Troubled retailer Sears Canada Inc. has announced it plans to close three of its department stores by the end of October: Vancouver Pacific Centre, Calgary Chinook Centre, and Ottawa Rideau Centre.
The company said it is finalizing a deal to sell the leases for the three stores back to their landlord, commercial real estate developer Cadillac Fairview Corporation Limited, for $170 million.
Sears has operated at the Calgary Chinook Centre since 1965, and at both the Vancouver Pacific Centre and Ottawa Rideau Centre locations since 2000.
President and CEO Calvin McDonald called the move “very advantageous” for the company.
“While we had no plans to close stores, the transaction for these three specific locations provides an attractive financial benefit for the company which strategically allows us to drive growth in areas which can be most beneficial,” McDonald said in a statement.
Employees impacted by the transaction will be able to apply for positions at nearby Sears locations, the company said.
Sears has been wrestling with falling sales, faced with a cautious consumer and strong competition from giant retailer Wal-Mart Canada Inc.
Competition is expected to intensify with the arrival in Canada of Target Corp. Target is buying up 220 Zellers locations and expects to open up to 150 stores across the country in 2013 and 2014.
Last month, Sears slashed regular prices on more than 5,000 items in the “first significant change customers will see as a result of the transformation undertaken by the company,” according to a press release.
In December and January, Sears Canada laid off more than 400 employees. South of the border, U.S. parent Sears Holdings is closing up to 120 of its Sears and K-Mart stores in order to cut costs.
Industry observers speculate that the closing of the three stores provides an opportunity for fashion specialty retailer Nordstrom Inc. to now expand into Canada. The U.S.-based company has been looking for suitable real estate here for the past year.