annual ratios....................................................................................................................... 21
Table 7: Sears Canada, Inc. - Interim ratios ....................................................................................................................... 23
Table 8: Sears Canada, Inc. - Capital Market Ratios.......................................................................................................... 23

4
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

List of Figures
TABLE OF CONTENTS ....................................................................................................................................................... 2
Figure 1: Sears Canada, Inc. - Revenue and Operating Profit ............................................................................................ 24
Figure 2: Sears Canada, Inc. - Financial Position .............................................................................................................. 25
Figure 3: Sears Canada, Inc. - Net Debt vs. Gearing Ratio ................................................................................................ 26
Figure 4: Sears Canada, Inc. - Operational Efficiency ........................................................................................................ 27
Figure 5: Sears Canada, Inc. - Solvency............................................................................................................................ 28

5
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

1 Sears Canada, Inc.

Financial Snapshot
Operating Performance

Fast Facts
Headquarters Address

Suite 700,Toronto,Ontario,M5B
2C3,Canada

Telephone

+1 416 9414428

Fax

+1 416 9412321

Website

www.sears.ca

Ticker Symbol , Exchange Name

SCC,Toronto Stock Exchange

Number of Employees

11,240

Fiscal Year End

February

Revenue (US$ million)

4,032

The company reported revenue of US$4,032 million
during the fiscal year 2014 (2014). The company's
revenue declined at a compounded rate of 5.47%
during 2010–2014, with an annual decline of 8.16%
over 2013. In 2014, the company recorded an
operating margin of -3.64%, as against -1.17% in 2013.
Revenue and Margins

SWOT Analysis
Strengths

Weaknesses

Multiple Channels Selling Strategy

Declining Operational Performance

Specialized Service Offerings

Product Recall

Strong Financial Leverage
Strong Store Network

Opportunities

Threats

Growth in E-Retail

Expansion by Competitor

Private Labels Gaining Momentum

Increase in Organized Retail Crime

Strategic Agreements/Contract

Shortage of Manpower

Share Data
Share price (US$) as on 08 Sep 2014

15.07

EPS (US$)

4.43

Market Capitalization (US$ million)

1,535

Enterprise Value (US$ million)

1,359

Shares outstanding (million)

102

6
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

2 Sears Canada, Inc. - Key Employees
Table 1: Sears Canada, Inc. - Key Employees
Name

Job Title

Board Level

Since

Age

Danita Stevenson

Director, Senior Vice President - Apparel
and Accessories Sears Canada Inc

Executive Board

2014

46

Douglas C. Campbell

Chief Executive Officer, President, Director Executive Board

2013

43

E.J. Bird

Chief Financial Officer - Interim, Director

Executive Board

2013

51

S. Jeffrey Stollenwerck

President - Sears Real Estate Business
Sears Holdings Corporation, Director

Executive Board

2008

44

Timothy E. Flemming

Director, Senior Vice President - Home &
Hardlines and Strategic Initiatives Sears
Canada Inc

Executive Board

2014

57

William C. Crowley

Chief Executive Officer, Chairman

Executive Board

2013

56

Klaudio Leshnjani

Chief Operating Officer, Executive Vice
President

Senior Management

2013

Salim Maherali

Interim Senior Vice-President, Direct

Senior Management

2013

Deborah E. Rosati

Director

Non Executive Board

2007

52

H Ronald Weissman

Director

Non Executive Board

2013

69

James McBurney

Director

Non Executive Board

2010

55

R. Raja Khanna

Director

Non Executive Board

2007

41

William C. Crowley

Chief Executive Officer, Chairman

Non Executive Board

2013

56

William R. Harker

Director

Non Executive Board

2008

41

Source: Canadean

7
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

3 Sears Canada, Inc. - Key Employees Biographies
Table 2: Sears Canada, Inc. - Key Employees Biographies
Employee Details

Biography

Douglas C. Campbell
Job Title : Chief Executive Officer, President, Director
Since : 2013
Age :43

Doug C Campbell has been the Chief Executive Officer, President and
Director of the company since September 2013. Prior to this, he served
as Executive Vice President and Chief Operating Officer of the
company from 2011 and 2012 respectively. Also, he served as Principal
for Boston Consulting Group during 2005 to 2011.

E.J. Bird
Job Title : Chief Financial Officer - Interim, Director
Since : 2013
Age :51

E. J. Bird has been the Chief Financial Officer and an Executive Vice
President of the company since 2013. He has been the company’s
Director since 2006. Prior to this, he was a private investor. He is also
the President of Overflow Ministry since 2003. Before that, he served as
an analyst for Levine Investments from 2002 to 2010 and as the Chief
Financial Officer of ESL Investments, Inc. from 1991 to 2002.

Klaudio Leshnjani
Job Title : Chief Operating Officer, Executive Vice President
Since : 2013

Klaudio Leshnjani has been an Executive Vice President and Chief
Operating Officer of the company since 2013. Prior to this, he served
many senior management roles including Chief Administrative Officer
and General Counsel, Executive Vice President, Financial and Home
Services, Human Resources, Executive Vice-President, General
Counsel and Corporate Communications and Senior Vice-President
and General Counsel of the company.

William C. Crowley
Job Title : Chief Executive Officer, Chairman
Since : 2013
Age :56

William C. Crowley has been the Chairman and the Chief Executive
Officer of the company since 2013. Prior to this he served as the Senior
Vice President of Finance at Kmart Holding Corp., during 2003-05. He
served as an Executive Vice President and the Chief Administrative
Officer of Sears Holdings, and the President and the Chief Operating
Officer of ESL Investments, Inc. Mr. Crowley is also a member of the
Sears Holdings, SHLD Acquisition Corp. and AutoNation, Inc.

Source: Canadean

8
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

4 Sears Canada, Inc. - Major Products and Services
Sears Canada Inc. is a multi-channel retailer in Canada. The key products and services offered by the company
include the following:
Table 3: Sears Canada, Inc. - Major Products and Services
Products:
Apparel
Beauty Products
Bed and Bath Products
Electronics
Fitness and Health Products
Footwear
Furniture and Mattresses
Home Appliances
Home Products
Jewelry
Pet Accessories
Toys
Wallets and Bags
Belt, Gloves, and Scarves
Shawls and Wraps
Sunglasses and Watches
Services:
Car Rentals
Hair Care Centers
Home Installation Services
Information Technology Services
Optical Services
Repairs
Upholstery and Air Duct Cleaning
Portrait Studio
Financial Service
Brands:
Alpinetek
Attitude
Craftsman
DieHard
Jessica
Kenmore
Nevada
Pure NRG
Whole Home
Source: Canadean

9
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

5 Sears Canada, Inc. - History
Table 4: Sears Canada, Inc. - History
Year

Event type

Description

2014

Contracts/Agreements

The company entered in to agreement with SHS Services Management Inc, whereby SHS will
operate Sears installed home improvements business.

2014

New Products/Services

The company launched Style at Home decor collection across Canada.

2014

Stake Sale

The company entered into an agreement to sell its 15.00% minority ownership stake in the
Centre commercial Les Rivières shopping center in shopping center in Trois-Rivières,
Quebec, to Ivanhoé Cambridge.

2014

Contracts/Agreements

The company entered into an agreement with Concord Pacific Group of Companies to
develop a 12-acre site in Calgary, Alberta.

2014

Contracts/Agreements

The company entered into an agreement with Sears Canada Inc. for the sale of their interests
in Kildonan Place, a shopping centre located in Winnipeg, Canada.

2014

Product Recall

The company recalled Joe Boxer licensed boys 3-piece Eat Sleep Play Pyjama Sets.

2014

Corporate Changes/Expansions

The company opened a new fulfillment center in Calgary, Alberta.

2013

Contracts/Agreements

The company signed an agreement to sell its 50.00% joint venture with The Westcliff Group
of Companies ("Westcliff") to Montez Income Properties Corporation ("Montez") for US$315
million.

2013

Corporate Awards

The company was named 2013 ENERGY STAR Retailer of the Year by Natural Resources
Canada.

