Hey there, time traveller!
This article was published 17/5/2012 (1623 days ago), so information in it may no longer be current.
TORONTO -- After several years of trying to gain a bigger stake of Sears Canada, its U.S. majority owner said Thursday it plans to cut its interest in the troubled department store chain as it deals with its own dwindling sales.
Sears Holdings Corp. (NYSE:SHLD), which also owns the Sears, Kmart and Lands' End department store chains in the United States, expects to reduce its stake in the Canadian company to 51 per cent by transferring 45.1 million shares to its stockholders.
The holding company, which currently owns about 95 per cent of the common shares of Sears Canada, could then choose to sell some or all of the rest of its stake.
Sears Holdings has been restructuring operations south of the border in an effort to regain profitability and market share.
In December, it announced it would close between 100 and 120 of its roughly 4,000 stores. And in February, it said it would sell 11 stores to General Growth Properties for $270 million, as well as spin off its smaller Hometown and Outlet stores and some hardware stores in order to raise cash.
The parent company's move also comes as the Canadian retailer revamps many of its locations and slashes prices to contend with lagging sales. Elise Amendola Sears Canada announced Wednesday a return to profitability in its most recent quarter, though it was driven by gains from the early termination of leases on three high-profile locations. It has also cut more than 1,000 jobs in recent months.
The U.S. company's decision, announced by Sears Canada, appeared to come as a surprise to investors. Sears Canada (TSX:SCC) stock fell nearly 13 per cent or $1.70 to close at $11.45 on the Toronto Stock Exchange.
Keith Howlett of Desjardins Capital Markets said the transaction could provide Sears Canada with some new-found freedom to grow.
"While all options to realize value from Sears Canada still remain open to Sears Holdings, it appears to us that the new executive management of Sears Canada has been granted at least a couple of years to establish if its plan can turn operating results around," Howlett wrote in a note.
-- The Canadian Press