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Sears Canada says online business in need of major overhaul

Sears Canada posted a net loss in the period ended Oct. 31 of $53.2 million, or 52 cents per share, compared with a net loss of $118.7 million ($1.16) in the same period a year ago.

TORONTO – With Internet retail sales expected to hit new highs over the Christmas period, Sears Canada’s executive chairman admits the department store’s Sears.ca online business is in need of a major overhaul.

“We have some very, very, very big plans to modernize what we do — both online and in mobile,” Brandon Stranzl said in an interview Thursday after the company released third-quarter results, which showed the company’s first quarterly same-store sales increase, (albeit a slight one), in two years.

But sales in the company’s direct channel, which includes revenue from online and catalogue operations, were down $23.7 million in the period compared with the third quarter of 2014. It’s a troubling sign that sales from the retailer’s shrinking catalogue business are not migrating to the company’s Sears.ca online business.

In the second quarter, sales in the direct channel also slid, falling $12.9 million due to the waning catalogue business.

Stranzl admitted revenue from catalogue phone orders has dwindled over the years due to changing consumer behaviour.

“We need to make a stronger effort to push that business online,” he said. “We have to grow our Internet business faster to offset what is an organic decline in that (catalogue) business.”

But Sears Canada has had plenty of time to convert sales to its Internet business. One of the first online retailers in Canada, Sears.ca debuted in 1998. At the time, it had a significant head start over industry rivals on the infrastructure and supply-chain side, thanks to its existing warehouse and distribution systems.

“The fact that Sears Canada is not growing its Web business definitely puts it in a field of its own,” Doug Stephens, founder of Toronto-based advisory firm Retail Prophet. “Most every retailer, if they are growing anywhere, it’s on the e-commerce side.”

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