2013

Contracts/Agreements

The company entered into an agreement with Reitmans Canada to provide Penningtons PlusSize Fashions for Sears stores and website.

2013

Corporate Changes/Expansions

The company introduced new Hometown Store Model in Orillia, Ontario, Canada.

2013

Contracts/Agreements

The company entered into strategic alliance with The ALDO Group to design and
manufacture Nevada and Attitude footwear for men and women, along with Jessica brand for
women.

2013

Contracts/Agreements

The company entered into strategic alliance with Buffalo International to design and
manufacture Nevada denim-based apparel.

2013

Contracts/Agreements

The company entered into strategic alliance with SHS Services Management Inc., to operate
Sears Installed Home Improvements business.

2012

Divestiture

The company sold its 40.00% ownership of the leasehold interest in Medicine Hat Mall in
Alberta to Sleeping Bay Building Corp., for US$43 million.

10
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.
Table 4: Sears Canada, Inc. - History
Year

Event type

Description

2012

Corporate Changes/Expansions

The company opened its refreshed store concept in Ontario, Canada.

2012

Contracts/Agreements

The company had entered into an agreement to sell its Cantrex Group operations to
Nationwide Marketing Group, LLC.

2012

New Products/Services

The company had launched its first application for iPhone and Android.

2011

Corporate Awards

The company won Retail Sustainability Award at the Excellence in Retailing Awards
ceremony.

2011

Product Recall

The company recalled 10 products in FY2011.

2010

Corporate Changes/Expansions

The company opened a Hometown Store in Chase, BC, Canada.

2010

Corporate Changes/Expansions

The company opened dealer stores at Kincardine, Fergus, Bouctouche, Melville, Lacombe in
Canada.

2009

Others

The company launched the Sears Water Appliance Program, an environmental initiative.

2008

Corporate Changes/Expansions

The company opened a new dealer store in Meadow Lake, Saskatchewan, Canada

2008

Corporate Changes/Expansions

The company opened a new department store in Hamilton, Canada.

2006

Corporate Changes/Expansions

The company relocated two of its dealer stores located in New Brunswick and one dealer
store located in Quebec, Canada

2006

Contracts/Agreements

The company partnered with Amazon.com and re-launched its website, www.sears.ca.

2006

Corporate Changes/Expansions

Sears opened three dealer stores in Quebec and British Columbia, Canada.

2005

Acquisitions/Mergers/Takeovers

Sears acquired Cantrex Group.

2005

Corporate Changes/Expansions

The company opened eight new dealer stores.

2005

Divestiture

The company sold its credit and financial services operations to JP Morgan Chase Bank.

2004

Plans/Strategy

The company announced its plans to exit automotive parts and service business.

2004

Divestiture

The company sold its interest in the Pine Center, Prince George shopping center in British
Columbia, Canada.

11
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.
Table 4: Sears Canada, Inc. - History
Year

Event type

Description

2003

Corporate Changes/Expansions

The company entered banking services segment by forming Sears Canada Bank.

2003

Acquisitions/Mergers/Takeovers

The company acquired Esso Home comfort service and equipment business from Imperial Oil
in selected markets in Ontario, Quebec, Nova Scotia, and Newfoundland, Canada.

2002

New Products/Services

Sears launched new online travel service, SearsTravel.ca.

2002

Contracts/Agreements

The company became the exclusive retailer of the Martha Stewart Everyday house wares
line.

2000

New Products/Services

The company launched a new banner Eatons.

1999

Acquisitions/Mergers/Takeovers

The company acquired T Eaton.

1998

New Products/Services

The company launched web site www.sears.ca

1995

Corporate Changes/Expansions

The company opened its first Sears Whole Home Furniture store.

1994

Corporate Changes/Expansions

Sears launched dealer stores, which provided appliance and electronics goods through
independent, locally owned outlets.

1984

Corporate Changes/Expansions

Simpsons-Sears Limited was renamed as Sears Canada Inc.

1983

Ownership Changes

Sears, Roebuck and Co. acquired 17 million shares of Simpsons-Sears Limited owned by the
Hudson's Bay.

1978

Ownership Changes

Hudson’s Bay acquired Simpsons Limited and also acquired 35.00% shares of SimpsonsSears Limited.

1971

Corporate Changes/Expansions

The company modified its logo with the name ’Sears’, to prevent customer confusion between
Simpsons and Simpsons-Sears.

1963

Corporate Changes/Expansions

The company opened its first store in Quebec, Canada.

1958

Corporate Changes/Expansions

The company opened 36 retail outlets across Canada.

1953

New Products/Services

The company launched first Simpsons-Sears spring/summer catalogue.

1952

Incorporation/Establishment

Sears Canada Inc. was established as Simpsons-Sears Limited a joint venture company by
Robert E. Wood and Edgar G. Burton.

Source: Canadean

12
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

6 Sears Canada, Inc. - Company Statement
A statement by Mr. Douglas C. Campbell, the Chief Executive Officer, President and Director of Sears, is given below. The
statement has been taken from the company’s 2013 annual report.
Sears Canada is focused on re-establishing business fundamentals, creating a solid foundation on which we can grow and
establish a strong future. While there were visible improvements to Sears over the past few years, the foundation to support
and sustain many of these improvements was not sufficient. Consequently, we did not see the long-term results on which we
were counting. To ensure that initiatives in the future can have long term success, we are improving our planning process,
investing in systems and standardizing store execution principles.
The pace at which the enterprise has been moving since late 2013 and early 2014 to improve our results has been
accelerating significantly. The management team is reviewing all areas of the organization and implementing continuing
improvement initiatives.
Going forward, we will create maximum value through the use of three levers: merchandising, operating efficiency and
network optimization. All three levers were used in 2013 and will continue to be employed in 2014.
Merchandising
The Merchandising lever incorporates those elements which relate to our relationship with the Canadian consumer and the
goods and services we offer them. Our focus is on this lever because it is the key to long term organic growth in revenue
and gross margin.
While there are several initiatives underway that relate to the work we are doing within this lever, the key ones center on:
• Sears Value Proposition
• Product Development
• Retail Fundamentals
• Direct Business
Sears Value Proposition
Sears history began over 60 years ago serving suburban and rural working Canadian families with a value proposition based
on quality merchandise for a reasonable price. Today, Canadians of all walks of life, income levels and communities come to
Sears because the elements of our value proposition still resonate.
Providing products to our customers that represent great value is paramount to our success. Value is a word that is thrown
around a lot in the retail industry and often undefined. For Sears, it is a balance of price, quality and service. Those three
elements presented in the right balance through the products we offer and the services we provide differentiate Sears in the
marketplace. Many retailers are moving their proposition further and further upscale becoming more “exclusive” in the
customers they serve. For Sears, we are focusing our value proposition on being an “inclusive” retailer serving all Canadians
who share our view of value as that right balance of price, quality and service.
Product Development
We are increasing the products we offer under “Canada’s Best”, a seal of approval that is assigned to carefully selected
fashion and home products that meet the highest standards in quality, style and innovation, and which we offer at
unexpectedly reasonable prices. Our Alpinetek women’s downfilled winter parka at $179.97, the Jessica women’s washable
suit at $79.97 and the 75,000 BTU Kenmore gas grill at $499.97 are great examples of this program.
We continue to develop our private brands to resonate with the lifestyle of Canadians. Our Pure NRG Athletics women’s
activewear brand introduced in January of 2014 is an example of capitalizing on the growth of yoga, activewear and casual
sportswear. The success of this line after just a few weeks is encouraging. We also introduced a private brand of casual
men’s sportswear in our Spring 2014 LOOK! report. The relaxed Logan Hill line of mix and match separates features cargo
pants, chinos, shorts, sweaters, wovens, and knits from $12.97.
Programs like these resonate well with customers and helped us gain a positive same-store sales increase in our Apparel
and Accessories business of 4.2 percent in 2013 vs. 2012.
National Brands with exclusivity also provide value to Sears customers. We introduced Carter’s and Osh Kosh children’s
apparel during the year, and Penningtons plus-sized apparel for women. We also launched Just Keep Livin’ (JKL), the men’s
apparel line inspired by actor Matthew McConaughey’s laid-back style. A portion of the proceeds of JKL support our longtime community partner, Boys and Girls Clubs of Canada. Brands like these help improve our apparel offering and
complement the work we are doing with private brands.
We rebranded our Sears-O-Pedic mattress sets to Whole Home to broaden the scope of this home décor private brand. In
addition, we continued to dominantly market Kenmore, Canada’s number one brand of major appliances.

