The woes befalling American department store owners are also punishing their Canadian counterparts. In one of the strongest signs yet of the challenging future of Canadian department stores, Sears Canada has announced it will seek creditor protection and will likely be liquidated.
Unlike most bankruptcies, Sears Canada did not accumulate large amounts of debt. Its debt is a relatively modest C$100 million, but with continuing losses the company needed to find financing to continue funding its operations. The most valuable assets the company owns are real estate, but much of it is housed in lower quality malls and lenders were unwilling to fund the company with its real estate as collateral.
Sears Canada opened its doors in 1952 as a joint venture with department store chain Simpsons. After Hudson Bay acquired Simpsons it sold Simpsons’ stake in the venture back to Sears’ United States parent. Today, Sears Holdings owns only about 10% of Sears Canada.
The last profit turned by Sears Canada was in 2013. Since then it has lost a cumulative C$728 million. Revenue, which once was more than C$6 billion, was only C$2.6 billion last year.
The last same-store sales increase for the company was in 2004. Last year, same-store sales declined by more than 4%.
Shares of Sears Canada are currently lower by 23% on the day in trading on the Toronto Stock Exchange.
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