Sears Canada Inc., the country’s second-largest department store chain, had its biggest gain in more than a year after it raised C$191 million ($188 million) from the sale of two Toronto-area stores to mall landlords.
Sears Canada rose 12 percent to C$10.60 at 11:22 a.m. trading in Toronto, the biggest gain since May 23, 2012.
The retailer sold its outlets at Yorkdale Mall and Square One Shopping Centre to Oxford Property Group and Alberta Investment Management Corp., the Toronto-based company said in a statement today. Sears plans to close the stores as early as March, Oxford said.
The company, controlled by U.S. retailer Sears Holdings Corp. (SHLD:US), has faced increased competition in the Canadian retail market with the entrance of U.S. competitors such as Target Corp. (TGT:US) and Nordstrom Inc. (JWN:US) Seattle-based Nordstrom plans to open its first Canadian store in Calgary next year, and its first Toronto-based store in Yorkdale Mall in 2016.
Last year Sears Canada sold three of its western Canada stores back to its landlord, Cadillac Fairview, for C$171 million in a similar move. Nordstrom will take over all three vacated stores starting in 2014.
“When transactions such as this become available, we must evaluate the trading value of a store compared to the value of the proposal,” Calvin McDonald, president and chief executive officer of Sears Canada said in the statement.
Blake Hutcheson, CEO of Oxford Properties Group, said the company hasn’t selected future tenants for the Sears stores.
“They’re sitting on a lot of real estate and obviously there’s some value there, but it doesn’t appear to be in the retailing side,” said Joe Cornell of Spin-Off Research, an analyst group that rates Sears Canada as a sell. “They’re trying to generate cash from asset sales and spin offs. We’ll probably see more of that.”
To contact the reporter on this story: Lauren S Murphy in Toronto at firstname.lastname@example.org
To contact the editor responsible for this story: David Scanlan at email@example.com