13
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

As we move forward in 2014, we will continue to introduce products in either private brands or exclusives to bring
differentiation and innovation to our customers.
Retail Fundamentals
By the end of 2013, we had refreshed or reset 58 of our full-line stores, with emphasis on merchandise presentation and
standards. While we are pleased with how these stores look, we need to improve how we are executing on the
fundamentals of the business.
It is futile to provide great shopping environments and not have what a customer wants when they want it. A great
merchandise presentation isn’t going to help sales without core sizes and colours being available to the customer. Going
forward, we plan to invest in replenishment systems and training that are going to keep us in stock while improving inventory
turns.
We also need to improve the balance of inventory we devote to frequently sought-after essentials. As we develop our retail
fundamentals, we are focusing on stock levels in core merchandise as a priority, before moving on to other items which
sometimes come with more risk.
Related to this is the tailoring of our assortments. In many categories, we are over assorted. For example, a selection of 20 plus toasters only confuses customers rather than help them. Our approach is to reduce the breadth of our assortment and
use those dollars to buy adequate depth of the best items.
Effective management of inventory principles is another important retail fundamental. Reducing aged inventory allows us to
buy current season goods in substantial enough quantities to stay in stock. We were successful in reducing our year-end
inventory in 2013 by $76.8 million versus the end of 2012. Taking advantage of the winter that lingered, our direction to
stores was to clear out the remaining fall-winter inventory from store stockrooms and move everything to the floor priced to
sell during January and February of 2014. Our intention going forward is to have inventory arrive in store and move directly
to the selling floor where customers can see it. We need to flow the merchandise better on a consistent basis; this work
represents a sizable amount of our effort in 2014 and we believe the payback will be significantly increased customer
satisfaction and improved inventory turns.
Direct Business
As Canadians continue to embrace e-commerce, we are proactively managing a shift from catalogue to internet. In 2013, we
experienced growth in internet that exceeded the catalogue decline. Our internet business and infrastructure to support it will
be a focus of investment in 2014.
Operating Efficiency
Operating efficiency centers on prudent expense management and identifying inefficiencies within the business. In the
immediate term, this is a priority for Sears because the initiatives we are undertaking are giving us time and capacity to
establish the retail fundamentals that support our improved merchandising.
Three key components of the Operating Efficiency lever where we undertook substantial initiatives during 2013 are:
• Expense Management
• Outsourcing
• Right-Sizing
Expense Management
When we remove the transformation expenses which are primarily related to severance, we reduced total operating
expenses in 2013 by $98 million versus 2012. The reductions we implemented are the result of a stringent review of our
business practices, and the identification of where we can be more cost efficient without affecting profitable revenue
generation or customer service.
Outsourcing
Outsourcing is a practice we consider for non-core activities requiring significant investment when we can find a partner who
can provide our customers with the level of service they would expect from Sears. For example, during 2013 we announced
outsourcing for some of our customer call centre activities, some information technology, some finance, accounting and
payroll, and some indirect procurement. To maintain these operations as part of Sears would have taken significant
investments in technology and resources. Doing so would take away from the investment we want to make to support our
core business, such as stores, marketing, replenishment system upgrades and other important information technology
enhancements.

14
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

Right-Sizing
We also took the opportunity in 2013 to right-size the organization, including the restructure of certain businesses such as
Repair Services and Parts and the de-layering of the management structure. We will continue to optimize the structure of the
Company to more closely align to the size and needs of the current business.
Network Optimization
The Network Optimization lever is focused on maximizing the return the Company receives through its assets such as real
estate and non-core businesses. In considering its real estate, the Company will evaluate opportunities that may become
available to monetize assets when the market value of those assets exceeds the retailing value. Concurrently, the Company
seeks creative ways to optimize and unlock the value of non-core assets in the network such as specialized businesses or
non-retail related services.
Three key initiatives during 2013 which we announced were:
• Store leases
• Joint Arrangement
• Burnaby Development
Store Leases
In 2013, in response to substantial offers from landlords, we terminated leases early on seven stores, with an option on an
eighth, for total consideration of $591 million. While the stores involved were profitable, the value of the transaction far
exceeded the EBITDA we could have realized in those stores even over a period of many years. While we have no plans to
vacate additional stores, we continue to review our portfolio and may consider proposals that will substantially create value
without affecting our presence as a major national retailer, or our focus on suburban, mid-market and rural locations.
Joint Arrangement
We sold a 50% joint arrangement interest for $315 million in eight properties that we owned. The properties involved are
comprised of four regional shopping centres, two strip centres and two open-format retail centres. While some of these
properties contain a Sears location, any Sears store currently situated on these properties will remain in operation and we
expect no impact on customers or associates in these stores as a result of this transaction.
Burnaby Development
In association with Concord Pacific Group of Companies, we are pursuing the development of the Sears site located at one
of Canada’s most important shopping centres, Metropolis at Metrotown in Burnaby, British Columbia. Sears submitted an
application to the City of Burnaby regarding nine acres of the Company’s property on and adjacent to its store at that
location. The vision of the redevelopment is a major urban-infill project consisting of seven residential and office high-rises
along with ground-level retail. While it is still too early to tell if conditions will allow the project to proceed, it is important to
note that the Company has the potential to use assets to earn potential income and continue to operate a store with access
to a great number of new condo residents and workers who will occupy the buildings planned for this space.
A Solid Foundation for a Stronger Future
Establishing a solid foundation for a stronger future requires the commitment of everybody in the organization. I want to
thank our associates, coast to coast, for their support and hard work as we plan for the future of Sears Canada. I am excited
by the energy of our team and their desire to make the Company better. Together, we are taking steps today that will allow
us to continue serving customers as a major national retailer in stores and through our Direct channel now and in the years
ahead.

15
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

7 Sears Canada, Inc. - Locations and Subsidiaries
7.1

Sears Canada, Inc. - Head Office

Sears Canada, Inc.
Suite 700
Toronto
Ontario
Zip: M5B 2C3
Canada
Tel: + 1 416 9414428
Fax: + 1 416 9412321

7.2

Sears Canada, Inc. - Other Locations and Subsidiaries

Table 5: Sears Canada, Inc. - Subsidiaries
SLH Transport Inc.
1585 Centennial Drive
Kingston
Canada
Tel: + 1 613 3849515
Fax: +1 613 3845925
Zip: K7L 4V2

Source: Canadean

16
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

8 Sears Canada, Inc. - Business Analysis
8.1

Sears Canada, Inc. - Company Overview

Sears Canada Inc. (Sears) is a multi-channel retailer based in Canada. The company's products portfolio includes apparel,
beauty products, bed and bath products, electronics, fitness and health products, footwear, furniture and mattresses, home
appliances, home products, jewelry, pet accessories, toys, wallets and bags, belt, gloves, and scarves, shawls and wraps,
sunglasses and watches. Sears offers these products under both private label and national brands . The company also
provides various services such as car rentals, hair care centers, home installation services, information technology services,
optical services, repairs, upholstery and air duct cleaning, portrait studio and financial service. Geographically, the company
operates in the US and Canada. The company is headquartered in Toronto, Ontario, Canada.

