Sears to close 5 more locations, including flagship Toronto store

A Sears store in Toronto

Sears Canada is going through a new round of closures, shutting down five department stores across the country including its flagship location in Toronto’s Eaton Centre, in a $400 million deal.

An estimated 965 employees at Sears Canada will be affected by the transaction, but the retailer says they will have the option to apply for other jobs within the company.

Sears Canada will be selling back store leases to mall operator Cadillac Fairview. Apart from the Eaton Centre, the company will be closing stores in Sherway Gardens in Toronto, Markville Shopping Centre in Markham, Ont., London-Masonville Place in London, Ont. and Richmond Centre in Richmond, B.C.

The transaction will amount to the biggest sale of leases since Sears began shedding assets and cutting jobs in an effort to revitalize the struggling company.

“The money that we get from the transaction -- the value of the total transaction -- for us far outweighs what we could make from operating the stores day to day,” said Vincent Power, Sears spokesman.

Sears’ Eaton Centre location in Toronto’s central tourist area occupies five stories of retail space, and the complex’s square footage may be expensive and daunting for many companies.

But John Crombie, senior managing director of national retail services at Cushman and Wakefield, says American high-end retailer Nordstrom would be “highly interested” in occupying the space in the Eaton Centre or Sherway Gardens.

“Nordstrom would be the most obvious choice for that space, and a much better fit than Quebec-based Simons, another large retailer some have suggested could move into such a key spot,” Crombie said.

“Cadillac already has a good track record with Nordstrom and I would think they would love to be in the downtown core."

Nordstrom has already occupied some of Spears’ previously sold locations.

The Globe and Mail reported that Simons and Saks Fifth Avenue, which is in the process of being acquired by the Hudson’s Bay Company, may also consider moving into the downtown Toronto space. The Toronto Star added Bloomingdale’s as another possible contender.

Despite the company’s challenges in Canada, CEO Doug Campbell said Sears isn’t engaging in asset liquidation.

“I don't have any strategy to sell stores, nor am I approaching anyone to try to sell stores," Campbell told The Canadian Press.

"This is an example where if I am approached for an offer for a piece of property, whose real estate value far exceeds the trading value, it's an offer that I have to take seriously."

And despite the latest round of lease sales which are expected to close Nov.12, the company will still have 111 department stores operating across Canada, Power said.

“We are a multi-channel retailer serving Canadians coast to coast.”

But industry analyst John Williams says he was surprised to see the company shut down five of its major stores.

“You don’t close down your stores for growth,” Williams said.

“These stores do hundreds of millions of dollars in volume, and they are obviously not going to replace that.”

An additional 276 Regina employees will be affected next year, as the company plans to replace an outdated distribution centre in Regina, with a new facility in Calgary.

Sears will have left most of its stores by Feb. 28 2014, but will continue to operate its headquarters out of the Eaton Centre, where it first opened in 2000. Sears’ outlets in Markham and Richmond will close in 2015.

With files from CTV’s Zuraidah Alman, Peter Akman and The Canadian Press