Sears Canada grabs Target brands
Canadian firm scoops up popular apparel lines of departed company
TORONTO — Target’s failure in this country keeps paying dividends for Sears Canada.
The U.S. retailer’s retreat took out Sears’ most direct competitive threat and provided it with an extended timeline in its attempt to turn around its merchandising business, which has had nine consecutive years of falling sales.
Now Sears Canada has scooped up exclusive Canadian distribution for two of Target’s most popular brands — the Cherokee apparel line for men, women and children, and the Liz Lange maternity line.
Both of the lines will begin selling at Sears Canada next year, chief executive Ronald Boire said Thursday at the retailer’s annual meeting, though he remained mum on whether the company will try to poach some of the other top Target brands such as sportswear line C9 by Champion, or the Canadian casualwear brand Beaver Canoe, one of Target Canada’s top-selling apparel lines when it operated here.
In malls where Sears and Target shared space, the latter’s exit has had a “generally positive” impact on the business, Boire said after the meeting, adding the company had hired “dozens” of employees from the failed retailer after it announced it was leaving Canada.
But it’s uncertain how much the absence of Target will impact Sears over the long term as it continues to grapple with a topheavy operating structure.
Last year, the company posted a net loss of $338.8 million, or $3.32 per share, compared with earnings of $446.5 million, or $4.38, in fiscal 2014. Annual revenue fell 14 per cent to $3.4 billion from $3.99 billion as the company operated fewer stores, but same-store sales, a measure that strips out the effect of year-over-year square footage increases or decreases, still fell 8.3 per cent.
“We continually focus on taking costs out of the business and rightsizing the infrastructure to the business,” Boire told shareholders. “This is a business that is sized for significantly more revenue than we (experience) today. We have plans to reduce costs this year and initiatives to exceed those cost-reduction targets.”
The company has been shedding unproductive inventory to help streamline the business, and reduce its year-over-year inventory level to $641.4 million in January 2015 from $765.8 million in January 2014, but it came at a cost.
“That inventory was not cleared at great margins. There was heavy discounting,” Boire said.
Sears Canada has also outsourced non-essential business functions, laid off employees and raised cash through selling off its real estate assets back to landlords, in some cases leasing the properties back to continue to operate stores.
Most recently, it struck a $140-million agreement last month with Concord Pacific Group of Companies to sell and lease back three properties in B.C. and Alberta.
Sears Canada also announced an exclusive deal to sell a new line of Wayne Gretzky-branded menswear. More than a decade ago the retired NHL player had a line of clothing at the Bay, but it was discontinued.