8.2

Sears Canada, Inc. - Business Description

Sears is a multi-channel retailer in North America. The company operated 457 stores, six NLCs, 97 Travel Office and 1,446
catalog merchandise pick-up locations in the US and Canada as of February 2014. The company also operates four
distribution centers in Canada.
The company's product portfolio includes a wide range of toys, footwear, home improvement products, house wares,
furniture, appliances, electronics, gardening items. The company provides various specialized services through home
improvement products and services division. In FY2014, the company generated CAD1,463 million (36.6%) of the total
revenue from Apparel and Accessories followed by Home and Hardlines with CAD998 million (25%), Major Appliances with
CAD823 million (20.6%), Services and other with CAD343 million (8.6%), Other merchandise with CAD228 million (5.7%)
and Commission and licensee with CAD137 million (3.4%).
The company operates under two reportable segments: Merchandising and Real Estate Joint Agreements.
The Merchandising segment offers products and services through various retail channels including Full-Line Department
store, Sears Home, Hometown Dealer, Outlet, Appliances and Mattresses, Corbeil Electrique Inc. stores and its Direct
channel.
The Full-Line Department store are involved in offering products in three categories which includes apparel and accessories
for man, woman and children’s, cosmetics, nursery products, footwear and accessories. It also offers home furnishings and
mattresses, home decor, lawn and garden, hardware, electronics and leisure, and seasonal products, besides offering
refrigeration, laundry, floor care and sewing services. As of February 2014, the company operated 118 Full-Line
departmental stores.
Sears Home stores, offers products such as furniture, mattresses and box-springs, and major appliances. This section also
offers limited selection of electronics. The store size ranges from 35,000 to 60,000 sq. ft. As of February 2014, the company
operated 48 Sears Home stores.
The company, under Hometown Dealer stores offers mattresses and box-springs, major appliances, outdoor power
equipment, electronics and furniture. Apart from this, it offers merchandise ordered through catalogs at pick-up locations. As
of February 2014, the company operated 234 Hometown Dealer stores.
Under the Outlet stores, the company offers clearance merchandise, basically from the company’s Full-Line Department
stores and Direct channel. As of February 2014, the company operated 11 Outlet stores.
Sears thorough its Appliances and Mattresses stores offers a wide selection of major appliances, and mattresses and boxsprings under Sears private labels and a variety of national brands. The store size ranges from 10,000 to 15,000 sq. ft. As of
February 2014, the company operated four Appliances and Mattresses stores.
Corbeil Electrique Inc. is a chain of major appliance specialty stores located in Quebec, the Greater Toronto Area and
Eastern Ontario of Canada. The average store size is 6,500 sq. ft. As of February 2014, the company operated 34 Corbeil
stores out of which 16 are franchised stores.
The company's Direct Channel selling business includes catalog business and an e-commerce website Sears.ca through
which it offers extensive general merchandise selection. At the end of review period, around 89 million people visited its ecommerce website.
In FY2014, the Merchandising segment reported revenues of CAD3,945 million, accounting for 98.8% of the company’s total
revenue.
Under the Real Estate Joint Agreements, the company operates three shopping centers in Canada in the joint agreement
with Ivanhoé Cambridge, in which the company has 15% to 20% interest. In FY2014, the Real Estate joint Agreement
segment reported revenues of CAD46 million, accounting for 1.2% of the company’s total revenue.

17
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

9 Sears Canada, Inc. - SWOT Analysis
9.1

Sears Canada, Inc. - SWOT Analysis - Overview

Sears Canada Inc. (Sears) is a retailer in the Canada. Strong financial leverage along with strong store network, multiple
channel selling strategy and specialized service offerings are the key strengths of the company even as declining
operational performance and product recall remains area of concern. Going forward, it faces challenges from shortage of
manpower, expansion by competitor and increase organized retail crime. However, strategic agreement/contract, growing
private labels markets and growth of e-retail industry ensure a strong future for the company.

9.2
9.2.1

Sears Canada, Inc. - Strengths
Strength - Strong Financial Leverage

The financial leverage or solvency position of the company affects its ability to borrow and repay money which in turn affects
its business operations. The solvency position of Sears may be sound due to less debt funding than equity. The company
recorded debt to equity ratio of 0.03 at the end of FY2014 against its competitors Canadian Tire Corporation, Limited and
Hart Stores Inc., which reported debt to equity ratio of 0.66 and 0.18, respectively. Furthermore, the debt levels of the
company decreased to CAD36 million on an annual basis at the end of FY2014 as compared to CAD59 million . Strong
solvency position indicates utilization of lower financial leverage and its comparatively higher equity position, underlining the
better creditworthiness of the company.
9.2.2

Strength - Strong Store Network

Extensive store network helps the company to reach a wide customer spectrum and increase its sales. As of February 2014,
the company operates 457 stores, six NLCs, 97 Travel Office and 1,446 Catalogue merchandise pick-up locations in the US
and Canada.. It operates 181 corporate stores, 234 dealer stores, 34 Corbeil stores, 97 Travel offices and six NLCs with a
total selling space of 24.8 million sq. ft. across the country. In addition, it also operates four distribution centers in Canada.
Therefore, the strong store network helps the company to enjoy high market penetration that lifts the footfalls.

9.2.3

Strength - Specialized Service Offerings

Sears Canada offers specialized services, which differentiate its stores, attracts a broad customer base and generates
higher revenue. In addition to traditional merchandise retail, Sears offers travel offices, optical services, hair care centers,
health food shops, income tax services, portrait studios, parts and service network, lawn care, upholstery and air duct
cleaning, gas bars, car rental, driver training, home installation and florists. The company through these offering may
differentiate itself from its competitors and thus, attract large number of customers.
9.2.4

Strength - Multiple Channels Selling Strategy

The sale of merchandise through multiple channels increases the company’s direct-to-consumer business. Sears retails its
products through a combination of traditional grocery stores and online business formats. The company operates a retail
estate of 457 stores, six NLCs, 97 Travel Office and 1,446 Catalogue merchandise pick-up locations under the Full-Line
Department store, Sears Home stores, Outlet stores, appliances and Mattresses stores, Hometown Dealer stores, Sears
Home Services Showrooms and Corbeil stores. In addition, the company retails merchandise online at www. Sears.ca.
Diverse retail and marketing channels helps to increase brand awareness, store traffic and sales.

9.3
9.3.1

Sears Canada, Inc. - Weaknesses
Weakness - Declining Operational Performance

Sears displayed poor financial growth in FY2014 during which the company recorded significant decline in income levels. In
FY2014, the company reported operating loss of CAD145 million, a decrease of 186.6%, in comparison with an operating
loss of CAD51 million registered in FY2013. Furthermore, the company's operating margin was -3.6% for the FY2014,
which was below the value of -1.2% in FY2013. The company's poor operational performance may reduce the investors’
confidence and have a negative impact on the company's growth prospects.
9.3.2

Weakness - Product Recall

Product recalls may significantly affect Sears’s brand equity. Earlier, in May 2014, the company recalled digital thermostats
manufactured by White-Rodgers due to the alkaline batteries which are used in the thermostat can leak onto the circuit

18
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.
board posing a fire hazard. In same month, company recalled Radian Restraint Systems manufactured by Diono because
the product was shipped without the required memory foam insert in the seat pan fabric which may transmit excessive loads
to the child occupant which could cause injury. Further more in April 2014, company voluntary recalled a Whole Home
Outdoor Hurricane Candle Holders. The recalled was made because of the top which can detach causing a potential
fire/burn hazard. Frequent product recalls indicate poor quality measures, which in turn might tarnish the company’s brand
image. Furthermore, besides sales lost due to product unavailability during the recall process, the company incurs various
costs associated with the recall process that increases operational expenditure.

