Happy 50th Anniversary, Sears!
The year 2003 was a year of innovation and extraordinary milestones for Sears Canada, although not without challenges. A war in Iraq, SARS, a winter that never seemed to end, an extensive power blackout in Ontario, forest fires in British Columbia and Hurricane Juan in our Atlantic region, all served to provide unusual situations for Canadians and Canadian companies with which to deal.
However, the atypical year's events did neither dampen Sears cheerful year-long celebration of its 50th anniversary with customers and associates, nor its determination to launch a series of original concepts and products designed to enhance the shopping experience of our customers.
One of the most dramatic examples of the drive to improve presentation and service was the launch of Sears new full-line store prototype in five locations: Square One in Mississauga, Polo Park in Winnipeg, Yorkdale in Toronto, St. Jerome in Quebec, and a new store in Joliette, Quebec. This project, which incorporated extensive input from customers and associates, significantly enhanced the shopability and appearance of the company's stores while improving customer service and operational efficiencies.
Another significant achievement for Sears was the completed implementation of a three-pronged value strategy - "Sears More Value", "Sears Essentials", and "Sears on Sale" - initiated in 2002 and fully launched in stores, catalogue and on the Internet in 2003.
Sears was also the benefactor of a little serendipity in 2003. In April, Sears planned to announce the exclusive right to represent Mike Weir's line of golf accessories the day after the Masters tournament, at which time Mike Weir was to make a personal appearance at our downtown Toronto full-line store. The serendipity? He won! Sears had the Masters Champion, himself, present for a spectacular launch and crowd-pleasing autograph-signing session. The company followed up in December with the exclusive launch of Weir Golf mens casual wear.
The relaunch of the Vogue intimate apparel brand in March and the launch of the Martha Stewart Everyday line of home products in September enhanced our offerings of exclusive, affordable and fashionable quality products for value-oriented shoppers. Sears also became the exclusive showcase for Sears Natuzzi Gallery, a unique presentation of high quality, Italian-made, upholstered leather and microfibre furniture.
Sears off-mall Furniture and Appliances stores were rebranded to Sears Home - Furniture, Appliances and Mattresses - to more fully describe products and services.
In December, ending a milestone anniversary year with a milestone accomplishment, Sears was granted approval by the Office of the Superintendent of Financial Institutions (OSFI) to commence operations of the Sears Canada Bank.
Total revenues for 2003 were $6.223 billion.
As the need to reach customers in newly developed areas grew, Sears responded with the opening of new stores and formats during 2004. Sears Home stores opened in Regina and Red Deer. New off-mall specialty formats were introduced. Sears Appliances and Mattresses stores opened in Burlington, Oshawa, and Stoney Creek, Ontario as well as a fourth in Calgary. Sears Coverings stores opened in Mississauga and St. Catharines, Ontario.
In March, the Company announced that it would license out its automotive business to three separate operators who specialize in the automotive aftermarket business. Sears retained three locations in Ontario, namely Kitchener, Oshawa, and Windsor, and in September, these were converted to free-standing Sears Hardware stores.
Sears also continued its department store renovation program to incorporate the prototype design unveiled in 2003. Stores at the Guildford Town Centre in Surrey, B.C., West Edmonton Mall, Winnipeg's Garden City Centre, and Place Laurier in Quebec City all were given our newest look in 2004, which included significant improvements from the previous version. As well, the store in Stratford, Ontario was relocated and would now serve as a model for a smaller market prototype.
As Sears Canada's 51st anniversary year ended, the Company had 121 department stores, 49 Sears Home stores, 153 Dealer stores, 4 Sears Appliance and Mattresses stores, 13 Outlet stores, 3 Sears Hardware stores, 50 Sears Floor Covering Centres, 2 Sears Coverings Stores, 12 Sears HomeCentral showrooms, 112 SearsTravel offices, and 2,258 Catalogue merchandise pick-up locations.
In September, Sears was pleased to welcome former heavyweight boxing champion George Foreman in person to kick off a new exclusive relationship between Sears and Casual Male Big & Tall men's apparel. A Clinique syndicated store was launched on www.sears.ca, bringing prestige cosmetics to internet shopping for the first time. Sears Canada invested significantly in its market-leading major appliance sector by rolling out Stainless Steel galleries to almost all of its department and Sears Home stores.
