Money 2 Lessons to Take From the Sears Canada Inc. Collapse

16:06  15 december  2017
16:06  15 december  2017 Source:   fool.com

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Sears Canada has a long and well-documented history of being a great place to shop and work. Sears thanks its customers for their loyalty and support since 1953, when it began serving Canadians coast to coast under its then corporate name, Simpsons- Sears Ltd

Appliances Exclusions In-store offer may vary. Applies only to items Sold by Sears . Not combinable with in-store Sears card offers. Interest will be charged to your account from the purchase date if the purchase balance is not paid in full within 12 months.

a group of people in a store© Provided by Fool

On October 13, Sears Canada Inc. received court approval to liquidate its remaining stores, marking the end of a retailer more than half a century old. The store closures have resulted in the job loss for over 12,000 Canadian workers. It is worth sifting through what went wrong at Sears Canada, so investors can avoid the pitfalls of a story that is becoming very common in the present-day retail sector.

Quotes in the article

Hudson's Bay Co

HBAYF

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In July — just days after liquidation sales began at the first Sears stores slated for closure — Sears Canada Inc . was delisted from the Toronto Stock Exchange. With files from The Canadian Press.

Sears Canada said customers can expect liquidation sales at the locations set for closure. Ste. Foy, Que. © 2017 Global News, a division of Corus Entertainment Inc . It used to take 10 years to diagnose multiple sclerosis. Now it takes mere minutes. FLYERS.

8.27
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Amazon.com Inc

AMZN

1,174.26
+10.13
+0.87%
Sears Holdings Corp

SHLD

3.87
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S&P/TSX Composite

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16,016.46
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Traditional brick-and-mortar retail continues to get hammered

Brick-and-mortar retailers have experienced an extremely difficult decade, as the retail industry has undergone transformational change. The rise of online retail giant Amazon.com, Inc. has pushed dozens of retailers to the brink. Toy retailer Toys “R” Us declared bankruptcy in 2017, and clothing retailer Mexx was forced to cease operations in 2014.

Hudson’s Bay Co.(TSX:HBC) has struggled mightily, as it has reported successive disappointing earnings. Internal debate has raged within Hudson’s Bay over whether it should commit to monetizing its real estate holdings rather than fighting a losing battle in retail. This is somewhat of a double-edged sword for Hudson’s Bay, as its brick-and-mortar footprint has always been a drag on operating costs.

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Walk into a Sears these days, and you'll see an icon of American retailing collapsing before your eyes. In May, the retailer filed a lawsuit against a tool supplier that it believes is "trying to take advantage of negative rumors" to get out of a contract.

Canada major appliances protection agreement business; and b) certain internet protocol addresses, in each case pursuant to an asset purchase agreement (the "PRS APA") dated December 19, 2017 between Sears Canada , Buyers Group of Mississauga Inc . (the "PRS Purchaser"), as buyer

In a late October article, I’d discussed the sharp rise of e-commerce retail sales in Canada. E-commerce retail sales climbed 41% year over year, according to an August 2017 report from Statistics Canada. Many companies now face an uphill battle to modernize e-commerce platforms, while simultaneously tackling declining profitability when it pertains to the traditional retail model.

Canada Goose Holdings Inc.(TSX:GOOS)(NYSE:GOOS) has put a huge focus on its e-commerce platform and has a small footprint in the form of several flagship stores. Shares of Canada Goose have increased 30.9% month over month as of close on November 22.

Sears Canada shows the ugly side of turnaround efforts

In a recent article, I’d discussed the departure of Hudson’s Bay CEO Jerry Storch and speculated that this likely telegraphed a capitulation to an activist shareholder who had been calling for the company to take advantage of its real estate holdings. In an early October meeting, Storch said that closing stores could begin “a process of slow dissolution” and added that “once the spiral starts, it can’t be stopped.”

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“ Sears retirees have been raising the alarm about the financial collapse of Sears Canada with the company and the Ontario © 2017 Global News, a division of Corus Entertainment Inc . Why some doctors want people to take less medication. 62892. Air Canada boots mom, son over seat choice.

But for Mr. Stranzl, always the optimist, the setback was simply another lesson in his journey to reinvent Sears , particularly its e-commerce systems, and " take it to the next level." 'Massive amounts of neglect'. So who killed Sears Canada ? The dust hasn't yet settled on its tragic collapse , but the

Billionaire hedge fund manager Eddie Lampert has served at Sears Holdings Corp. for over a decade as chairman and was appointed as CEO of Sears Canada in January 2013. Lampert spent billions in share buybacks, while receiving criticism for failing to invest in retail operations. In spite of its plummeting retail sales, Sears reported a profit of $244 million in its last quarterly report before declaring bankruptcy.

Sears Holdings launched a spin-off REIT called Seritage Growth Properties in 2015. Seritage is able to develop properties to drive toward monetization, while Sears benefits from lower rent on said properties.

Investor takeaway

The rise of e-commerce should drive investors to retailers like Canada Goose, and even Aritzia Inc.(TSX:ATZ), over clothing companies with large brick-and-mortar footprints.

Investors can draw clear parallels between the crisis that faced Sears Canada and the ongoing developments at Hudson’s Bay. If history is any indication, the continued push toward real estate does not bode well for the future of its retail operations.

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Collapse : How Societies Choose to Fail or Succeed (titled Collapse : How Societies Choose to Fail or Survive for the British edition) is a 2005 book by academic and popular science author Jared Diamond

Sears Canada Inc . has decided to shut its doors and is seeking approval to liquidate its roughly 130 remaining store, leaving another 12,000 employees across the country without a job. (Andrew Vaughan / THE CANADIAN PRESS).

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How ‘sunny ways’ got soiled in the Ottawa swamp Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not necessarily represent the views of MSN.ca or Microsoft.Here is a little tourism tip for the holiday season: Even with the chillier weather, Parliament Hill will be a much more pleasant place to visit over the next few weeks than it was for Canada’s 150th birthday party in July.

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