Sears Canada Posts Higher 2Q Earnings

Toronto, Ontario, July 27, 2006–Sears Canada in the middle of a battle between its U.S. parent Sears Holdings and minority shareholders over its buyout, posted a higher second-quarter profit on Wednesday, on better margins and a more favorable exchange rate.

The retailer said it earned C$18.1 million, or 17 Canadian cents a share in the quarter ended July 1. That compares with a profit of C$10.8 million, or 10 Canadian cents a share in the same period a year ago.

Sears Canada said sales fell 6.2 percent to C$1.43 billion from C$1.52 billion in the prior-year period, due to the sale of the company’s credit and financial services operations to JPMorgan Chase & Co. last year.

Sears Holdings, which has long held a majority stake in Sears Canada, last April said it had gained the support of most of the retailer’s minority shareholders to take it private in a deal worth C$892 million ($775 million).

But a group of minority shareholders led by hedge fund Pershing Square Capital Management LP has vowed to fight the deal and filed a complaint to the Ontario Securities Commission.

The OSC held hearings earlier this month, and is expected to rule on the case in the coming weeks.