FILE - In this Wednesday, Feb. 8, 2017, file photo, shoppers walk into a Sears store in Pittsburgh. Sears said that there is “substantial doubt” that it will be able to remain in business. The company, which runs Kmart and its namesake stores, has struggled for years with weak sales. (AP Photo/Gene J. Puskar, File)

Sears Canada ponders sale, says there is ‘significant doubt’ about its future

Despite its recent efforts to turn itself around, the writing has been on the wall for Sears Canada

Sears Canada, known for its catalogues that were a household staple for generations, said Tuesday there is “significant doubt” about its future and it could sell or restructure itself.

The struggling retailer, which tried to reinvent itself last year with a new corporate logo, said it doesn’t expect to have enough cash flow over the next 12 months to meet its obligations. It’s the latest sign of how the retail sector is being upended by numerous factors, including the rise of online shopping.

“The company continues to face a very challenging environment with recurring operating losses and negative cash flows from operating activities in the last five fiscal years, with net losses beginning in 2014,” Sears Canada (TSX:SCC) said in a statement.

“While the company’s plans have demonstrated early successes, notably in same-store sales, the ability of the company to continue as a going concern is dependent on the company’s ability to obtain additional sources of liquidity in order to implement its business plan.”

Its shares tanked, down 22 per cent to 89 cents in midday trading on the Toronto Stock Exchange.

In a retail world dominated by the likes of Amazon, Sears Canada has floundered, a relic of a bygone shopping era where the department store was king.

The company’s executive leadership has been a veritable revolving door, having gone through several changes over the last four years.

Despite its recent efforts to turn itself around, the writing has been on the wall for Sears Canada for about a decade, said Mandeep Malik, an assistant professor at the DeGroote School of Business at McMaster University.

“It was a too-little, too-late kind of story,” he said.

Malik said Sears Canada has failed to meet customer expectations when it comes to service, choice and price, and it now finds itself trying to play catch-up in a hyper-competitive marketplace. Its decline is symptomatic of a broader trend in retail, he added.

“The mid-line department stores are getting squeezed out.”

Last week, rival Hudson’s Bay Co. (TSX:HBC) said it is cutting about 2,000 jobs across North America in an effort to help it compete in an increasingly tough retail environment, partly due to the rise of e-commerce.

Sears Canada’s announcement came as it reported a first-quarter loss of $144.4 million, more than double what it was a year ago. Its revenue slipped by about $90 million to $505.5 million, a decline of 15.2 per cent.

The company said it had expected to be able to borrow $175 million for additional liquidity, but that has been reduced to about $109 million. It said it also lacks other assets, such as real estate, that can be monetized in a timely manner.

“Accordingly, such conditions raise significant doubt as to the company’s ability to continue as a going concern,” it said.

Spokesman Vincent Power said in an email it’s not clear yet whether there will be any layoffs at the company, which had about 16,000 employees as of the quarter ending April 29.

Still, Sears Canada maintained some positivity about its outlook, pointing to a 2.9 per cent increase in same-store sales, a key metric in retail that measures sales at locations open for at least a year. That came, however, as the number of its stores dropped. Sears Canada has 94 department stores, 23 Sears Home stores and 10 outlets.

The department store chain also postponed its annual meeting, which had been scheduled for Wednesday, until an unspecified date.

Just Posted

Quesnel Bantam Rep Hockey Tourney got off to a spirited start

Williams Lake jumped into a two-goal lead and never looked back in a 5-3

Biologist will be monitoring wildfire impacts on aqua culture and runoff

A change in runoff patterns in wildfire impacted areas could result in lakes not getting oxygenated properly

Snowy track made running very slick and slippery

Quesnel cross-country athletes dominated race and owned the podium

Curling Club Sponsor League keen on the ice

Weekly games began at the Quesnel Curling Club on Oct. 11

Silver Screen Scoundrels Quesnel performance an opportunity for a new experience

Homemade silent movie in background adds a unique atmosphere to performance

VIDEO: Sears liquidation sales continue across B.C.

Sales are expected to continue into the New Year

New B.C. acute care centre opens for young patients, expectant mothers

Facility aims to make B.C. Children’s Hospital visits more comfortable

Search ramps up for B.C. woman after dog, car found near Ashcroft

Jenny Lynn Larocque’s vehicle and dog were found in Venables Valley, but there is no sign of her

Police officer hit by car, stabbed in Edmonton attack back on job

Const. Mike Chernyk, 48, returned to work Thursday

UBC medical students learn to care for Indigenous people

Students in health-related studies to take course, workshop to help better serve Aboriginal people

Dorsett has 2 goals, assist in Canucks’ 4-2 win over Sabres

‘It was a real good hockey game by our group,’ Canucks coach Travis Green said.

Berry disappointed: Bear tries to eat fake fruit on woman’s door wreath

A Winnipeg woman has taken her berry-embellished wreath down, after a hungry bear visited her porch

Man in custody linked police search near Salmon Arm

Police have not connected arrest to search at Salmon River Road property

B.C. search groups mobilize for missing mushroom picker

Searchers from across the province look for Frances Brown who has been missing since Oct. 14.

Most Read