TORONTO -- Sears Canada Inc. (TSX:SCC) will pay its shareholders an extraordinary dividend of $5 per share on Dec. 6 -- an amount equal to about 30 per cent of the company's latest stock price.
Predictably, shares jumped after the early-morning announcement but later gave up some of the gains. Its shares traded as high as $19.89 -- a level unseen since July 2011 -- but were up a lesser 7.9 per cent at $18.13 near midday.
It will be paid to Sears Canada shareholders of record as of Dec. 2. The Toronto-based retailer's main shareholder is Edward Lampert, a U.S. hedge-fund manager who controls Sears Holdings Corp. (Nasdaq:SHLD) and ESL Investments Inc.
The dividend increase comes as Sears released its third-quarter results, including an enlarged net loss of $48.8 million or 48 cents per share -- mainly due to severance and restructuring costs.
Sears Canada has been downsizing some of its operations and redirecting its merchandising focus in response to intense competition from other retailers, including newcomers such as Target and established rivals such as Hudson's Bay Co. (TSX:HBC).
The company says the net loss included $20.2 million for severance, accounting for about half the quarter's non-recurring items totalling $42.8 million.
Excluding the non-recurring items, Sears Canada earned $7.3 million in the 13 weeks ended Oct. 27 -- up from $3.9 million in adjusted earnings a year earlier.
Same-store sales for locations open at least a year improved by 1.2 per cent but overall revenue declined by 6.4 per cent to $982.3 million from $1.05 billion a year earlier.
The company has closed some of its big-city locations in Western Canada and has announced plans to vacate other large stores, including its flagship downtown Toronto location, but continues to operate more than 100 stores as well as an online and catalogue business.
Sears is a veteran player in the Canadian retail sector but has been struggling in recent years and is in the midst of revamping its operations and product lineup to adapt to the changing market.
"This is the first quarterly same-store sales increase for the company since 2008," said Doug Campbell, the new Sears Canada president and chief executive officer, in a statement Tuesday.
"October was our strongest month of the quarter, during which we adjusted our plans to market conditions and experienced double-digit same store sales increases in both our apparel and accessories and home and hardlines categories."
Campbell, who had been a senior executive of the company, was promoted to CEO in September after the sudden departure of Calvin McDonald, who left for a job at cosmetics retailer Sephora.
Under McDonald's watch, Sears Canada had begun a multi-year strategy to reduce operating costs and improve sales.
The third quarter also included a $16.5 million writedown of assets related to its Regina logistics centres and $6.1 million writedown of goodwill, an intangible asset, for its home installation of products and services business.
