Sears Canada (NASDAQ: SRSC) has continued to underperform, with news of multiple store closings and layoffs coming out alongside a bankruptcy announcement. Though the company expects to continue operations and plans on using bankruptcy as a way to protect itself after more consistent loses in sales, shares have plummeted 22%.
The company released information stating that it will shutter 20 full line locations, in addition to 14 “Sears Hometown” locations, as well as 15 “Sears Home” and 10 “Sears Outlet” stores, and let go of 2,900 employees. This is being justified as a pivot in the industry and follows a year of changes to Sears Canada aimed at restoring the standing of the American Sears spinoff, shares of which have also fallen as it controls a major stake in the Canadian offshoot.
Though it reported even lower EBITDA, revenue and a larger net loss over last year, Sears Canada has acquired $109 million in order to continue restricting the company, and has apparently seen rewards of this approach with same-store sales increasing by 2.9% in Q1-17 compared to Q1-16. The company has acknowledged the doubt around its ability to continue as a going concern, since losses have plagued the company since 2014, however the management is hoping to rally around a new business model and use the funds freed up by the layoffs and closures in order to continue its pivot. Even still, results are expected to come slow, as the company does not expect to meet obligation in the next 12 months.