Court OKs Sears Canada liquidation, all stores to close

An Ontario Superior Court judge has approved a request by Sears Canada to liquidate all of its remaining stores.

Most of the 74 Sears department stores are in areas with populations under 400,000

Sears currently employs more than 12,000 people in Canada. But all of the stores will be closing. (Jeannie Lee/CBC)

An Ontario Superior Court judge has approved a request by Sears Canada to liquidate all of its remaining stores.

The retailer had applied for permission to liquidate the stores on Tuesday, and permission was granted at a court hearing on Friday.

The retailer, which has been in business in Canada for more than six decades, has been trying to restructure itself under court supervision since earlier this summer.

Company chairman Brandon Stranzl had been trying to put together a bid to keep the company going while it restructured itself, but those efforts did not materialize into a plan that would have allowed the chain to continue, in the judge's estimation.

"I am satisfied that there is no other viable alternative," Justice Glenn Hainey said.

More than 12,000 people still work at the chain's roughly 130 remaining stores across Canada, which includes 74 Sears stores, eight Sears Home stores, and 49 Sears Hometown stores, which are independently owned and operated but affiliated with the company. 

Workers told CBC News outside the courthouse on Friday that the news was disheartening. "I knew it was going to happen," said Zobeida Maharaj, who had worked at the retailer for 28 years up until she was made redundant in June. "It is not a shock to many Sears employees."

Indeed, few people were surprised by the news because it was such a long time in coming. Even before entering restructuring in June, Sears Canada had seen dwindling sales for several years, as the chain was waylaid by growing debt loads and shifting consumer tastes toward online sales, where the chain got left behind.

"This is a company that had all the elements for success in e-commerce, and squandered them all," said Joanne  McNeish, a marketing professor at the Ted Rogers School of Management at Ryerson University in Toronto. 

"I don't think it's a complete surprise," McNeish said. "We all kept expecting ... the management team would step up and make some adjustments given the wonderful assets that this company had."

Marketing professor Joanne McNeish says Sears had every opportunity to succeed in the online world, but squandered them all. (Ryerson University)

While other retailers had reinvested in their bricks-and-mortar operations and revamped their e-commerce offerings, Sears Canada instead sold off assets in order to pay off creditors. And the chain has shuffled through a half-dozen CEOs since the recession of 2009.

"That kind of churn at the management levels causes people to cease to take action," McNeish said. "After the first one or two people start saying 'well they're going to leave soon anyway,'" she said.

Maharaj said that new executives never truly understood what the company was all about. "Our coworkers that are still in stores are very very upset and angry," she said, even as they will now be asked to work during a liquidation process knowing they will be out of a job as soon as it ends.

"Will some flee? Some might," she said. "But I know dedicated ones will stay right till the end. I did."

David Soberman, a marketing professor at the Rotman School of Management at the University of Toronto, agrees that the company's management never fully figured out how to right the ship, and the recent attempts to change were too little, and too late.

"Perhaps only in the last two or three years did they really make some efforts to renovate some of their major stores," he said in an interview. "This seemed to be having a positive effect but it's a bit like closing the barn door after the horse already got away."

With files from the CBC's Jacqueline Hansen


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