The Company announced two major milestones related to community investment. Sears associates contributed over 1 million dollars to charities of their choice through the Sears Employees Charitable Fund. The Corporation donated a record 4 million dollars to charitable organizations through Sears Young Futures, its community investment program focused on providing support to after-school programs across the country.
Brent Hollister, a 35-year veteran of Sears Canada, became President and Chief Executive Officer in August, succeeding Mark Cohen in leading the Company. Revenues for 2004 were $6.230 billion.
Sears began 2005 with the announcement in the first week of January that it had entered into an agreement to acquire Cantrex Group Inc., Canada's largest buying group representing independent merchants of furniture, appliances, electronics, photography equipment and floor coverings. This strategic acquisition would provide Sears Canada with an opportunity to further develop its merchandising, buying and logistics services in the furniture and appliances sectors and also provide independent retailers with the opportunity to continue to develop their business within the communities they serve. The transaction closed on April 29, 2005.
On March 17, the Company opened its first ever free-standing off-mall store. This Charlottetown store which was to become a prototype for Sears one-floor department stores. The opening celebrations for Prince Edward Island's first Sears department store were met with great enthusiasm by Islanders who had loyally shopped Sears through the Catalogue for decades. The 108,000 square-foot design incorporated all departments and the layout allowed for a productive and profitable model, used later in the year for new stores in St. John's, as well as in Brockville and Timmins, Ontario.
Many new initiatives were introduced during the year, including a new searsbaby.ca website for infants clothing and juvenile products. The furniture line bearing the names of the Olson Twins (Mary Kate and Ashley) was launched, exclusive to Sears in Canada. A Sears Digital Photo Finishing Service was also added to the many services offered by Sears.
On November 15, 2005, the Company completed the sale of its Credit and Financial Services operations to JPMorgan Chase Bank N.A. for $2.3 billion cash net of securitized receivables and other related costs and taxes. Approximately $2.0 billion (or $18.64 per share) of the proceeds were distributed to shareholders in December through a special distribution. Under the long-term marketing and servicing alliance, JPMorgan Chase will provide credit and customer service benefits to Sears Card and Sears MasterCard holders in Canada.
The Board of Directors appointed Mr. Alan Lacy as Chairman of the Board, following the announcement that the previous Chairman, Glenn Richter, was stepping down. The Company also appointed David B. Merkley as Senior Vice-President and Chief Financial Officer. On March 24th, Sears Canada's controlling shareholder became Sears Holdings Corporation, the new U.S.-based retailer created from the merger of Sears, Roebuck and Co. and Kmart Holding Corporation. On December 5th, 2005, Sears Canada acknowledged the proposal by Sears Holdings Corporation to acquire all of the outstanding common shares of Sears Canada which Sears Holdings and its affiliates did not already own
The Company facilitated the collection of donations to two major disaster-related Red Cross fundraising efforts, namely the Asia Earthquake and Tsunamis Relief Fund and the Flood Relief Efforts in Western Canada. Along with its own fundraising efforts for Sears Young Futures, the Company provided donations of approximately $4 million to charitable organizations during the year.
Revenues for 2005 were $6.238 million.
Sears adopted a new Vision statement in 2006:
"Sears is committed to improving the lives of our customers by providing quality services, products and solutions that earn their trust and build lifetime relationships."
During the year, the Company planned its activities based around the new Vision, and focused the efforts of all associates on the Vision statement to help zero in on strategies that would provide excellent customer service and superior financial results.
In June, we re-launched our website, www.sears.ca, which brought together Canada's most extensive general merchandise online shopping site and the technology of Amazon.com to create a powerful, user-friendly site. The improvements made the Sears website easier to navigate while providing personalization features and positioned it as one of the most advanced shopping websites in the world. Sears Travel also introduced a newly designed website during the year making it easier for customers to search for, and book, business and vacation travel.
