Sears Canada exits more leases
• Sears Canada Inc. will hand eight of its big- box Sears Home store leases to Leon’s Furniture Inc., a potentially disappointing sign for an historically robust area of its business.
Tuesday’s announcement, which covers four home stores in British Columbia, three in Ontario and one in Moncton, N. B., is the latest in a series of lease exits by Sears in recent years as the retailer shrinks its retail store footprint amid dwindling overall sales, which have fallen for the past nine years to $ 3.4 billion. The company’s shares have fallen 43 per cent this year.
Unlike the other real estate deals, which have been a boon to the company, bringing in hundreds of millions of dollars to Sears Canada, Tuesday’s deal transfers essentially no money to Sears: It merely allows the faltering retail chain to exit locations at which it has been losing money.
“We are working on rationalizing our store network to ensure our core store physical footprint is highly productive,” Brandon Stranzl, executive chairman, said in a statement. “Our focus is on converting each and every customer at stores with less efficient footprints into customers of our more efficient and best performing stores. These actions will drive more business over less square footage, and will make Sears Canada a stronger company.”
Sears Home stores sell major appliances, mattresses, furniture and some outdoor products at 43 locations, and typically occupy space at outdoor suburban power centres, where rents are l ower than enclosed shopping malls.
Stranzl said the company will invite Sears Home customers at the affected locations to shop for similar items at the closest Sears department store.
“Recent experiences show that when we execute this ‘ conversion,’ our full- line stores pick up a significant portion of the sales, the market area’s efficiency per square foot improves, and customers continue to be served as they would expect from Sears.”
Despite Tuesday’s announcement, the company’s most recent earnings attributed its 0.4-per-cent increase in same-store sales to higher sales of major appliances, furniture and mattresses. Same- store sales in its fullline and Sears Home stores increased by 2.7 per cent.
In the third quarter ended Oct. 31, Sears Canada shrank its loss to $53.2-million or 52 cents per share, compared to a loss of $ 118.7 million ($ 1.16) a year earlier. Due to cost- cutting, Sears Canada had achieved $ 67 million in annualized savings in the first three quarters of last year, and had planned up to $ 40 million more for the fourth quarter.