Sears CEO Calvin McDonald appears more willing to entertain offers for Sears store leases. This could provide opportunity for new Nordstrom, Target, Simons and other retailers looking to expand in Canada. 

A Sears insider notes that the company is willing to fight hard to improve its financial position, and has started to divest of some real estate interests. For example, yesterday, Sears sold its stake in a Medicine Hat, Alberta mall for $43million. Yesterday (Wednesday December 12) the store issued a special dividend of $1/share, for a total of $102million. Both show a potentially aggressive move by Sears to go head-to-head with Target. 

To quote Calvin McDonald:

“When people call, our due diligence is to evaluate that conversation. When we evaluate our portfolio of stores and look to find the balance between trading value and real estate value, our focus is very much on trading value in the organization. We are not in discussions with anybody, but we constantly evaluate our portfolio and look for opportunity for value.”

Calvin recognizes the value in Sears Canada’s assets and may be willing to shore-up its financial position by divesting some real estate holdings. This is HUGE news, as Sears has some of the best large-format retail real estate in Canada. Sears already sold interest in three store leases for $170million, paving the way for Nordstrom’s Canadian entry. We’re asking our Sears insider to monitor their situation and with what other store leases they may release. 

Sources: Sears Insider, Financial Post.

Sears Canada website: www.sears.ca

Sears Canada will concentrate on rural and mid-market communities for future growth. These markets provide less competition and, according to Sears Canada CEO Calvin McDonald, will allow Sears to grow like it did initially in its 1950’s Canadian inception.

Granted, this isn’t the 1950’s. But is Calvin on to something? And will Sears Canada give over more prime retail space for Nordstrom’s Canadian expansion?

An industry insider speculates Sears will concentrate on smaller markets and suburbs while selling-off its larger downtown and some prime suburban space to increase cashflow. This could pave the way for more Canadian Nordstrom locations. This is speculative and Calvin McDonald, himself, says he wants Sears Canada’s flagship location to remain at the Toronto Eaton Centre.

An insider at Oxford Properties expressed frustration with Sears’ lack of cooperation in releasing some prime leases, including Sears’ Yorkdale Shopping Centre location. Nordstrom is said to want it, and Oxford wants to deliver. Yorkdale recently went through a major expansion as we previously reported.

Sears might just become a successful retailer. Sears Canada is using its credit card database to study past consumer spending. It hopes this information will direct it to target shoppers and increase sales.

Sears Canada’s customer database was initiated in 1953 and includes about 4.5 million credit card holders. Analysis led to the re-introduction of Sears’ Jessica fashion line, and management hopes further analysis will be able to determine consumer wants and needs, including the requirement for a new bed mattress or new shoes, for example.

Sears Canada is struggling financially, and its CEO Calvin McDonald wants to make it profitable by 2014. This is a tall order considering that Sears has reported losses for the past 12 quarters.

Sears is still either #1 or #2 market-share retailer in Canada for such product categories as bed mattresses, women’s dresses, men’s formal wear and major appliances. At the same times, Sears is significantly reducing its concentration of electronics and toys, deferring to strong Canadian competitors.

We are watching Sears Canada closely, as it may still be a viable Canadian retailer. At the same time, we’re rooting for Sears to give up prime retail leases so Nordstrom, Simons and other interested retailers can comfortably continue their Canada-wide expansions in a market with limited retail space.

Sears Canada webiste: www.sears.ca