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Canada: Sears Canada moves to calm customers despite warning

Canada: Sears Canada moves to calm customers despite warning

Junio 20, 2017

Autor/Fuente: By FRANCINE KOPUN - The Star 👤Periodista: María Alejandra Lopez 🕔20.Jun 2017

 

Sears Canada says it’s business as usual for shoppers, even as the company, which announced a first-quarter loss of $144.4-million on Tuesday, examines options that include a possible sale or restructuring.

“We are trying to get more customers to shop at Sears, the last thing we’d want to do is give them a disappointing experience or unfulfilled commitments,” said company spokesman Vince Power, in an e-mailed response to questions from the Star about whether customers can expect Sears to continue honouring deliveries and warranties.

“We are improving all customer touchpoints, and any customer who makes a purchase from Sears now or anytime in the future will get their products delivered or money refunded as per usual practice.”

The company has posted recurring operating losses and negative cash flows from operating activities in the last five fiscal years, with net losses beginning in 2014.

In the first quarter reported on Tuesday, revenue at Sears Canada was down $90 million or 15 per cent, to $505.5 million, and the company pointed to conditions raising “significant doubt as to the company’s ability to continue as a going concern.”

Retailers in deep financial distress can seek protection from creditors under the Companies’ Creditors Arrangement Act (CCAA) while they restructure. Filing allows them to continue operating as they take actions to try to return to profitability, which can include selling assets, closing or selling unprofitable stores, laying off staff, typically paying suppliers and other creditors a percentage of what they are owed.

Sometimes the result is a complete closure – as in the case of Target, which liquidated its inventory and shuttered 133 stores less than two years after expanding into Canada. In other cases, it can leave the company leaner and more competitive, albeit with a smaller number of stores.

Even if Sears does file, it would likely want to continue honouring the commitments it has made to consumers to preserve its goodwill and brand, according to Robert J. Drake, a member of the restructuring and insolvency group at Goldman Sloan Nash and aber LLP.

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