9.4
9.4.1

Sears Canada, Inc. - Opportunities
Opportunity - Growth in E-Retail

The company stands to benefit from growing trend of online retailing in Canada, which provides consumers the convenience
of shopping from home. With the increase in interactive methods and limitless content, the retail e-commerce is growing at a
faster rate. According to the Canadian Internet Registration Authority (CIRA), Canadians are the second heaviest users of
the internet in the world. CIRA’s 2014 fact book reports that the Canadians have been spending an average of 41.3 hours
online per month, compared to 38.9 hours in the UK and with a world average of 24.6 hours. The agency also projected fast
growth in online commerce in the coming years, averaging 7.40% through 2016. As Sears sells its products through online
shopping websites www.sears.ca, may utilize the opportunity to market its presence across the globe through internet
services.
9.4.2

Opportunity - Private Labels Gaining Momentum

The company stands to benefit from the increasing demand for private label products. Following a period of slow and
negative economic growth, private label sales are rising as consumers increasingly shop to a budget. While price is a prime
factor driving private label sales, improvements in packaging and quality have helped to remove the stigma attached with
buying store brands. The company’s private label brands include Alpinetek, Attitude, Craftsman, DieHard, Jessica,
Kenmore, Nevada, Pure NRG and Whole Home.. As the company sells private label products it has a strong opportunity to
increase its profit margins in the future.
9.4.3

Opportunity - Strategic Agreements/Contract

Strategic initiatives offer a strong growth opportunity for the company, especially while foraying into new markets. Sears
focuses on collaborations and agreements to expand its business operations and support its position in the retail industry. In
this direction, in June 2014, the company entered into a binding agreement with Concord Pacific Group of Companies
development of the 12-acre Sears site located at the North Hill Shopping Centre in Calgary, Alberta. As a result of this
contract Sears will able to expands its business in the Alberta market. Further more in July 2013, the company entered into
an agreement with Reitmans (Canada) Limited to provide Penningtons Plus-Size fashions for Sears stores and website.
Such strategic agreement initiatives help the company to diversify its operations to new markets providing significant growth
in the revenues in the long run.

9.5
9.5.1

Sears Canada, Inc. - Threats
Threat - Shortage of Manpower

The company’s operations may suffer as a result of manpower shortage in Canada. According to the Canadian Chamber of
Commerce, one of the biggest challenges to be faced by the Canadian economy once the global recession eases will be
shortage of manpower. The problem of shortage of manpower is going to become more severe in the long-run with the birth
rates declining and the population ageing. According to the Canadian government’s chief actuary, the number of people
above the age of 65 is going to rise from 15.3% in 2013 to 26.3% by 2075. As a result of which Canada will face severe
manpower demand supply imbalance in the coming years and the government needs to take action to address this problem.
Furthermore, according to Manpower 2013, Talent Shortage Survey Results 34% of the employers in Canada find difficulty
in filling job vacancies. Since the company operates in Canada, the company may face disruptions in its operations as a
result of manpower shortage in the country.
9.5.2

Threat - Increase in Organized Retail Crime

Organized retail crime is on the rise and this may negatively affect the profits of retailers. According to a survey conducted
by the National Retail Federation, 93.50% of retailers reported acts of organized retail crime in 2013. Many retailers had cut
their staff to reduce costs during the global financial crisis, which further increased the problem. Moreover, many consumers
are now turning to auction sites to find budgeted deals, which provide a market for stolen goods. Every year, organized retail
crime losses total an estimated US$15 billion–US$30 billion. This poses a challenge to the company’s in-store sales and
may limit its revenues.

19
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

9.5.3

Threat - Expansion by Competitor

Competition is high among the retail store irrespective of their sales, quality, and availability of products. Competition within
the industry is generally on the basis of the sales, maintaining low cost, and customer service, price of the product and
brand equity. The company’s key competitors include Canadian Tire Corporation, Limited, Hart Stores Inc., Hudson's Bay
Company, Loblaw Companies Limited, RONA inc., The Jim Pattison Group and Walmart Canada Corp. While major retailers
have undertaken expansion programs to match the growth rate, the market also witnessed consolidation involving mergers
and acquisitions and expansion strategies.
For instance, in November 2013, the Hudson's Bay Company (HBC) acquired Saks Incorporated. As a result the company
will enhance its presence in North American. Furthermore in August 2013, Canadian Tire Company’s (Canadian Tire)
subsidiary FGL Sports Ltd. (FLG Sports) acquired the Pro Hockey Life (Pro Hockey) who provides the best hockey products
available in the world. As a result of this acquisition the Canadian Tire will enhance FGL Sports' capacity to provide
Canadians with an unparalleled selection of hockey equipment, knowledgeable staff and excellent customer experience.
Such consolidations within the sector may result in large companies intensifying competition that may cause the company to
lose out on certain customers.

20
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

10 Sears Canada, Inc. - Company Financial Analysis
10.1 Sears Canada, Inc. - Five Year Snapshot: Overview of Financial and Operational
Performance Indicators
The company reported revenue of US$4,032 million during the fiscal year 2014 (2014). The company's revenue declined at
a compounded rate of 5.47% during 2010–2014, with an annual decline of 8.16% over 2013. During 2014, operating margin
of the company was -3.64% in comparison with operating margin of -1.17% in 2013. In 2014, the company recorded a net
profit margin of 11.19% compared to a net profit margin of 2.33% in 2013.
Table 6: Sears Canada, Inc. - Annual ratios
Key Ratios

Unit/Currency

2014

2013

2012

2011

2010

Equity Ratios
EPS (Earnings per Share)

CAD

4.38

0.99

-0.48

1.16

2.18

Dividend per Share

CAD

5

1

7

Dividend Cover

Absolute

0.88

0.99

0.17

Book Value per Share

CAD

10.54

10.57

10.63

11.96

Cash Value per Share

CAD

0.1

0.2

0.2

0.19

Gross Margin

%

36.17

36.75

36.52

38.88

9.39

Operating Margin

%

-3.64

-1.17

-1.1

3.79

6.68

Net Profit Margin

%

11.19

2.33

-1.09

2.53

4.51

Profit Markup

%

56.66

58.1

57.53

64.06

10.36

PBT Margin (Profit Before Tax)

%

12.28

2.63

-1.23

3.79

6.68

Return on Equity

%

41.58

9.4

-4.61

9.92

10.43

Return on Capital Employed

%

-9.42

-2.96

-2.74

9.96

13.2

Return on Assets

%

18.66

4.04

-1.82

4.3

5.84

Return on Fixed Assets

%

-14.89

-3.89

-3.65

13.94

21.89

Return on Working Capital

%

-25.63

-12.34

-10.9

34.85

33.22

Sales Growth

%

-8.16

-5.91

-6.07

-5.43

-9.29

Operating Income Growth

%

-127.2

-46.17

-17.63

EBITDA Growth

%

149.85

-12.82

314.69

-15.29

Net Income Growth

%

341.21

-140.24

-46.74

-19.26

EPS Growth

%

-143.79

-50.15

-9.91

Working Capital Growth

%

38.06

-12.06

-13.02

-48.69

-8.91

Operating Costs (% of Sales)

%

103.64

101.17

101.1

96.21

93.32

Administration Costs (% of Sales)

%

37.39

35.45

Current Ratio

Absolute

1.67

1.52

1.52

1.52

1.76

Quick Ratio

Absolute

0.76

0.44

0.61

0.6

1.14

Cash Ratio

Absolute

0.59

0.29

0.43

0.41

1

Absolute

0.03

0.06

0.14

0.1

0.15

20.91

Profitability Ratios

Growth Ratios

-85.68

Cost Ratios

Liquidity Ratios

Leverage Ratios
Debt to Equity Ratio

21
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.
Table 6: Sears Canada, Inc. - Annual ratios
Key Ratios

Unit/Currency

2014

2013

2012

2011

2010

Net Debt to Equity

Absolute

0.2

0.08

0.17

0.12

0.17

Debt to Capital Ratio

Absolute

0.02

0.03

0.08

0.07

0.13

Asset Turnover

Absolute

1.67

1.74

1.67

1.7

1.3

Fixed Asset Turnover

Absolute

5.08

3.89

3.86

5.48

5.41

Inventory Turnover

Absolute

3.29

3.23

3.56

3.14

5.53

Current Asset Turnover

Absolute

2.82

3.62

3.36

3.15

2.14

Capital Employed Turnover

Absolute

3.72

4.04

4.23

3.92

2.31

Working Capital Turnover

Absolute

7.04

10.58

9.89

9.2

4.97

Revenue per Employee

CAD

355142

Net Income per Employee

CAD

39724

Capex to Sales

%

1.77

2.34

1.82

1.21

1.26

Efficiency Ratios

Source: Canadean

22
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

11 Sears Canada, Inc. - Interim ratios
Table 7: Sears Canada, Inc. - Interim ratios
Key Ratios

Unit/Currency

Aug-2014

May-2014

Feb-2014

Nov-2013

Equity Ratios
Interim EPS (Earnings per Share)

