Sears Canada Inc. slashed another 400 jobs this week after cutting 70 before Christmas, more signs of the retailer's troubles as its new boss races to revamp its operations and foreign retailers rush to set up shop in this country.
The moves at the Toronto-based department-store retailer come amid heightened uncertainty at its parent, U.S.-based Sears Holdings Corp., which struggled through a weak holiday period and announced plans to close up to 120 U.S. stores to shave costs.
In Canada, Sears is ripe for a takeover by a U.S. department-store merchant, industry watchers said. Nordstrom Inc., in particular, is searching for space here and would find Sears' flagship stores in Toronto and Vancouver a good fit, they said.
"There might be companies that might be interested in Sears, or part of the organization," said retail advisor Wendy Evans at Evans & Co. Consultants. "With that amount of real estate, it's a noose around [Sears']neck to some extent."
Sears has been dragged down by mounting competition from more agile specialist rivals and discount giants, including the Canadian division of Wal-Mart Stores Inc., the world's largest retailer. By next year, Target Corp., the second-ranked U.S. discounter, will start to open outlets in Canada.
But, while Sears struggles to bolster its performance, its real estate remains valuable with low rents, giving landlords the incentive to try to find a stronger retailer, such as Nordstrom, to pick up some of the space now occupied by Sears.
"The developers would love to get their hands back on some of the [Sears']real estate and make more money on it," Ms. Evans said. Sears spokesman Vincent Power said he wasn't aware of any talks with Nordstrom and, in any case, couldn't comment on such matters.
Amid the changes in the retail landscape, Sears' new chief executive officer, Calvin McDonald, has acknowledged its problems, and launched a recovery plan. It entails refocusing on the retailer's core appliances and mattresses departments as well as on apparel and all things tied to children's goods, while remodelling four of the 122 department stores.
Still, the retailer is racing against time amid weak consumer spending and, in the holiday period, heavy discounting that pinched many merchants' profit margins, analysts said. Overall national holiday sales rose about 2 per cent in 2011, according to Ernst & Young. That was below last year's gain of between 3 and 4 per cent in 2010.
"Calvin has done quite a good job on core stores," Ms. Evans said. "But they've got a long way to go."
Mr. Power said the latest staff cuts, in "non-core" store positions and head office, are part of Sears' wider transformation initiatives and aren't tied to Sears plans in the U.S. to shut stores after its same-store sales at outlets open a year or more dropped 5.2 per cent in the fourth quarter. No store closings are planned in Canada, he said.