Hoffman Estates, IL—As part of its strategic alternatives to save its business, Sears Holdings Corp. said today that it may sell its majority stake in Sears Canada Inc., a move that could mean the entire Canadian retailer would go up for sale.
Sears Holdings, which operates more than 2,300 stores in the United States and Canada, said it would hire an investment bank to help explore alternatives for its 51% stake in the Canadian company.
Sears Canada’s board and management plan to cooperate with Sears Holdings as it explores strategic alternatives.
News of the sales come as Sears Holdings, and its chairman/ceo Edward Lampert, come under increased pressure to turnaround the retail giant’s business. The company, which owns Sears and Kmart, has been sales declines since 2005 when Lampert merged the two retailers in an $11 billion deal. Since then, the company has had to close about 200 U.S. stores.
Sears Canada has had its own troubles. The retailer has lost market share and faced new competition from U.S.-based retailers Walmart and Target who are expanding northward.
Earlier this year, Sears Canada said it would have about 20,000 employees after a string of job cuts, including some 3,000 positions eliminated since November.
Sears Canada has 176 corporate and 234 Hometown stores, 1,400 catalog and online pick-up locations, 97 Sears travel offices and a nationwide repair and service network. Its market valuation is about $1.6 billion Canadian (about $1.5 billion).
Potential suitors for Sears Canada might include Macy’s Inc, Kohl’s even Hudson’s Bay Co.
Desjardins Securities analyst Keith Howlett wrote that buyers include major landlords and pension funds that want to use mall space occupied by Sears Canada, along with private equity and retail turnaround groups, such as Sun Capital, Hilco and Gordon Brothers.