Sears Canada to close 59 stores
Company will cut 2,900 jobs in push to return to success with fewer locations
Sears Canada is no longer the colossus it once was, with 125 department stores across the country ringing up $6.7 billion a year in sales, but it is hoping to restructure under creditor protection granted Thursday and return to profitability with fewer locations.
The company has posted net losses every year since 2014 and plans to close 59 stores, including 20 full-line department stores as part of the restructuring.
The company’s 32 Corbeil stores will remain in business.
In all, 2,900 jobs will be lost: 500 in administration, effective immediately, and 2,400 more jobs as stores close over the coming weeks.
Sears department stores in the GTA, many of them newly renovated as part of executive chairman Brandon Stranzl’s effort to rebrand the retailer, will remain open, including the stores at Fairview Mall, Oshawa Centre, Promenade in Thornhill, CF Lime Ridge in Hamilton and Upper Canada Mall in Newmarket.
“The Sears Canada Group is entering these proceedings with the intention of emerging as a stronger, more focused competitor in the Canadian retail industry,” according to an affidavit filed on behalf of the company in court.
“Management expects that the company that emerges from this CCAA proceeding will be well-positioned to capitalize on the opportunities that exist in the Canadian re- tail marketplace.”
The company listed assets of $1.187 billion and total liabilities of $1.108 billion.
Inventory at the stores being closed will be liquidated.
Most of the Sears stores are leased. Sears Canada Group owns properties where eight full-line department stores, two outlet stores and one Sears Home store operate. The majority of the other stores are held under long-term leases.
Sears Canada is pointing to increases in same-store sales in the past two quarters as evidence that a turnaround is possible, given enough breathing room.
It is conceivable that if Sears Canada has found the right formula it could succeed, said Marvin Ryder, professor of marketing at McMaster’s DeGroote School of Business. He wouldn’t bet on it.
“I would say that the odds are much higher that we’re going to see bankruptcy and liquidation. When your back is up against the wall and you have to make that much change that quickly, it’s very hard to do.”
“They’re going to have to move so far so fast, the odds are really against them,” Ryder added.
It didn’t help that the company cycled quickly through three leaders in four years before appointing Stranzl in 2015, said Arthur Fleischmann, president and chief executive officer of the advertising agency John St.
“I think they just started focusing on short-term returns and trying to shore up traffic declines,” Fleischmann said.
“My feeling is, I think the ship has sailed on Sears.”
Farla Efros, president of HRC Advisory, said that while losing an anchor tenant could be a problem for some malls, Sears has not been driving a lot of traffic and some properties may actually benefit from being able to fill the space with new tenants.
“I just think that we are tired of that brand and it doesn’t really have any more relevance to the Canadian consumer,” Efros said.
Numerous retailers stand to benefit as a result of Sears shrinking, including Canadian Tire, Walmart, Hudson’s Bay Company, Leon’s and Costco, said Maureen Atkinson, senior adviser at J.C. Williams Group.
While the new look of Sears, which includes fashion aimed at a young, hip customer base is an improvement, times are tough for department stores. “I think it’s possible, but I think it’s a long shot,” Atkinson said, of the company’s potential for success moving forward.
In an attempt to transform the business, Stranzl founded an innovation hub to modernize the technological platform for Sears Canada and launched a new off-price retail business called “the Cut,” among other initiatives.
Despite a long decline that has accelerated since 2011, the company still employs about 17,000 people across Canada.
There are 3,071full-time employees in Ontario and 4,472 working part time and there are 65 Sears Canada retail stores in the province.