TORONTO - Sears Canada Inc said on Friday it will shut three major downtown stores in Vancouver, Calgary and Ottawa, in a move that will allow it to raise capital to revamp stores in other locations.
The department store chain, majority-owned by U.S.-based Sears Holdings Corp, plans to close outlets at the Vancouver Pacific Centre, the Calgary Chinook Centre and the Ottawa Rideau Centre by Oct. 31. The Calgary store has been operating for nearly 50 years.
It will return the locations to developer Cadillac Fairview Corp Ltd for C$170 million ($172 million). The transaction is expected to close on or around April 20.
“They had a leadership change in Canada and, you know, part of the change is that they’re just being very, very careful with cash now,” said Morningstar analyst Paul Swinand, who noted that Sears Holdings is also watching its cash.
Sears Canada’s chief executive, Calvin McDonald, joined the company in June 2011.
“While we had no plans to close stores, the transaction for these three specific locations provides an attractive financial benefit,” McDonald said in a statement.
Sears Holdings, which owns 94.7 percent of Sears Canada according to Thomson Reuters data, said late last month it would raise about $770 million by spinning off parts of its business and selling prime real estate.
That announcement helped reassure Wall Street that the retailer had enough assets to tap to pay down debt, sending its shares up nearly 19 percent.
Both companies have struggled with falling sales. In early February, Sears Canada cut regular prices on more than 5,000 products, part of a “transformation” to help it compete more effectively.
Shares of Sears Canada rose 5.2 percent to C$12.83 on Friday morning on the Toronto Stock Exchange.