CAD

-0.21

-0.74

3.67

-0.48

Book Value per Share

CAD

9.58

9.77

10.54

11.3

Gross Margin

%

33.29

32.81

33

37.2

Operating Margin

%

-6.24

-13.02

-2.98

-6.44

Net Profit Margin

%

-2.52

-9.74

31.61

-4.97

Profit Markup

%

49.91

48.83

49.24

59.23

PBT Margin (Profit Before Tax)

%

-3.94

-13.26

35.6

-6.67

Operating Costs (% of Sales)

%

106.24

113.02

102.98

106.44

Administration Costs (% of Sales)

%

36.14

42.78

37.57

40.83

Current Ratio

Absolute

1.66

1.66

1.67

1.84

Quick Ratio

Absolute

0.61

0.58

0.76

0.68

Debt to Equity Ratio

Absolute

0.03

0.03

0.03

0.03

Net Debt to Equity

Absolute

0.22

0.17

0.2

0.15

Debt to Capital Ratio

Absolute

0.02

0.02

0.02

0.02

Profitability Ratios

Cost Ratios

Liquidity Ratios

Leverage Ratios

Source: Canadean

11.1.1 Sears Canada, Inc. - Financial ratios: Capital Market Ratios
Table 8: Sears Canada, Inc. - Capital Market Ratios
Key Ratios

Value

P/E (Price/Earnings) Ratio

3.4

EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization)

2.24

Enterprise Value/Sales

0.34

Enterprise Value/Operating Profit

0

Enterprise Value/Total Assets

0.56

Dividend Yield

0.34

Note: Above ratios are based on share price as of 08-Sep-2014. The above ratios are absolute numbers.
Source: Canadean

23
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

11.2 Sears Canada, Inc. - Financial Performance and Ratio Charts
11.2.1 Sears Canada, Inc. - Revenue and Operating margin
The consolidated group revenue of the company for 2014 stood at US$4,032 million, which corresponds to a decline of 8.16%
over the previous year. The operating margin of the company was -3.64% in 2014, a decrease of 247.00 basis points over the
previous year.

Figure 1: Sears Canada, Inc. - Revenue and Operating Profit

Source: Canadean

24
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

11.2.2 Sears Canada, Inc. - Asset and Liabilities
The company's assets declined by 4.49% over the previous year to US$2,416 million in 2014. The company's liabilities declined
7.69% over the previous year to US$1,332 million in 2014. The company's asset to liability ratio improved from 1.75 in 2013 t o
1.81 in 2014.
Figure 2: Sears Canada, Inc. - Financial Position

Source: Canadean

25
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

11.2.3 Sears Canada, Inc. - Net Debt vs. Gearing Ratio
The company recorded lower net debt of US$26 million at the end of fiscal year 2014 when compared to the previous year's net
debt of US$39 million.The company's gearing ratio for the year 2014 was 0.03, which was lower when compared to the previous
year's gearing ratio of 0.05. The gearing ratio remained lower in 2014 due to lower debt funding activities over equity.
Figure 3: Sears Canada, Inc. - Net Debt vs. Gearing Ratio

Source: Canadean

26
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

11.2.4 Sears Canada, Inc. - Operational Efficiency
The company's working capital turnover for 2014 declined to 7.04, from the previous year's working capital turnover of 10.58. In
2014, the company's asset turnover declined to 1.67 from the previous year's asset turnover of 1.74.

Figure 4: Sears Canada, Inc. - Operational Efficiency

Source: Canadean

27
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

11.2.5 Sears Canada, Inc. - Solvency
In 2014, the company's current ratio increased to 1.67 from the previous year's current ratio of 1.52. The company’s quick ratio
increased to 0.76 in 2014 from the previous year's quick ratio of 0.44. In 2014, the company’s debt ratio remained unchanged at
0.02.

Figure 5: Sears Canada, Inc. - Solvency

Source: Canadean

28
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

11.3 Sears Canada, Inc. - Key Competitors
The following companies are the major competitors of Sears Canada, Inc.:
The Jim Pattison Group
Hart Stores Inc.
Canadian Tire Corporation, Limited
Hudson's Bay Company
RONA inc.
Walmart Canada Corp.
Loblaw Companies Limited

29
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

12 Sears Canada, Inc. - Mergers & Acquisitions and Partnerships
12.1 Sears Canada, Inc. - M&A and Partnerships Strategy
Sears Canada partners with Buffalo International
Deal Type

Partnership

Deal Sub Type

Co-development

Deal Status

Completed

Announced Date

1/17/2013 12:00:00 AM

Deal in Brief
Sears Canada Inc., an operator of departmental and specialty stores, has entered into a strategic alliance with Buffalo
International Inc., a designer and manufacturer of clothing for women and men, to design and manufacture Sears entire line of
Nevada denim-based apparel. Both companies involved in the transaction are based in Canada.
Under the agreement, the Nevada lifestyle brand will encompass men's and women's apparel and will be available in Sears’
stores beginning in fall 2013.
Participant Company Information
Company Name

Buffalo International Inc.

Involvement Type

Target

Company Overview
Buffalo International Inc. is a designer and manufacturer of clothing for women and men.

Sears Canada partners with ALDO Group
Deal Type

Partnership

Deal Sub Type

Co-development

Deal Status

Completed

Announced Date

1/17/2013 12:00:00 AM

Deal in Brief
Sears Canada Inc., an operator of departmental and specialty stores, has entered into a strategic alliance with ALDO Group, Inc.,
a manufacturer and retailer of footwear and accessories, to design and manufacture Sears entire line of Nevada and attitude
footwear for men and women, as well as the Jessica brand for women. Both companies involved in the transaction are based in
Canada.
As part of the transaction, the brands will be available in Sears’ stores across Canada beginning with the Fall 2013 season.
Participant Company Information
Company Name

Aldo Group Inc.

Involvement Type

Target

Company Overview
Aldo Group Inc. (ALDO) is a fashion apparel products retailing company. The company designs and produces fashion footwear,
handbags and accessories. It retails products including shoes, boots, sandals, handbags, bracelets, hats, scarves, gloves,
necklaces, earrings, rings and others. ALDO offers sunglasses, hair accessories, belts, leg wear, watches, wallets, totes, clutches,
and satchels and messengers. The company distributes its products under the brand names including ALDO, CALL IT SPRING,
LOCALE, LITTLE BURGUNDY and GLOBO. It operates through its 1750 retail stores located across Canada, the U.S, the U.K.
and Ireland. ALDO is headquartered in Saint-Laurent, Quebec, Canada.

