Sears rolls out plan to save face in light of Q3 results
It's no secret that Sears has been struggling, but a less-than-robust Q3 earnings report may have prompted the retailer to make a few drastic moves in an effort to sustain itself.
For one, Sears Canada is selling five store leases to Cadillac Fairview Corporation Limited for a price tag of $400 million Canadian, one of which includes its flagship location in Toronto. The transaction, which is aimed at increasing the value of Sears Holdings' 51% inerest in the branch, is slated to close within the next 10 business days.
"We are very supportive of Sears Canada's actions to create value," said Sears Holdings chairman and CEO Edward Lampert. "It is clear that the Canadian market is becoming more competitive, but also more lucrative for those who can compete effectively. We believe that Sears Canada is well positioned to create value for its shareholders through a combination of operating performance improvements, business portfolio actions and leveraging its real estate footprint working with its mall and other partners."
The company will also be reviewing its locations and determining whether to renew leases that are set to expire. Unprofitable stores will likely be shuttered in an effort to bolster the operations at high-earning locations.
Lastly, and perhaps most notably, Sears Holdings is evaluating whether to lose Lands End and Sears Auto Center.
"We believe that Lands' End is an iconic brand with the potential to become a more global brand, and we presently anticipate that any separation, if pursued, would not be structured as a sale but rather through a transaction that would allow existing shareholders the opportunity to benefit from the significant potential for value creation over the long term," said the company in a statement.
The actions were described in a company release as moves that are "intended to improve our financial flexibility and accelerate our transformation into a leading Integrated Retailer that fosters relationships with members through our Shop Your Way platform."