Sears Holdings Corp (NASDAQ:SHLD) on Wednesday said it is exploring options for its stake in Sears Canada including a possible sale.
The retailer intends to hire an investment bank during the proceedings.
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String of spin-offs
Last month, Sears Holdings Corp (NASDAQ:SHLD) completed the spin-off of the Lands’ End, Inc. (NASDAQ:LE) brand, the fourth in just 30 months. Though the move brought in some very welcome cash, the company doesn’t have a great track record of generating shareholder value from spin-offs and losing one of the most profitable parts of its business makes Sears’ long-term prospects look even worse than they did before.
Orchard Supply Hardware Stores Corporation (OSH), spun-off at the end of 2011, is currently in Chapter 11 bankruptcy liquidating its assets. Sears Hometown and Outlet Stores Inc is down more than 20% since it was spun off in late 2012 while the market as a whole was rallying. Sears Canada Inc is up 39% over roughly the same time frame, but even that has only kept pace with the market.
Sears: Earlier denial of Canada’s sale
Interestingly, in November, Sears Holdings Corp (NASDAQ:SHLD) denied media reports that it was considering selling its Canadian business. Billionaire hedge fund manager, Sears’ CEO Eddie Lampert has been selling some of the company’s best stores in Canada since he took over at Sears Holdings Corp in 2005. Last year, the company announced it would sell five major stores in Canada, including the coveted Toronto Eaton Center stores, for $400 million.
However, Sears Holdings Corp (NASDAQ:SHLD) which owns a 51% stake in Sears Canada said Wednesday it is considering whether to sell its holdings or the operation as a whole. Sears Canada’s board said it intends to cooperate fully in the process. The retailer’s core business, which includes the flagship Sears and Kmart chains, has produced $5.4 billion in losses in the past three years. Much of the company’s remaining value is tied up in its real estate, and estimates differ widely on what those properties are worth.
Sears Canada, meanwhile, has been cutting jobs and attempting a turnaround as more competition from U.S. stores, including Target Corporation (NYSE:TGT) infiltrates the Canadian retail market.