Sears Canada enters bankruptcy protection
An 18-month long reinvention process underway at Sears Canada couldn’t keep the company from seeking legal protection from its creditors.
Sears Canada, which spun off from Sears Holdings back in 2012, has been granted protection from its creditors under Canada’s Creditors Arrangement Act. It has received C$450 million in debtor-in-possession financing.
Sears Canada said it hopes to exit its bankruptcy protection “as soon as possible in 2017.”
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As it announced the CCAA proceedings, the company also announced the closing of 20 full-line locations, plus 15 "Sears Home" stores, 10 "Sears Outlet" and 14 "Sears Hometown" locations, as well as a corresponding planned reduction in its workforce of approximately 2,900 positions across its retail network and at its corporate head office in Toronto.
“The continued liquidity pressures facing the company as well as legacy components of its business are preventing it from making further progress in its brand reinvention efforts and from restructuring its legacy assets and businesses, which is why it sought creditor protection under the CCAA,” the company said.
Progress from the reinvention, according to management, over the past 18 months included a rebuilt front- and back-end technology platform, a redefined brand position, a revamped product assortment and a “rebooted customer experience.” These factors contributed to the company’s reported increases in same-store sales in each of its past two quarters.
In its most recent quarter, Sears Canada posted a loss of C$144.4 million as revenue declined 15.2% to $505.5 million. Same-store sales increased 2.9%.
The company says it will continue executing its reinvention and continue operating stores and the company’s website during the CCAA action.