Sears Canada seeks to close all stores, lay off 12,000
TORONTO — Sears Canada is closing up shop, announcing Tuesday that it is seeking court approval to close all of its stores across the country and lay off about 12,000 employees.
The move came after weeks of discussions with executive chairman Brandon Stranzl to save the money-losing retailer, but the company failed to reach an agreement after his most recent bid last week.
“Following exhaustive efforts, no viable transaction for the company to continue as a going concern was received,” said a statement from the retailer, adding the liquidation has been recommended by its financial advisors in restructuring and its court-approved bankruptcy monitor, FTI Consulting.
“The company deeply regrets this pending outcome and the resulting loss of jobs and store closures,” the statement said.
Sears Canada entered bankruptcy protection in June, saying it could not continue to operate as a going concern without a new source of financing.
It comes after more than a decade of sales declines for Sears Canada, founded as Simpsons-Sears in 1952 as a national mail-order business in partnership between Toronto’s Robert Simpson Company of Toronto and Sears Roebuck Co. of Chicago.
While Sears Canada was viewed as the most likely inheritor of the market share void left by Canadian department store chain Eaton’s when it folded in 1999 and Sears bought out its remaining assets, in the lengthy interim period Sears failed to adapt to a changing marketplace, ceding customers and market share to Walmart, Canadian Tire, Best Buy, Costco and Winners, and more recently, Amazon.
“This took a heck of a long time, because the writing was on the wall almost 20 years ago,” said retail consultant Richard Talbot of Talbot Consultants International Inc., who has followed the company for decades.
“It’s very sad, and it’s just amazing how they could fritter away their name, reputation and business model. What I found astounding was here was a company with a catalogue business across the country and they somehow messed up when e-commerce was coming in. It was theirs to lose. For the longest time, Sears was the only place for young families to go. Fifty years ago, it was one of the very few places to give credit.”
Last week, a lawyer for the company told Ontario Superior Court judge Glenn Hainey that there was a “short fuse” to a potential liquidation of the retailer, with the retailer’s court-approved lenders pressing for liquidation of the company’s remaining assets to maximize the value of the process for the company’s creditors, pensioners and employees.
The debtor in possession lenders, which had been keeping the business afloat since June even as it was losing more than a million dollars a day, had asked for approval of a liquidation agreement no later than Oct. 13 in order to maximize on the busy retail period leading into the holidays.
Sears wants to start the liquidation sales no later than Oct. 19 and expects them to continue for 10 to 14 weeks.
Sears Canada is seeking court approval to close all of its stores across the country and lay off about 12,000 employees.