TORONTO – Sears Canada Inc. will hand eight of their big-box Sears Home store leases to Leon’s Furniture Inc., a potentially disappointing sign for an historically robust area of its business.
Tuesday’s announcement, which provides coverage for four home stores in Bc, three in Ontario and something in Moncton, N.B., is the latest in a series of lease exits by Sears in recent years because the retailer shrinks its retail store footprint amid dwindling overall sales, which have fallen for the past nine years to $3.4 billion. The business’s shares have fallen 43 percent this year.
Unlike another real estate deals, which have been a boon to the company, getting vast sums of dollars to Sears Canada, Tuesday’s deal transfers essentially no money to Sears: It merely permits the faltering retail chain to exit locations at which it has been taking a loss.
“We are working on rationalizing our store network to make sure our core store physical footprint is highly productive,” Brandon Stranzl, executive chairman, said in a statement. “Our focus is on converting each and every customer at stores with less efficient footprints into customers in our more effective and best performing stores. These actions will drive more business over less square footage, and will make Sears Canada a stronger company.”
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Sears Home stores sell major appliances, mattresses, furniture and some outdoor products at 43 locations, and typically occupy space at outdoor suburban power centres, where rents are less than enclosed departmental stores.
Stranzl said the company will invite Sears Home customers at the affected locations to buy similar items in the closest Sears mall.
“Recent experiences show that whenever we execute this ‘conversion,’ our full-line stores get a significant area of the sales, the market area’s efficiency per sq . ft . improves, and customers continue being served as they would expect from Sears.”
Despite Tuesday’s announcement, the company’s newest earnings attributed its 0.4 percent increase in same-store sales to raised sales of major appliances, furniture and mattresses. Same-store sales in the full-line and Sears Home stores rose increased by 2.7 percent.
In the 3rd quarter ended Oct. 31, Sears Canada shrank its loss to $53.2-million or 52 cents per share, compared to a lack of $118.7 million ($1.16) a year earlier. Due to cost-cutting, Sears Canada had achieved $67 million in annualized savings within the first three quarters of last year, coupled with planned as much as $40 million more for that fourth quarter.
Financial Post
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