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Sears Canada sells three major market stores back to landlord PDF Print E-mail
Written by Michael J. Knell   
TORONTO (02 March 2012) - Sears Canada will sell three of its downtown stores in Vancouver, Calgary and Ottawa back to the Cadillac Fairview Corporation, the owner of the shopping centres in which they are housed, for $170 million.

The transaction is expected to close on April 20 and Sears said it expects to vacate the stores - located in the Vancouver Pacific Centre, the Calgary Chinook Centre and the Ottawa Rideau Centre - by October 30.

"Overall, this is a very advantageous agreement for Sears Canada," Sears Canada president and chief executive officer Calvin McDonald said in a statement.

He quickly added the multi-channel retailer isn't planning to shutter stores, as is being done by its U.S. parent - Sears Holdings, the operators of Sears and Kmart. The latter is not only closing more than 100 stores but selling off assets in an attempt to bolster its bottom line. He also said it was Cadillac Fairview that approached Sears about taking back the leases.

"While we had no plans to close stores, the transaction for these three specific locations provides an attractive financial benefit for the company which strategically allows us to drive growth in areas which can be most beneficial," McDonald said, adding, "We are investing in a refresh of our stores and piloting new formats which will provide Canadians exciting ways to access Sears products and services. This is an opportunity for Sears Canada that fits well with our vision and where our strengths are as a retailer."

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The Sears Canada Home store in Halifax. The troubled multi-channel retailer has identified furniture, mattresses and major appliances as categories critical to its future success.

However, like its parent, Sears Canada is struggling financially, having reported declines in each of the last 13 quarters. Last week, it reported profit in the fourth quarter fell more than 50% to $38.7 million while sales fell 6.4% to $1.37 billion and same store sales dropped 7.4% - steeper than the 4.1% fall reported by its namesake U.S. cousin.

Since taking over as CEO almost eight months ago, McDonald has been launching several initiatives designed to turn around the retailers' faltering performance, including clearing out excess inventory, job cuts and a recently announced decision to lower prices on some 5,000 core items in its line-up by as much as 30%.

"Sears continues to execute its transformation strategy and remains focused on growing the business," McDonald said. "We will continue to unveil new customer-focused strategies and events that demonstrate our resolve in being top of mind for shoppers across the country."

Sears has operated in Vancouver Pacific Centre and Ottawa Rideau Centre since 2000 and in Calgary Chinook Centre since 1965.

In an interview with the Globe & Mail, McDonald said each of the three stores being returned to Cadillac Fairview weren't reflecting what he sees as Sears Canada's strengths, particularly in the furniture, mattress and major appliance categories. What's more, these aren't the only Sears stores in each of those cities.

Sears Canada purports to be this country's single largest retailer of furniture, mattresses and major appliances. Collectively, the three categories probably account for 25% to 30% of its overall revenue. In recent months, executives have said Sears Canada will do everything possible to defend its dominance in these categories.

McDonald also told the Globe & Mail that Sears is planning a "larger than usual home goods store" for Ottawa. The company also plans to expand its existing - and franchise - dealer store network across the country. These stores always carry a few SKUs in each big ticket category while having access to the company's entire offering.

Many industry observers speculated that Sears Canada could sell some of its leases to another U.S. department store merchant, just as Hudson's Bay Co. - parent to The Bay and the U.S. department store Lord & Taylor - spun off as many as 220 of its Zellers leases to Target for $1.8 billion last year.

Several retail industry watchers have suggested that Nordstrom's is an ideal candidate to occupy the soon-to-be vacated stores.

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Picture of the Day
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Marlaine (far left) and Eric Bennett, owners of Bennett’s Home Furnishings are seen here accepting their award as the leading multi-store Comfort Studio dealer in North America in 2013 from Bob Ireland, vice present of La-Z-Boy Canada. Looking on (at right) are Jasmine Bennett and Tyler Steeves. Click here for our report.


 

 

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