Sears Holdings takes steps to improve Q3 performance
HOFFMAN ESTATES, Ill. — A selloff of several store leases and the spinoff of two business segments are on the way for Sears Holdings as the company hopes to improve its third quarter 2013 performance, the retailer said Tuesday.
The company, which owns the Kmart mass-merchandise and Sears department store chains, said it would sell five store leases in Canada to Cadillac Fairview for about $383.5 million. That deal is expected to close in the next 10 business days.
Sears Holdings has a 51% interest in Sears Canada, valued at more than $675 million, with 118 full-line stores as of second quarter 2013, which ended in August. While the company has struggled with slumping sales and losses in its U.S. division, Sears Canada trails even further. Earlier this month, its CEO, Douglas Campbell, told Canadian national newspaper The Globe & Mail that he would be open to selling the store at Toronto’s Eaton Centre, considered the division’s flagship store and also the location of Sears Canada’s headquarters.
"We are very supportive of Sears Canada’s actions to create value," Sears Holdings chairman and CEO Edward Lampert said. "It is clear that the Canadian market is becoming more competitive, but also more lucrative for those who can compete effectively. We believe that Sears Canada is well-positioned to create value for its shareholders through a combination of operating performance improvements, business portfolio actions and leveraging its real estate footprint working with its mall and other partners."
Sears Holdings’ third quarter will end this Saturday, but for the 12-week period that ended last Saturday, the company’s same-store sales declined by 3.7%, including a 4.8% decline for U.S. Sears stores and a 2.6% decline for Kmart. Adjusted EBITDA is expected to have declined by between $250-300 million, compared with a $156 million decline in third quarter 2012, though that included an $8 million rise in adjusted EBITDA for Sears Canada in addition to a $164 million decline for the U.S. division.
The retailer said it may allow its leases on U.S. locations to expire as well if they’re unprofitable in order to free up capital and focus on more profitable stores.
In addition, Sears Holdings plans to spin off its Lands’ End and Sears Auto Center businesses, saying that separating their management would allow them to better pursue opportunities on their own. Calling Lands’ End an "iconic brand," Sears Holdings said it has the potential to become a more global brand and that it would not pursue the spinoff as a sale, but as a way to maximize value for shareholders.
The company also announced Tuesday that it would extend its "Integrated Retail" omnichannel program to Kmart stores in Puerto Rico and allow customers there to shop online at Kmart.com using their ZIP codes. Integrated Retail is designed to connect the online and in-store channels to provide a seamless shopping experience, particularly for members of the Shop Your Way loyalty program.
"Kmart strives to provide a seamless experience for our customers," Kmart regional VP for Puerto Rico and the U.S. Virgin Islands Dave Rodney said. "We are excited to give our Shop Your Way members and customers in Puerto Rico access to new options that enhance the experience in-store and online."
Former Detroit Lions players to appear at Walgreens immunization events as part of continued partnership
DETROIT — Walgreens is continuing its partnership with the Detroit Lions as the football team’s official pharmacy, the two said.
Walgreens said it would also remain the presenting sponsor of the Lions’ Living for the City health and wellness community program, designed to bring preventive healthcare resources and programs to disadvantaged and at-risk families in the Detroit metropolitan area. As part of the partnership between the team and the retailer, Walgreens began its 2013 flu immunization tour at a Waterford, Mich., store last week, with former Lions tackle and seven-time pro bowler Lomas Brown in attendance. The Waterford event was the first of 10 featuring former Lions players.
Walgreens will have camera-visible signage during games and events at Ford Field, on-site displays at select events and a mix of marketing rights and in-stadium assets and promotion at the club level. The Deerfield, Ill.-based retail pharmacy chain, the largest in the country, operates 155 stores in and around Detroit.
Safeway to open on-site grocery store at Phoenix NASCAR event
PHOENIX — Safeway will open a grocery store in the camping area of the Phoenix International Raceway starting next month.
PIR president Bryan Sperber said the store would open for the AdvoCare 500 NASCAR Spring Cup Series weekend, which takes place Nov. 8-10, selling snacks and camping essentials.
"We are delighted to partner with Safeway to provide our fans with a first-class grocery store at Phoenix International Raceway during the AdvoCare 500 race weekend," Sperber said. "Our fans know that Safeway’s in-store experience is second to none, and we are excited to provide that same level of service at our AdvoCare 500 race weekend and for years to come."
The store will be 17,200 sq. ft., selling such items as charcoal and firewood, food and groceries, ice, beer, snacks, coffee, donuts, breakfast burritos and newspapers.