Sears Canada exits more store leases, handing off 8 Sears Home leases to Leon’s Furniture

TORONTO – Sears Canada Inc. will hand eight of its big-box Sears Home store leases to Leon’s Furniture Inc., a potentially disappointing sign to have an historically robust section of its business.

Tuesday’s announcement, which provides coverage for four home stores in British Columbia, three in Ontario and one in Moncton, N.B., may be the latest inside a series of lease exits by Sears recently because the retailer shrinks its 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 per cent this year.

Unlike the other property deals, that have been a boon to the company, getting hundreds of millions of dollars to Sears Canada, Tuesday’s deal transfers essentially no money to Sears: It merely allows the faltering retail chain to exit locations at which it has been losing money.

“We will work on rationalizing our store network to make sure our core store physical footprint is extremely productive,” Brandon Stranzl, executive chairman, said inside a statement. “Our focus is on converting each and every customer at stores with less efficient footprints into customers of our more effective and finest performing stores. These actions will drive more business over less square footage, and can make Sears Canada a greater company.”

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Sears Home stores sell major appliances, mattresses, furniture plus some goods at 43 locations, and frequently occupy space at outdoor suburban power centres, where rents are lower than enclosed departmental stores.

Stranzl said the company will invite Sears Home customers at the affected locations to shop for similar items in the closest Sears mall.

“Recent experiences show that whenever we execute this ‘conversion,’ our full-line stores pick up a substantial portion of the sales, the marketplace area’s efficiency per sq . ft . improves, and customers continue to be served as they would expect from Sears.”

Despite Tuesday’s announcement, the business’s most recent earnings attributed its 0.4 per cent rise in same-store sales to higher sales of major appliances, furniture and mattresses. Same-store sales in its 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, over a lack of $118.7 million ($1.16) last year. Because of cost-cutting, Sears Canada had achieved $67 million in annualized savings within the first 75 % of last year, coupled with planned up to $40 million more for that fourth quarter.

Financial Post

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