30
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

13 Sears Canada, Inc. - Recent Developments
Sears Canada reports second quarter results
Sears Canada announced its unaudited second quarter results.
Published Date : 8/21/2014 12:58:00 PM
Sears Canada announces opening of new fulfillment centre in Calgary
Orders for 2014 Wish Book launching this weekend will comprise first shipments from new facility.
Published Date : 8/21/2014 12:00:00 AM
Ivanhoé Cambridge and Sears Canada announce sale of their interests in Kildonan Place
Ivanhoé Cambridge and Sears Canada announced today that they have entered into an agreement for the sale of their interests in Kildonan
Place, a shopping centre located in Winnipeg.
Published Date : 8/7/2014 11:48:00 AM
Ivanhoe Cambridge and Sears Canada announced the sale of their stake in Kildonan Place
Ivanhoé Cambridge and Sears Canada announced that it has negotiated an agreement for the sale of their interests in Kildonan Place, a
shopping center located Winnipeg.
Published Date : 8/7/2014 11:48:00 AM
Ivanhoe Cambridge and Sears Canada announce sale of their interests in Kildonan place
Ivanhoe Cambridge and Sears Canada announced that they have entered into an agreement for the sale of their interests in Kild onan Place, a
shopping centre located in Winnipeg.
Published Date : 8/7/2014 10:23:00 AM

Sears Canada issues a voluntary product recall on Joe Boxer boys 3-piece pyjama sets
Sears Canada Inc. is issuing a voluntary product recall today for Joe Boxer licensed boys 3-piece Eat Sleep Play Pyjama Sets that Sears
Canada designs and produces under license from Joe Boxer Canada.
Published Date : 8/6/2014 12:00:00 AM

Sears Canada issues a voluntary product recall for Nevada toddlers and girls Moccasins
Sears Canada is issuing a voluntary product recall for Nevada toddlers and girls moccasins in black, yellow and tan colours.
Published Date : 8/5/2014 12:00:00 AM
Sears Canada makes appointment to board of directors
Sears Canada, is deeply saddened by the sudden passing of H Ronald Weissman, who has served as a member of the Company's Boar d of
Directors since November, 2013 and was a member of the Audit Committee.
Published Date : 7/24/2014 11:19:00 AM
RR Donnelley receives partners in progress award from Sears Canada
R. R. Donnelley & Sons Company announced that it has been recognized with the 2013 Sears Canada Inc. Partners in Progress award in
recognition of its performance in supporting Sears Canada with catalog and other printing, logistics and related services.
Published Date : 7/22/2014 5:29:00 PM
Sears Canada enters into development agreement for Calgary North Hill
Sears Canada is announcing that it has entered into a binding agreement with Concord Pacific Group of Companies to pursue the development
of the 12-acre Sears site located at the North Hill Shopping Centre in Calgary, Alberta.
Published Date : 6/18/2014 3:48:00 AM

31
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

Sears Canada announces sale of its minority interest in Trois-Rivières joint arrangement
Sears Canada announced that it has entered into an agreement for the sale of its 15% minority ownership interest in the Centre commercial Les
Rivières shopping centre in Trois-Rivières, Quebec, a joint arrangement the Company holds with affiliates of Ivanhoé Cambridge, for pre-tax
consideration of $33.5 million.
Published Date : 5/16/2014 12:00:00 AM
Sears Canada acknowledges Sears Holdings release announcing possible divestiture
Sears Canada Inc. acknowledges the release today by Sears Holdings Corporation (NASDAQ: SHLD) announcing its intention to exp lore
strategic alternatives including the potential divestiture of its remaining shares in Sears Canada and/or the sale of Sears Canada as a whole.
Published Date : 5/15/2014 8:29:00 AM
Sears Holdings provides update on its interest in Sears Canada Inc.
Sears Holdings Corporation announced that it is exploring strategic alternatives for its 51% interest in Sears Canada, including a potential sale of
Sears Holdings' interest or Sears Canada as a whole.
Published Date : 5/15/2014 5:52:00 AM
Sears Holdings explores options for sale of stake in Canadian arm
Department store chain Sears Holdings is exploring strategic alternatives for its 51% interest in multi-channel retailer Sears Canada, including a
potential sale of Sears Holdings' interest or Sears Canada as a whole.
Published Date : 5/15/2014 5:34:00 AM
Sears Canada Issues a voluntary product recall for Whole Home Outdoor Hurricane Candle Holder
Sears Canada Inc. is issuing a voluntary product recall today for a Whole Home Outdoor Hurricane Candle Holders.
Published Date : 4/11/2014 12:00:00 AM

Sears Canada 2013 annual report now online
Revenue was $3,991.8 million for the 52-week period ended February 1, 2014 ("Fiscal 2013") compared to $4,346.5 million for the 53-week
period ended February 2, 2013 ("Fiscal 2012"), a decrease of $354.7 million.
Published Date : 3/17/2014 12:00:00 AM

JKL T-shirt now available exclusively at Sears Canada
Sears Canada Inc. announced today that customers can now purchase the Alright, Alright, Alright t-shirt, made famous by actor, entrepreneur
and philanthropist Matthew McConaughey, at www.sears.ca/jkl or by calling 1-800-26-SEARS.
Published Date : 3/12/2014 12:00:00 AM
Sears Canada and Style at Home launch exclusive home decor collection
Sears Canada Inc. is pleased to announce the exclusive launch of the Style at Home(TM/MC) collection, available at retail stores across
Canada, and online at sears.ca/styleathome, beginning today.
Published Date : 3/10/2014 12:18:00 PM
Sears Canada and Style at Home launch exclusive home decor collection
Sears Canada is pleased to announce the exclusive launch of the Style at Home(TM/MC) collection, available at retail stores across Canada ,
and online at sears.ca/styleathome, beginning today.
Published Date : 3/10/2014 9:08:00 AM
Sears Canada pumps up fitness apparel with PURE NRG athletics activewear for Women
New private brand addresses consumer need for affordable performance-driven, high-quality athletic apparel.
Published Date : 2/6/2014 12:00:00 AM
Source: Canadean

32
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

14 Appendix
14.1 Methodology
Canadean company reports are based on a core set of research techniques which ensure the best possible level of quality
and accuracy of data. The key sources used include:


Company Websites



Company Annual Reports



SEC Filings



Press Releases



Proprietary Databases

Notes


Financial information of the company is taken from the most recently published annual reports or SEC filings



The financial and operational data reported for the company is as per the industry defined standards



Revenue converted to US$ at average annual conversion rate as of fiscal year end

14.2 Sears Canada, Inc. - Ratio Definitions

Capital Market Ratios

Price/Earnings Ratio (P/E)

Capital Market Ratios measure investor response to owning a company's stock and also the cost
of issuing stock.

Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual income
earned per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors
are paying more for each unit of income, so the stock is more expensive compared to one with
lower P/E ratio. A high P/E suggests that investors are expecting higher earnings growth in the
future compared to companies with a lower P/E. Price per share is as of previous business
close, and EPS is from latest annual report.
Formula: Price per Share / Earnings per Share

Enterprise Value/Earnings
before Interest, Tax,
Depreciation & Amortization
(EV/EBITDA)

Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel with,
or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE ratio is that
it is unaffected by a company's capital structure. It compares the value of a business, free of
debt, to earnings before interest. Price per share is as of previous business close, and shares
outstanding last reported. Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / (Net Income +
Interest + Tax + Depreciation + Amortization)

Enterprise Value/Sales

Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to buy
the company's sales. EV/Sales is seen as more accurate than Price/Sales because market
capitalization does not take into account the amount of debt a company has, which needs to be
paid back at some point. Price per share is as of previous business close, and shares
outstanding last reported. Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Sales

Enterprise Value/Operating
Profit

Enterprise Value/Operating Profit measures the company's enterprise value to the operating
profit. Price per share is as of previous business close, and shares outstanding last reported.
Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Operating Income

33
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

Enterprise Value/Total
Assets

Enterprise Value/Total Assets measures the company's enterprise value to the total assets.
Price per share is as of previous business close, and shares outstanding last reported. Other
items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Total Assets

Dividend Yield

Dividend Yield shows how much a company pays out in dividends each year relative to its share
price. In the absence of any capital gains, the dividend yield is the return on investment for a
stock.
Formula: Annual Dividend per Share / Price per Share

Equity Ratios

These ratios are based on per share value.

Earnings per Share (EPS)

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding
share of common stock. EPS serves as an indicator of a company's profitability.
Formula: Net Income / Weighted Average Shares

Dividend per Share

Dividend Cover

Dividend is the distribution of a portion of a company's earnings, decided by the board of
directors, to a class of its shareholders.

