Sears Canada's new CEO says it is carving out value niche
Doug Campbell says retailer on track to lower costs, improve same-store sales
Sears Canada CEO Doug Campbell says he believes there’s a niche for the troubled retailer in the Canadian market, despite the drubbing it’s taken from discount retailers.
Campbell, a former U.S. Marine Corps officer with an MBA who grew up near Washington, D.C., joined Sears Canada as vice-president of home and hardware lines in March 2011 and became CEO in September of this year.
He is leading a company that has been shedding jobs for two years and is in the midst of a major restructuring that involved closing five of its stores in a major centres and selling off its interest in eight regional malls where it operates.
Discount chains such as Target and Wal-Mart are scooping up department store business, while stores such as The Bay move to the higher end.
History in Canada
But Campbell said Sears Canada has a long history in this country because of its association with Simpson’s. It also has a reputation as a value retailer at a time when other chains are abandoning the middle-class, he said.
“I think there’s a sweet and unique space for Sears Canada. Lately there’s a fascination, a love affair with luxury retail with a lot of people moving to the right and moving up to luxury retail,” Campbell told CBC’s Lang & O’Leary Exchange.
“Our history, our roots are really with middle-income working Canadian families and they aren’t just concerned about price, they really care about quality for dollar spent.”
Campbell said Sears Canada has reduced costs by $80 million this year to date and seen same-store sales rise by 1.2 per cent.
The decision to close stores at the Toronto Eaton Centre, Sherway Gardens in Toronto and London-Masonville Place in London, Ont., by February, and the Markville Shopping Centre in Markham, Ont., and Richmond Centre in Richmond, B.C. was a surprising one, interpreted as a signal the chain was in trouble.
Selling 5 stores
Some analysts speculated that the value of the real estate was more than store income, but Campbell dismissed that criticism.
“In our case, the operating value of all those stores was past [the real estate value], but the challenge comes when the offer presented is 10, 15, 20 times what the operating income was in that store. Then you have to make what the right decision is overall for the business and in this case, it was selling off some of those assets,” he said.
“That doesn’t mean anything about the overall health of Sears Canada.”
He said Sears Canada continues to invest capital in new stores and revamping older properties to serve its traditional market, which is suburban and rural shoppers.