Sears Canada will shed more of its real estate to rack up additional liquidity, and the next to go are two distribution centers, which, combined, will bring the company $108.5 million.
The retailer said Friday it would sell one distribution center for $8.5 million, and sell and lease back another distribution center in Ontario for $100 million in the first quarter of 2016. Under the terms of the lease back, Sears said it will still operate the Ontario center with no staff cuts or service disruptions.
These distribution centers are just the latest two to go, but Sears announced in September the sale of another for $18.125 million, plus the sale and lease back of a non-mall based property for $10 million, which it will continue operating post sale.
“Sears Canada is taking a proactive approach to its real estate strategy,” Sears Canada executive chairman Brandon G. Stranzl, said. “We have substantial non-core assets, and there continue to be numerous opportunities for the company to be more efficient and creative with its asset base.”
The Canadian format of the American brand has been working to revamp its business for some time as sales have fallen and foot traffic has faltered.
Sales for the second quarter ended Aug. 1, were down 3.9% over the prior year period and revenue was down 9.1% to $768.8 million, owed at least in part to store exits, dips in the print catalogue business and declines in logistics services sold to third parties.
Shifting its leadership has also been a priority. Earlier this month, Sears Canada hired former Hudson’s Bay Company and Jones Apparel Group executive Carrie Kirkman to be its new president and chief merchant. Kirkman is expected to help the retailer reconnect with consumers by bringing back well-loved offerings like Sears’ holiday catalog and Wish Book.
Sears said it will use the opportunities it can to monetize its sizable non-core assets and make its business more efficient.
“We will continue to be opportunistic in building surplus capital by monetizing these assets, including parts of our non-core real-estate portfolio,” Stranzl said. “We will use our balance sheet and asset base to create value for the company and to enable us to focus on restoring Sears Canada’s core retail business to an iconic position in the Canadian retail landscape, all within the context of a disciplined framework for capital allocation.”