First, Sears Canada announced today the sale of five store leases to Cadillac Fairview Corporation Limited for total consideration of $400 million Canadian. The transaction is expected to close in the next ten business days. With respect to this transaction, Edward S. Lampert, Sears Holdings' Chairman and Chief Executive Officer, said "We are very supportive of Sears Canada's actions to create value.”
“It is clear that the Canadian market is becoming more competitive, but also more lucrative for those who can compete effectively. We believe that Sears Canada is well positioned to create value for its shareholders through a combination of operating performance improvements, business portfolio actions and leveraging its real estate footprint working with its mall and other partners."
Holdings will work with the board and management of Sears Canada with a goal of increasing the value of our 51 percent interest and realizing significant cash proceeds to support our transformation and to create value for our shareholders. "The current market value of our 51 percent interest in Sears Canada is over $675 million. We believe that the maximization of value of our stake in Sears Canada will improve our financial position and our ability to execute on our strategic transformation," said Mr. Lampert.
Second, with regard to our domestic operations, we will continue to evaluate our stores in the context of our integrated retail strategy. As we have done over the past several years, we will review each location, including leased locations that are set to expire, and decide whether or not to renew such leases.
We expect to improve our financial performance by removing unprofitable locations, and redeploying the capital tied up in those locations, while sharpening our focus around existing Sears and Kmart stores that have higher levels of profitability.
We believe this will be accomplished without incurring significant closed store lease liabilities due to the nature of our leases and the approach we are taking to refine our portfolio to position us as a more profitable company that leverages our stores as part of our overarching Integrated Retail vision.
Third, we seek to accelerate our transformation by becoming a more focused company that is easier to understand and to manage not just from the standpoint of our store portfolio but also from the standpoint of our portfolio of businesses. We are evaluating separating both our Lands' End business and Sears Auto Center ("SAC") business.
We believe separating the management of these two businesses from Sears Holdings would allow them to pursue their own strategic opportunities, optimize their capital structures, attract talent, and allocate capital in a more focused manner while bringing our business unit structure to life outside of the Sears Holdings portfolio.
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