Sears Canada Inc., a unit of leading U.S. broad line retailer,
Sears Holdings Corporation
), has agreed to offload its 40% ownership of the leasehold
interest in Medicine Hat Mall in Alberta. The company will
transfer its interest in the Mall to its joint venture partner
Sleeping Bay Building Corp. Sears has finalized the deal for a
sum of $43 million (pre-tax).
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However, the company assured that it will continue to operate its
store in the mall and the sale will not impact the employees or
its business. The company's store has been operational in the
Medicine Hat Mall since 1978. The store was initially set up a
different location in 1960.
Additionally, in a separate release, Sears Canada announced a
special dividend of $1.00 per share or $102 million, payable on
December 31, 2012 to shareholders with record on December 24,
Sears Holdings has long been grappling with soft top-line
performances and even weaker bottom-line results. However, the
measures undertaken to revive the operating performance are
showing some signs of improvement as is evident from the
company's EBITDA growth and narrower loss per share reported in
the most recent quarter.
Sears Canada is a 95%-owned subsidiary of Sears Holdings and
operates as a multi-channel retailer with about 195 corporate
stores, 269 hometown dealer stores, 8 home services showrooms,
over 1,500 catalogue and online merchandise pick-up locations,
102 Sears Travel offices and a nationwide home maintenance,
repair, and installation network. The company also publishes
Canada's most extensive general merchandise catalogue and offers
shopping online at www.sears.ca.
In an effort to enhance its liquidity position, Sears Holdings
completed the partial spin-off of 45% of Sears Canada's common
shares to the company's shareholders on November 13, 2012. The
company also successfully completed the separation of Sears
Hometown and Outlet Stores Inc. on October 11, 2012, raising
$446.5 million in gross proceeds.
Sears Holdings continues to take the actions necessary to create
value and retain the flexibility to invest in its strategic
priorities. Further, the company remains focused on cost
containment, inventory management, and merchandise initiatives to
improve margins through leveraging buying and occupancy expenses.
Sears Holdings, which competes head-to-head with
Wal-Mart Stores Inc.
), currently has a Zacks #4 Rank, implying a short-term Sell
rating. However, we retain our long-term Neutral recommendation
on the stock.