Sears Canada has filed for bankruptcy protection, according to a company report released Thursday.
Over the past 18 months, Sears has taken on restructuring initiatives, including developing technology systems, redefining its brand positioning and updating its product assortment, according to the company.
As a result of these changes, same-store sales increased in the prior two financial quarters, the retailer reports. However, without bankruptcy protection, Sears Canada will be unable to continue its restructuring program, according to the company.
“The brand reinvention work Sears Canada has begun requires a long-term effort, but the continued liquidity pressures facing the company as well as legacy components of its business are preventing it from making further progress and from restructuring its legacy assets and businesses outside of a [Companies’ Creditors Arrangement Act] proceeding,” the company statement says.
The retailer says it will attempt “to complete its restructuring in a timely fashion” if granted the bankruptcy protection, with a goal to exit protection by the end of this year “better positioned to capitalize on the opportunities that exist in the Canadian retail marketplace.”
In its annual financial report, Sears Canada expressed “significant doubt” about its ability to continue operating. In the company’s first-quarter financial results, released June 13, the retailer reported a year-over-year revenue loss of 15.2 percent for the quarter, but also a 2.9 percent increase in same-store sales compared to first-quarter sales in 2016.
The company attributes the revenue loss to “a planned and significant reduction in catalogues versus last year in response to lower customer demand; some products not being available on the new website during the period while back-end logistics technology was under development; and a planned decline in the number of merchandise pick-up locations to reduce costs.”
Sears Canada separated from Sears Holdings Corp. in 2012, although Sears Holdings retains 12 percent of the Canadian retailer’s shares. Sears Canada is headquartered in Toronto and operates more than 200 retail stores throughout Canada.