Sears Canada to sell, vacate five store locations for C$400 million
October 29, 2013,
Toronto - In a long anticipated move, Sears Canada has announced it will return its flagship store at the Eaton Centre here, plus four other prominent locations in Ontario and British Columbia, to the landlords for C$400 million.
Four of the five stores are owned by the Toronto-based retail property developer and manager Cadillac Fairview. The deal, which is expected to close around Nov. 12, will require Sears to vacate three of the stores by Feb. 28 and the others a year from then.
In addition to the Eaton Centre, Sears will surrender its stores in Sherway Gardens and the Markville Shopping Centre - both in the greater Toronto area - and London-Masonville Place, in London, Ontario. The fifth store is at Richmond Centre in British Columbia and co-owned by Ivanhoé Cambridge and Cadillac Fairview.
The deal will require Sears to vacate the Eaton Centre, Sherway Gardens and London-Masonville stores by Feb. 28. Markville and Richmond will be closed by Feb. 28, 2015.
However, Sears will continue to operate its head office from the upper four floors of the Toronto Eaton Centre.
"Unlocking the value of assets is one of the three levers we have said we will use as a way to create total value for the company," Doug Campbell, who was named president and CEO just a few weeks ago, said in a statement.
"When proposals such as this one are presented to us, we must weigh the value of the transaction against the value we will obtain from continuing to operate those stores in their current locations," he continued, adding, "In this case, we were presented with an opportunity that gives us a significant financial benefit without changing our plans to improve the business and make Sears more relevant to Canadians."
He said that after the stores close, Sears Canada will continue to operate some 111 full-line department stores, "which continues to be a substantial retail presence across Canada, especially in suburban and mid-size markets where Sears plays a major role in the marketplace."
Sears Canada has now returned 12 stores to their various landlords over the past 18 months.
Retail industry observers said the locations are probably of great interest to serve U.S. retail giants that are looking from growth in Canada, where prime downtown space in major cities is hard to come by. Among the names most commonly mentioned is Nordstrom. Saks, recently acquired by Hudson's Bay, is also rumoured to be interested in some of these locations.
At least one analyst has said the recent departure of former CEO Calvin McDonald "reduces [the] probability of an operating turnaround." Keith Howlett, retail analyst at Desjardins Securities, recently told the Globe & Mail, McDonald was "a talented, energetic retail executive and might have been able to accomplish a turnaround against what we perceive as long odds."
However, Campbell said the fight for survival is continuing.
Most of the spaces Sears Canada is vacating sold at least some furniture, mattresses and major appliances, if not full in-store departments devoted to the category. Neither Nordstrom nor Saks carry furniture, mattresses and major appliances.
There are currently 965 associates located in these five store locations. Those potentially affected by this transaction will have the opportunity to apply for positions in other Sears locations should any become available during the transition period.
Sears has operated in London-Masonville since 1985, in Richmond Centre since 1989, in Markville since 1991, and in Sherway Gardens and the Toronto Eaton Centre since 2000.