Sears Canada may have plenty to thank Target for. After years of waning appeal with shoppers, some are cautiously returning to the iconic department store, the company says.
The ailing retailer said Wednesday sales at existing locations are rebounding at its “core” network of outlets. Same store sales – a key retail metric that shows the ongoing pace of purchases – increased 4 per cent at existing “core” locations in June, the company said.
That’s the first time Sears has reported positive same-store sales in years, experts say. Moreover, “this trend has accelerated into August,” Sears Canada said in a statement.
Sears Canada said its core retail store network consists of 95 full-line stores and 45 Sears Canada Home stores, and excludes Outlet and Hometown stores.
MORE: Sears Canada nearing make or break moment, analyst says
Sears Canada says it has 177 Hometown stores, over 1,200 catalogue and online merchandise pick-up locations, 84 Sears Travel offices and a nationwide repair and service network in addition to its corporate stores.
Now or never
Experts aren’t sure yet whether Sears can pull out of its long slide. Keith Howlett of Desjardins Securities published a report in late June saying it’s “now or never” for the money-losing company to make headway on a turnaround that has dragged on for several years with little progress.
Howlett’s prediction suggests the fate of the company will be determined some time around the 2016 holiday shopping season.
“The next seven quarters are ‘make it or break it’ for Sears Canada,” he wrote. “Our current view is that an operating turnaround is improbable.”
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Across the entire retail chain, Sears Canada saw revenue decline 9.1 per cent from the comparable period last year, to $768.8 million. The sale of some properties helped the retailer produce a small profit.
Same-store sales were also lower by 3.9 per cent across the full network of stores, but the retailer nevertheless called its performance in second quarter a “turning point.”
Target exit
The renewed sales momentum — at core locations, not the entire chain — comes as Sears and others, such as Walmart and Loblaw, benefit from the exit of Target Canada, which closed 133 locations in March and April.
Sears has also dramatically cut costs and reduced headcount in recent years, while vacating high-profile anchor locations in marquee shopping centres in Toronto, Vancouver and Calgary.
MORE: Complete coverage of Target Canada’s historic collapse
Sears Canada said it may be able to operate more profitably within smaller individual store sizes. It also said it will open a wave of branded shops within its stores by November under agreements with 12 vendors, including Haggar and Dockers.
Leader search
The company said it’s continuing to search for a new chief executive to replace Ronald Boire, who announced in July that he was leaving to become president and CEO of the Barnes & Noble chain of bookstores in the United States, effective Sept. 8.
Boire became CEO of Sears Canada last fall. He followed Douglas Campbell, who left in September 2014, and Calvin McDonald, who quit suddenly in September 2013 in the midst of a multiyear turnaround plan.
WATCH: Sears Canada loses CEO Ron Boire (Fri., July 3, 2015)
With files from The Canadian Press
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