'Sears is doomed': Why former execs doubt troubled retailer can survive
Former CEO predicts company is headed for complete liquidation
Check out Sears Canada on Facebook and all appears well as young, cheerful models promote down vests for fall and skinny jeans.
But behind the hip outfits hides a troubled retailer whose days may be numbered.
"Sears is doomed," says Mark Cohen, who served as Sears Canada's CEO from 2001 to 2004.
"The company is toast. It's gone. It's not coming back."
For starters, Sears Canada is hemorrhaging money and could begin a total liquidation of the business this month if the only bid to buy the beleaguered retailer falls through.
A report from the court monitor overseeing the retailer's insolvency proceedings even outlines the most lucrative time for liquidation sales: "Before and during the lead up to the December holiday season."
The only hope now to keep the company alive is the bid led by Sears Canada's executive chairman, Brandon Stranzl. He pledges to keep Sears in operation and save thousands of jobs. The retailer currently employs about 11,500 people.
Stranzl's previous offers were rejected and Sears has until Oct. 13 to hammer out a deal with him.
But some retail experts predict even if Stranzl manages to buy Sears, the department store chain has been so beaten down, it will still fail.
"There are crumbs left," says Cohen, who is now director of retail studies at Columbia University's graduate business school. "This process of hollowing out Sears Canada has been going on for some time — for years. The company has basically sawed its legs off."
Selling off the best stuff
Parent company Sears, Roebuck and Co. set up shop in Canada in 1952 and won over customers with its mail-order catalogue and iconic department stores. But the retail landscape has changed and critics say Sears has failed to keep up.
In a desperate bid to reinvent itself, cash-strapped Sears announced in June it was closing 58 stores and laying off 3,100 staff as part of a court-supervised restructuring process.
On Wednesday, the court approved Sears' plan to sell off some of its most valuable possessions such as its subsidiary, Corbeil Appliances, plus 11 more stores including flagship department stores.
"They're selling the most profitable assets they have," says Armance Bartold, a former Toronto-based vice-president of planning for Sears. "What's Brandon [Stranzl] going to work from?"
Bartold worked at Sears from 2012 to 2015, but was recruited to return to the retailer in 2016 to help Stranzl rebrand the ailing department store. She was laid off when Sears became insolvent in June.
Bartold says some of the stores that are closing such as those at Oakville Place, Fairview Mall and Scarborough Town Centre in the Toronto region are popular locations that Stranzl invested time and money to modernize as part of Sears' reinvention. She questions how the company can survive without the properties.
"To get rid of the stores that they've been focusing on, that doesn't make any sense because that was part of [Stranzl's] crown jewels," she says. "Those stores had the traffic, those stores had the fixtures, those stores had everything in the best locations."
Bartold says another problem is that Sears Canada, which has been losing customers for years, has recently managed to alienate even more shoppers. That's because as part of the restructuring process, laid-off staff aren't receiving severance, and retiree pension payments may be reduced.
The plight of the employees has upset many Canadians, some of whom started calling for a Sears boycott on social media. Sears' Facebook site was flooded with angry comments until July when the retailer stopped allowing public posts.
"Through this whole process, they've lost a lot of customers," Bartold says.
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Given all that Sears has already lost, Cohen says, "under what circumstances could the company possibly be successful?"
He believes if Stranzl had the ability to save Sears from sinking, he would have done so before the retailer became insolvent.
At this point, Cohen predicts that if Stranzl's bid is approved, all he'll be able to do is delay the inevitable — total liquidation.
"This is a bad movie with a bad ending that never changes," he says.
A source close to the bid process, however, told CBC News that Stranzl has a comprehensive plan to save Sears that is backed by a major financial institution.
He claims approving Stranzl's bid is "the right decision to save jobs and save Sears Canada from liquidation."