Sears Canada Inc., a unit of the cash-strapped broadline retailer Sears Holdings Corporation (SHLD), is working to attract customers with a renewed focus on customer service and modifications in its store layout and merchandising.
Sears Canada has announced that it will inaugurate four remodeled stores in Ontario on May 25, 2012. The stores, located at Barrie, Belleville, Newmarket and at the Lime Ridge mall in Hamilton, will have wider passageway, reduced disorder and modernized merchandise offerings with many updated brand names.
Expansions in stores will include a new KidsRoom and BabyRoom, Jessica women’s suit shops, Men’s suit shops with easier by-size shopping and additional fitting services, a new collection and look for Craftsman outdoor power equipment and the best collection of major appliances and mattresses.
Additional features at the new stores include an improved check-out process in Newmarket, and easy-access shopping carts in Barrie and Belleville.
Following the inauguration of these stores on May 25th, the company offers to distribute random gift cards of value ranging between $25 and $500 to first 100 customers. Additionally, the customers stepping into the stores will have the opportunity to win a $500 gift card every hour between 9am and 1pm.
The newly modeled Sears stores aim to transform the shopping experience of customers in Canada by making available the products in demand at their stores while establishing their leadership in the marketplace.
Measures to Revive Operational Activities
Sears has long been grappling with weak top-line performance and even weaker bottom-line results. However, the measures undertaken to revive the operating performance are showing some signs of improvement as evident from the company’s margin expansion and narrower loss per share from the prior-year quarter.
In its streak to optimize its financial performance, the company recently announced string of measures to enhance its growth prospects by dipping investment in sections of the company that no longer contribute significantly to its growth.
In doing so, Sears Holding has announced its intention to partially spin-off its interest in Sears Canada Inc. Sears Holdings has currently 95% ownership interest in Sears Canada, which it intends to reduce to 51%. The move is expected to enhance Sears Holdings’ liquidity position.
Further, Sears Holdings filed a registration statement with the Securities and Exchange Commission (SEC) for spinning off its Sears Hometown and Outlet stores businesses. The separation is expected to provide an additional liquidity of $400-$500 million while focusing on its core business.
Moreover, Sears Holdings also intends to shutter 100 to 120 Kmart and Sears full-line stores to trim down costs and generate cash. Further, the company expects to produce $140 to $170 million of cash from store closures through inventory clearance.
Apart from this, the company is focusing on cost containment, inventory management, and merchandise initiatives to improve margins through leverage on buying and occupancy expenses.
Sears Holdings, which competes with Wal-Mart Stores Inc. (WMT) and Target Corporation (TGT), currently has a Zacks #2 Rank, implying a short-term Buy rating. The company retains a long-term Neutral recommendation.
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