The new chief executive officer of Sears Canada Inc. will consider abandoning more stores – including the jewel in the crown at the Toronto Eaton Centre – if he’s approached with an offer that helps shore up the ailing retailer’s business.
Douglas Campbell, 43, who unexpectedly took over the top job at Sears from Calvin McDonald on Sept. 24, said in an interview he would view selling the lease for the flagship Eaton Centre outlet – where the retailer houses its head office – no differently than any other lease, as he weighs his options for “maximizing the value” of the retailer’s assets.
His approach differs from that of his predecessor, who was reluctant to part with the flagship store because of its symbolic importance. And it raises questions about the direction of the retailer, whose parent Sears Holdings Corp. has sold valuable store leases, but struggled with weak results.
On Friday, Mr. Campbell said he’d look at offers for any Sears lease.
“Every store is different and every deal will be different. On a case-by-case basis, Eaton Centre would be no different than any other store we would look at.”
The Eaton Centre lease is coveted by other retailers, sources have said, including U.S. department store rival Nordstrom Inc., which is opening its first store in Canada next year. (Among others, it picked up leases that Sears had abandoned.)
Cadillac Fairview Corp., landlord of the Toronto Eaton Centre, has been trying to buy back Sears’ lease to sell it to a retailer that can draw more shoppers to the mall, sources have said. It also would like to buy out the lease because Sears pays a relatively tiny amount of rent – believed to be about $1 a square foot – for the store.
Under Mr. McDonald, Sears Canada already sold a handful of leases back to their landlords, including those at key stores in downtown Vancouver and Toronto, including Yorkdale Shopping Centre and Square One Shopping Centre, raising almost $400-million.
“Many of Sears Canada’s department store locations would presently be more productively deployed if operated by other retailers,” Keith Howlett, a retail analyst at Desjardins Securities, said recently.
Mr. McDonald, 41, who is believed to be moving to a top job at cosmetics giant Sephora in San Francisco, had been halfway through a three-year turnaround plan to revive the chain. He focused on “hero” categories, such as appliances and childrens’ products, while dropping less-profitable departments such as toys and electronics, although continuing to sell them online.
But he left Sears following differing views with parent Sears Holdings over “the pace at which capital was being deployed” to keep up the momentum of the transformation efforts, a source familiar with the situation has said.
Mr. Campbell, who was a consultant for Sears before joining the company in 2011, said he is continuing on the same path as Mr. McDonald, with whom he worked closely.
“A lot of what ails us are basics – are Retail 101,” Mr. Campbell said. “They’re what makes a good retailer good – operating effectively and consistently across the retail basics.”
He said it’s important that Sears become leaner to take on more intense competition. He will look at everything from lowering logistics and inventory expenses to further staff cuts. Mr. McDonald said in April that Sears wants to reduce costs by $100-million to $200-million in the next few years, after having already slashed about $100-million of expenses in the past couple of years.