The Company recharged its Women's Apparel department which gave our full-line store customers a broader assortment, including significantly more choice in petite and larger sizes. We increased our selection of Home Electronics to provide a more relevant selection of merchandise. We augmented our full-line store advertising to create simpler, easier-to-understand offers to make them more straightforward for customers. In our catalogue business, we introduced "specialogues", in-season smaller catalogues targeted to select customers offering specialized assortments at just the right time.
For the Holiday season, we introduced the "Elf" program to offer free, one-on-one personalized shopping assistance to our customers at the busiest time of year. We also launched "Operation Wish", a partnership between Sears and the Canadian Armed Forces, to offer our perennially popular Wish Book catalogue to Canadians serving overseas with a special discount.
Sears continued to expand its Dealer store network with several openings and relocations, and opened a brand new full-line store in St. Eustache, north of Montreal.
Dene L. Rogers was appointed President and Chief Executive Officer, succeeding Brent Hollister who stepped down and left the Company in May.
A bid by Sears Holdings Corporation to acquire all of the outstanding minority shares of Sears Canada was unsuccessful. By year's end, Sears Holdings Corporation's ownership of Sears Canada stock was at 70%.
The Company continued its work of supporting worthy community organizations, most notably those offering after-school programs such as Boys and Girls Clubs of Canada. With the help of its customers and associates through fundraising efforts and donations from the Company, Sears provided over $4 million to charitable causes during the year.
Revenues for 2006 were $5.933 billion, which reflected our first full year of not including Credit revenue due to the sale the Credit and Financial Services operations to JPMorgan Chase Bank N.A. in November of the previous year.
Sears continued to implement improvements during 2007 in order to fulfill our new Vision statement adopted in 2006 in which we committed to improve the lives of our customers by providing quality services, products and solutions that earn their trust and build lifetime relationships.
The Company introduced an enhanced apparel selection as a result of an exclusive relationship with major European retailers, such as the Otto Group. The selection was styled and tailored for a more fashionable customer through targeted catalogues. Successful pilots during the year paved the way for expanded assortments in 2008 including the introduction of these European brands into Sears retail stores.
Sears completed a recharge of its Home Electronics departments in its full-line and Sears Home stores which included infusion of new product such as iPods, computers and home installation services while expanding existing lines such as high-definition flat-panel TV's to include the latest in technology. We also recharged Mattresses with an improved selection and extensive product knowledge training for our associates to provide an augmented shopping experience for our customers.
Our Home Services area increased its relevance to Canadians by offering the "Efficient Home" services program, which helps make a home energy efficient, healthy and automated. In an era where customers are increasingly concerned with rising energy costs, while caring about their environment and consumption, Efficient Home allows customers to save money through energy conservation, stay healthy through water and air filtration and facilitate home management through home automation products such as temperature control and home alarm systems.
During the final months of the year, the Canadian dollar reached par with its U.S. counterpart for the first time in decades. This strengthened Canadian dollar in relation to the U.S. dollar caused a significant increase in cross-border shopping. In response, Sears lowered its prices across the store and introduced its "Stronger Dollar - Lower Prices" program during the fourth quarter which offered lower prices that resonated well with Canadians while making Canada stronger. We believe there is an economic benefit for Canada and Canadians when they shop in Canada.
Sears continued its commitment to the communities in which it conducts business continuing to support such worthy programs such as Boys and Girls Clubs of Canada, Opération Enfant Soleil, and "Operation Wish", a joint program with the Canadian Forces Personnel and Family Support Services. We also announced Sears as a community investment partner for kids cancer programming and support, in addition to our multi-decade support of after-school programs. A major fundraising event for 2008 was announced in June of 2007, the "Sears National Kids Cancer Ride", the world's longest charity cycling event to raise funds for kids living with and beyond cancer. The Ride would raise significant funds to fight children's cancer through a cycling event scheduled to take place in June of 2008 from Vancouver to Halifax.
The Company announced its decision to move its head office operations to the Toronto Eaton Centre and the subsequent sale of its current head office building located at 222 Jarvis Street in Toronto. The physical move would take place over the next couple of years.
Revenues for 2007 were $6.326 billion, which represented 57 weeks ending February 2, 2008 reflecting the change in the Company's year end from the Saturday closest to December 31 to the Saturday closest to January 31, effective the 2007 fiscal year.