After recently reporting another deep loss in its first quarter, troubled Sears Canada has filed for bankruptcy protection and is closing some stores and reducing its workforce as it attempts to restructure.
Although some expected to see a liquidation given the retailer’s troubles, Sears Canada has been granted an order from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act that authorizes the Sears Canada Group to obtain debtor-in-possession financing in the aggregate principal amount of C$450 million with existing lenders.
Sears Canada said it expects the financing to provide it with sufficient liquidity to maintain business operations throughout the bankruptcy proceedings. The company added that it would work to complete restructuring and exit bankruptcy protection as soon as possible in 2017 and that it will be better positioned to capitalize on the opportunities that exist in the Canadian retail marketplace.
Sears Canada also announced the closing of 20 full-line locations as well as 15 Sears Home, 10 Sears Outlet and 14 Sears Hometown stores. A corresponding planned reduction in its workforce will include approximately 2,900 positions across its retail network and at its corporate head office in Toronto.
The retailer asserted that, over the past 18 months, it had pursued a reinvention plan that had begun to gain traction with customers, citing positive comparable store sales as evidence of advancement. Under the plan, Sears Canada said it rebuilt its technology platform, redesigned its website, redefined its brand positioning, revamped its product assortment and rebooted its customer experience and service standards, along with a new store format called Sears 2.0.