Dividend cover is the ratio of company's earnings (net income) over the dividend paid to
shareholders.
Formula: Earnings per share / Dividend per share

Book Value per Share

Book Value per Share measure used by owners of common shares in a firm to determine the
level of safety associated with each individual share after all debts are paid accordingly.
Formula: (Shareholders Equity - Preferred Equity) / Outstanding Shares

Cash Value per Share

Cash Value per Share is a measure of a company's cash (cash & equivalents on the balance
sheet) that is determined by dividing cash & equivalents by the total shares outstanding.
Formula: Cash & equivalents / Outstanding Shares

Profitability Ratios

Gross Margin

Profitability Ratios are used to assess a company's ability to generate earnings, based on
revenues generated or resources used. For most of these ratios, having a higher value relative
to a competitor's ratio or the same ratio from a previous period is indicative that the company is
doing well.

Gross margin is the amount of contribution to the business enterprise, after paying for directfixed and direct variable unit costs.
Formula: {(Revenue-Cost of revenue) / Revenue}*100

Operating Margin

Operating Margin is a ratio used to measure a company's pricing strategy and operating
efficiency.
Formula: (Operating Income / Revenues) *100

Net Profit Margin

Net Profit Margin is the ratio of net profits to revenues for a company or business segment - that
shows how much of each dollar earned by the company is translated into profits.
Formula: (Net Profit / Revenues) *100

34
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

Profit Markup

Profit Markup measures the company's gross profitability, as compared to the cost of revenue.
Formula: Gross Income / Cost of Revenue

PBIT Margin (Profit Before
Interest & Tax)

Profit Before Interest & Tax Margin shows the profitability of the company before interest
expense & taxation.
Formula: {(Net Profit + Interest + Tax) / Revenue} *100

PBT Margin (Profit Before
Tax)

Profit Before Tax Margin measures the pre-tax income over revenues.
Formula: {Income Before Tax / Revenues} *100

Return on Equity

Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of
the common stock owners.
Formula: (Net Income / Shareholders Equity)*100

Return on Capital Employed

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a
company's capital investments. ROCE should always be higher than the rate at which the
company borrows; otherwise any increase in borrowing will reduce shareholders' earnings.
Formula: EBIT / (Total Assets – Current Liabilities)*100

Return on Assets

Return on Assets is an indicator of how profitable a company is relative to its total assets, the
ratio measures how efficient management is at using its assets to generate earnings.
Formula: (Net Income / Total Assets)*100

Return on Fixed Assets

Return on Fixed Assets measures the company's profitability to its fixed assets (property, plant &
equipment).
Formula: (Net Income / Fixed Assets) *100

Return on Working Capital

Return on Working Capital measures the company's profitability to its working capital.
Formula: (Net Income / Working Capital) *100

Cost Ratios

Cost ratios help to understand the costs the company is incurring as a percentage of sales.

Operating costs as percentage of total revenues measures the operating costs that a company
Operating costs (% of Sales) incurs compared to the revenues.
Formula: (Operating Expenses / Revenues) *100
Administration costs (% of
Sales)

Administration costs as percentage of total revenue measures the selling, general and
administrative expenses that a company incurs compared to the revenues.
Formula: (Administrative Expenses / Revenues) *100

Interest costs (% of Sales)

Interest costs as percentage of total revenues measures the interest expense that a company
incurs compared to the revenues.
Formula: (Interest Expenses / Revenues) *100

Leverage Ratios

Leverage ratios are used to calculate the financial leverage of a company to get an idea of the
company's methods of financing or to measure its ability to meet financial obligations. There are
several different ratios, but the main factors looked at include debt, equity, assets and interest
expenses.

35
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

Debt to Equity Ratio

Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio also
depends on the industry in which the company operates. For example, capital-intensive
industries tend to have a higher debt equity ratio.
Formula: Total Liabilities / Shareholders Equity

Debt to Capital Ratio

Debt to capital ratio gives an idea of a company's financial structure, or how it is financing its
operations, along with some insight into its financial strength. The higher the debt-to-capital ratio,
the more debt the company has compared to its equity. This indicates to investors whether a
company is more prone to using debt financing or equity financing. A company with high debt-tocapital ratios, compared to a general or industry average, may show weak financial strength
because the cost of these debts may weigh on the company and increase its default risk.
Formula: {Total Debt / (Total assets - Current Liabilities)}

Interest Coverage Ratio

Interest Coverage Ratio is used to determine how easily a company can pay interest on
outstanding debt, calculated as earnings before interest & tax by interest expense.
Formula: EBIT / Interest Expense

Liquidity Ratios

Current Ratio

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts
obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the
company possesses to cover short-term debts. A company's ability to turn short-term assets into
cash to cover debts is of the utmost importance when creditors are seeking payment.
Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine
whether a company will be able to continue as a going concern.

Current Ratio measures a company's ability to pay its short-term obligations. The ratio gives an
idea of the company's ability to pay back its short-term liabilities (debt and payables) with its
short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable
the company is of paying its obligations. A ratio under 1 suggests that the company would be
unable to pay off its obligations if they came due at that point.
Formula: Current Assets / Current Liabilities

Quick Ratio

Quick ratio measures a company's ability to meet its short-term obligations with its most liquid
assets.
Formula: (Current Assets - Inventories) / Current Liabilities

Cash Ratio

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It only
looks at the most liquid short-term assets of the company, which are those that can be most
easily used to pay off current obligations. It also ignores inventory and receivables, as there are
no assurances that these two accounts can be converted to cash in a timely matter to meet
current liabilities.
Formula: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

Efficiency Ratios

Fixed Asset Turnover

Efficiency ratios measure a company's effectiveness in various areas of its operations,
essentially looking at maximizing its use of resources.

Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to generate
sales. A higher ratio indicates the business has less money tied up in fixed assets for each
currency unit of sales revenue. A declining ratio may indicate that the business is over-invested
in plant, equipment, or other fixed assets.
Formula: Net Sales / Fixed Assets

36
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

Asset Turnover

Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales
revenue to the company. A higher asset turnover ratio shows that the company has been more
effective in using its assets to generate revenues.
Formula: Net Sales / Total Assets

Current Asset Turnover

Current Asset Turnover indicates how efficiently the business uses its current assets to generate
sales.
Formula: Net Sales / Current Assets

Inventory Turnover

Inventory Turnover ratio shows how many times a company's inventory is sold and replaced
over a period. A low turnover implies poor sales and, therefore, excess inventory. A high ratio
implies either strong sales or ineffective buying.
Formula: Cost of Goods Sold / Inventory

Working Capital Turnover

Working Capital Turnover is a measurement to compare the depletion of working capital to the
generation of sales. This provides some useful information as to how effectively a company is
using its working capital to generate sales.
Formula: Net Sales / Working Capital

Capital Employed Turnover

Capital employed turnover ratio measures the efficiency of a company's use of its equity in
generating sales revenue to the company.
Formula: Net Sales / Shareholders Equity

Capex to sales

Capex to Sales ratio measures the company's expenditure (investments) on fixed and related
assets' effectiveness when compared to the sales generated.
Formula: (Capital Expenditure / Sales) *100

Net income per Employee

Net income per Employee looks at a company's net income in relation to the number of
employees they have. Ideally, a company wants a higher profit per employee possible, as it
denotes higher productivity.
Formula: Net Income / No. of Employees

Revenue per Employee

Revenue per Employee measures the average revenue generated per employee of a company.
This ratio is most useful when compared against other companies in the same industry.
Generally, a company seeks the highest revenue per employee.
Formula: Revenue / No. of Employees

Efficiency Ratio

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company is
losing a larger percentage of its income to expenses. If the efficiency ratio is getting lower, it is
good for the bank and its shareholders.
Formula: Non-interest expense / Total Interest Income

Source : Canadean

37
©Canadean. This product is licensed and is not to be photocopied.

Sears Canada, Inc.

14.3 Disclaimer
All Rights Reserved
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means,
electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Canadean.
The data and analysis within this report is driven by Canadean from its own primary and secondary research of public and
proprietary sources and does not necessarily represent the views of the company profiled.
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the
findings, conclusions and recommendations that Canadean delivers will be based on information gathered in good faith from
both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Canadean can
accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

38
©Canadean. This product is licensed and is not to be photocopied.

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close