Calvin McDonald, the former CEO of Sears Canada, just resigned his post to be come the CEO of Sephora, a colossus in the beauty retail field.
McDonald has been at Sears at since June 2011. His resignation came as a surprise to many, especially given his prominent role in crafting the retailers’ halting turnaround plan.
McDonald is widely credited with spearheading Sears’ efforts to sell off some of its bestselling locations in Canada to raise capital, often extracting payments from landlords in search of higher paying tenants.
The store closings are part of nationwide trend for Sears, which has been shuttering locations quietly in both the US and Canada. Over the last eighteen months, Sears has sold almost a dozen stores, some of them admittedly among their best money makers. Some have noted that this an unconventional strategy since retailers typically invest more money into their top performing locations, rather than unload them. Robert Futterman, chief executive of RFK, a realtor which specializes in leases to retailers, said, “Retailers invest in their best stores and refurbish them, they don’t sell them.”
Of course, a dozen locations comprise a miniscule fraction of Sears’ massive holdings, with more than 2,000 stores in the US and another 148 scattered about Canada. Still, the sale of profit-generating stores is evidence of its straitened circumstances; while the better locations are more lucrative pieces of realty to move, such a strategy obviously diminishes the company’s ability to make more money by moving product. Also, worried investors are left wondering why other avenues for further capitalization are foreclosed to Sears. Even in its harrowed state, JC Penny managed to raise a billion dollars without cutting itself off from future centers of profit.
Some industry experts have speculated that Eddie Lampert was originally attracted to Sears precisely because of the value of its real estate. One of Sears’ investors, Baker Street Capital, issued a report recently that the retailer’s 350 remaining locations were collectively worth $7.3 billion. Consider that Sears’ total market capitalization is approximately $600 million.
Sears has struggled in Canada, particularly since Target and Wal-Mart have established a more significant presence there, with plans for even greater encroachment in the future.
In a statement to the press delivered October 24, Christopher de Lapuente, chief executive at Sephora, called McDonald a “visionary and highly talented industry leader.”