Sears Canada Rings Up More Job Cuts
Unfortunately for Sears (NASDAQ:SHLD) employees, the job cuts just keep on coming. The latest news is that the retailer is shaving more than 1,600 jobs from its workforce in Canada, accounting for 7 percent of its total manpower.
Reuters reports that the Chicago-based retailer announced Wednesday that its Sears Canada division plans to orchestrate major job cuts in the near future on account of the company outsourcing some of its business. Sears Canada signed an agreement with IBM Corp. (NYSE:IBM) to take over work currently handled internally, and the new structure will affect 1,345 jobs at three call centers in the country over the next nine months. An additional 238 jobs will also immediately be cut as Sears Canada reorganizes its logistics unit.
As a whole, Sears has been struggling to revive sales since 2005, when hedge fund manager Edward Lampert merged Sears and discount chain Kmart. However, the company’s prospects have taken a turn for the worse in recent months, as the company continues to issue disheartening forecasts and reports. Sears reported this week that sales dropped 7.4 percent at established stores during the fourth quarter. Sears shares fell nearly 14 percent after its latest report, and the announcement Wednesday may not prove to be much help.
Sears initially thought Canada could be its saving grace, and it currently operates around 181 corporate stores in the country. However, the retailer has not realized success there as it initially expected, and it is now being forced to make major layoffs, as well as orchestrate store closures.
According to Reuters, Sears expects to cut its number of department stores to 109 by the beginning of April. It has already laid off nearly 800 workers, including 712 jobs in its services business and 79 at its head office. Sears Canada spokesman Vincent Power said to the news service that the retailer will still employ 20,000 associates once the final cuts are made, but that is a number significantly down from what it once was.
Along with job cuts, Sears Canada also has been scrapping assets as it works to come up with fast cash to front its turnaround. Lampert has faced significant criticism for his store-closing agenda, especially since he has now shut down 300 U.S. stores since 2010, but the CEO continues to maintain his position that Sears needs the money more than it needs the property.