“Sears Canada” Suffers Setback As Chief Executive Quits In The Middle Of Company Revamp
Canada’s ailing retail major, Sears, suffered a jolt as its Chief Executive Ronald Boire resigned mid-way, when the Canadian retailer has been working on an intense turnaround exercise, after sustaining losses for the last six years. Boire will now take up a job in the U.S. bookstore chain Barnes & Noble Inc.
The struggling retailer posted a net loss of CA$59.1-million in the first quarter. Its hope of capturing the market share of its one time competitor Target Canada after it exited the Canadian retail market seems to be gone dud. For Sears Canada, this is the second consecutive loss of a CEO since September 2014. The company has been trying to beat the reverses of six straight years in which sales had been nosediving. “I think that this is an unfortunate event for Sears Canada as Ron Boire was building some positive momentum," said Bruce Winder, a retail consultant.
Hamstrung CEOs
Sears Canada in a statement said, Boire would leave the company by end of the summer and Chairman Brandon Stranzl would officiate as executive chairman to carry out the revamp strategy. Retail consultant Mark Satov believes Sears Canada’s CEOs were all qualified retailers but they were constrained by hedge fund manager Eddie Lampert, who is controlling Sears and its parent company Sears Holdings. The analyst reasoned that “may be as a hedge fund manager he’s actually taken a lot of cash out of this thing.” But he poses the question that is very relevant-- who are you going to attract now as everybody keeps leaving?
After years of asset sales, special dividends and CEO departures, Satov says the department store is still failing and the only option now is to sell what is left. Sears Canada still has assets such as travel business, eye care business, Corbeil Appliance chain and a robust e-commerce platform.
Question of Survival
The departing CEO Boire will take charge as CEO of Barnes & Noble's retail division in September and replace Michael Huseby. The American company is planning to spin off the college books business division. In his previous stints, Boire was chief merchandising officer of Sears and K-Mart at Sears Holdings Corp. He also worked as merchandise manager at electronics retailer Best Buy before joining Sears.
Notwithstanding the revamp, Sears Canada’s chances to improve financial results and assert its survival are slim, says an analyst. Keith Howlett of Desjardins, in a report said it is “now or never” for the loss facing company. “The next seven quarters are make it or break it for Sears Canada,” the analyst wrote. Howlett’s prediction is that the 2016 holiday shopping season will be crucial in deciding whether restructuring of Sears will work or not.
(For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)
