Sears Canada Announces Bankruptcy; Fires 2,900

Update: Sears Canada was authorized to obtain financing of C$450 million. The bankrupt company said it would close 20 full-line locations plus 15 Sears Home stores, 10 Sears Outlets and 14 Sears Hometown locations; it would also cut 2,900 positions across retail network, corporate head office in Toronto.

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It's official - the US 'retail apocalypse' has moved north as Sears Canada (and some of its subsidiaries) have applied to Ontario Superior Court of Justice for protection under the companies’ Creditors Arrangement Act (CCAA), in order to continue to restructure its business.

Sales at Sears Canada have fallen sharply since it was spun off from its equally-troubled US-based parent in 2012; the slump coincides with a broader shift in consumer preferences away from brick and mortar retailers and toward e-commerce.

This shouldn;t come as a surprise to anyone, in an admission last week, Sears Canada said it has “significant doubt” that it can continue to operate for much longer. Meanwhile, its American counterpart announced that it would lay off 400 employees as part of an initiative to produce $1.25 billion in savings after admitting back in March that the future of its business is also in serious jeopardy, as Fortune reported.

Statement from Sears Canada (note you would hardly think this is a 'bad' thing judging by this PR spin)

Sears Canada Reinvention Continues

 

Over the past 18 months, Sears Canada embarked on a reinvention plan that has now begun to gain traction with customers. Sears Canada rebuilt its front and back-end technology platform, redefined its brand positioning, revamped its product assortment, and rebooted its customer experience and service standards.  The new product assortment is reflected in two pillars, The Cut @ Sears, which offers designer labels at everyday value prices, and the Sears Label, which offers premium quality and enduring styles, also at everyday value prices.  The customer experience was reinvented, both online, with a newly designed site built in-house by a new technology team, and in-store with a new format called Sears 2.0. Sears Canada also redefined its customer service standards to be best-in-class, and launched a new store in downtown Toronto to showcase its reinvention to an entirely new audience.

 

The Company's hard work to bring its vision to reality is reflected in reported growth in same store sales in its two most recently completed quarters. Sears Canada believes this indicates that the new brand positioning is starting to resonate with consumers.  The brand reinvention work Sears Canada has begun requires a long-term effort, but the continued liquidity pressures facing the Company as well as legacy components of its business are preventing it from making further progress and from restructuring its legacy assets and businesses outside of a CCAA proceeding.

 

If granted, the Sears Canada Group will work to complete its restructuring in a timely fashion and hopes to exit CCAA protection as soon as possible in 2017, better positioned to capitalize on the opportunities that exist in the Canadian retail marketplace.

As a reminder, we noted last week that if Sears Canada was to go bankrupt, Lambert loses his equity stake, but he remains the company’s principal creditor. Already, Lampert has effectively laid claim to enormous amounts of the company’s assets through loans he’s made. His hedge fund, ESL Investments, also owns large stakes in Lands’ End and a Real Estate Investment Trust that gained control of some of Sears’ best properties in a $2.8 billion deal back in 2015, then leased them back to the company. Lambert owns a stake in that vehicle, too.

In other words, while Sears was floundering, Lambert was busy shielding himself from the worst of the fallout. His former employees will need to make due with the public safety net.

Comments

Antifaschistische Alt RightGirl (not verified) Thu, 06/22/2017 - 09:06 Permalink

I go to sears last night...I need ONE wrench.  There it is...my trusty 15/16ths...I see it, it's in a set with 20 other wrenches.  On sale for $59.   But I don't need the other 19.   Where are those individuals wrenches....found it...15/16ths.  EIGHTEEN DOLLARS!!  So you're selling them for an average $3.00 in a kit...and making money.  But alone they're EIGHTEEN dollars!!   There is NO WAY I am paying that!!   So go ahead and keep scratching your head wondering why no one is shopping at your stores.

In reply to by Alt RightGirl (not verified)

Michigander Toronto Kid Thu, 06/22/2017 - 14:26 Permalink

I bought a washer and dryer from our local Sears. Paid to have it delivered and set up. They called a week later and said it was in, I can come get it. No, I paid to have it delivered and set up. Ultimately figured out the salesman checked one little box incorrectly, so everything had to be unbought and unpaid for, and then rebought and repaid for a grand total of 2 hours of my precious time over one fucking little checkbox. I told the manager this is why Sears is going under. She asked me if I was trying to tell her how to do her job as she’d been at it for 23 years. That store closed 2 months later.

In reply to by Toronto Kid

Justin Case wildbad Thu, 06/22/2017 - 10:22 Permalink

Sears won't be the last one. I see the ghost malls in merica. Canada is about ten years behind in trends, eg. housing collapse. We are just beginning ours. Sales are peaking as rates are turning upward. Mind you not as aggressivly as ten yrs ago, but will push people out that bought too much house. Moar sellers than buyers exiting at discount prices.

In reply to by wildbad

shimmy Thu, 06/22/2017 - 08:42 Permalink

I am stunned that their recent decision to have the moronic tagline 'WTS? What The Sears' didn't bring in a massive amount of traffic.

opport.knocks Thu, 06/22/2017 - 08:48 Permalink

Well, that was the worst kept secret in the Canadian retail world. The answer to "what took so long" is contained in the article, the parasites had to carve the best pieces of the carcass off for themselves before doing the obvious.

Endgame Napoleon opport.knocks Thu, 06/22/2017 - 10:32 Permalink

This is one reason why Mitt Romney lost the election in 2012. A lot of his massive stash of wealth was made in that manner, rather than by building up businesses that employ humans. Until robots can vote, human interests will prevail in the election tally, anyway. They will not vote for people who profited from slicing up businesses and laying off tons of humans. At least, official pink-slip layoffs lead to UC that covers rent between jobs. Not so for most workers who are relentlessly churned in temp and part-time jobs in the service sector. The ones without kids to cover their rent via welfare / taxfare are simply s*****d.

In reply to by opport.knocks