Spin-Off To Help Sears Holdings Corp (NASDAQ:SHLD)
The stock of Sears Holdings Corp (NASDAQ:SHLD) gained 11.75% on Tuesday, following the announcement that Sears Canada Inc. will be closing its flagship Toronto store besides four other locations in a $383 million deal. The company also said to have been considering separating its Land’s End clothing and auto center businesses to raise cash.
The Canadian department store chain, controlled by Sears Holdings Corp, which reported 181 corporate stores at the end of 2Q13, will terminate the leases starting 1Q14 and return the spaces to the landlords. However, this key locations could be used by rival firms like Target Corporation (NYSE:TGT) or Nordstrom, Inc. (NYSE:JWN) looking to expand in Canada.
Sears Canada announced to vacate three stores by the end of February 2014 and remaining two stores by the end of February 2015. The company said some of total 956 employees working at these five stores may be moved to other locations. Of total five stores, three are in the Toronto area, one in Ontario and one in British Columbia. One of the store in Toronto area shares space with the company’s corporate head office at the large downtown mall, Eaton Centre – one of Toronto’s must see tourist destination. At Eaton Centre company plans to hold on to four floors for its offices.
The Chief Operating Officer with Sears Canada, Douglas Campbell took over as the new Chief Executive Officer in September 2013, following then CEO Calvin McDonald’s resignation.
Sears Canada has faced steep declines in its same-store sales amid strife competition from retail giant Wal-Mart Stores, Inc. (NYSE:WMT) as well as new entrant Target Corp. which opened its first Canadian stores in March.
Sears Holdings already spun off its Orchard Supply Hardware Stores in 2011 and announced its plans to further spin off the Sears Hometown and Outlet businesses as well as certain hardware stores last year. The company plans separation of Land’s End through a deal that could benefit current shareholders.
Chris Brathwaite, spokesman at Sears Holdings said, “”As we move through this process we are continuously evaluating our asset structure and whether specific assets and/or businesses are better managed within the current Sears Holdings asset configuration or outside it.”