Sears Canada Inc. SRSC signed a contract with Concord Pacific Group of Companies to sell and lease back three of its properties. Sears Canada will receive $140 million, or $130 million after-tax and certain adjustments, for the sale, which is expected to conclude by Jun 8, 2015.
The assets being sold under the deal include Sears Canada’s stores and adjacent property located at the Metropolis at Metrotown in Burnaby, British Columbia; Cottonwood Mall in Chilliwack, British Columbia and North Hill Shopping Centre in Calgary, Alberta.
Following the sale, the multi-channel retailer will continue to operate its stores at these locations through a long-term lease agreement with Concord. Hence, the sale is not going to affect either Sears’ customers or its employees.
With this agreement, the troubled Canadian retailer seeks to strengthen its financial position and enhance shareholder value, keeping its operations out of harm’s way.
Intense competition from large U.S. retailers like Target Corp. TGT and Wal-Mart Stores Inc. WMT, lack of innovation, higher fixed costs and declining quality have taken a toll on Sears Canada’s revenues, which has been falling for seven straight years. The company has been slashing jobs as well as divesting assets, closing stores and selling leases for quite some time, in an effort to revive business.
The retailer’s parent company, Sears Holdings Corp. SHLD, offered a rights issue to existing shareholders in October last year after its failure to find a buyer for Sears Canada. With this, Sears Holdings sold most of the 51% stake in its Canadian unit, retaining only 12% interest.
Sears Canada currently operates 172 corporate stores, 201 Hometown stores, over 1,300 catalogue and online merchandise pick-up locations, 96 Sears Travel offices and a nationwide repair and service network.
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