A couple of U.S. veteran retail executives are trying to shake up the Canadian scene with the launch of The Cut.
Taking a page from Macy’s and its recent addition of the Backstage off-price concept inside of several of its largest stores, Mark Shulman and Heywood Wilansky are working with Sears Canada chief executive officer Brandon Stranzl to spearhead a similar move within Sears Canada.
The first of The Cut shops had a soft opening last week with a grand opening scheduled for April 1, Shulman said. The new division will eventually be rolled out to all 94 Sears Canada stores as well as online.
“We’re experiencing the same thing in Canada as we are in the U.S.,” said Shulman, whose background includes Filene’s Basement, Brooks Brothers, Annie Sez and several other American chains. “The stores are just too big.”
So with the blessing of Stranzl, who is overseeing the new initiative, and working with Wilansky, the former chief executive officer of DSW, Bon-Ton, Foley’s and others, who is senior advisor for merchandising, marketing and retail for the Toronto-based retailer, they created The Cut.
Sears Canada is carving out about 20,000 square feet for the off-price division, which will be evenly split between apparel and home.
Shulman said Sears Canada has added buyers and a divisional in New York as well as in Montreal and Toronto to “take advantage” of the off-price goods in the market. The planning, marketing and back-office operations remain in Toronto.
The Cut will offer an assortment of well-known brands for men and women in apparel, accessories, intimate apparel and shoes. Among the labels that will be offered in apparel are Jessica Simpson, Tahara, Juicy Couture, Report Collection and others, he said. Prices are advertised as 30 to 60 percent below regular retail.
Shulman said the time is right for Sears Canada to make a play for the off-price market in Canada. Saks Off 5th and Nordstrom Rack are both planning to expand or enter the market, joining Winners and Marshalls, both divisions of The TJX Cos. Inc. And off-price has been one of the bright spots in the struggling American retail landscape.
Like many U.S. retail stores, Sears Canada is struggling under the weight of declining sales and has been closing stores. In the third quarter of fiscal 2016, the company reported a loss of $77.7 million Canadian, or $58 million at average exchange, in adjusted earnings before interest, taxes, depreciation and amortization on a comparable-store sales decline of 7.1 percent. Total sales fell 21.1 percent to $625.2 million Canadian dollars, or $468 million, in the period.
Originally a joint venture between Sears in the U.S. and the Simpsons retail chain in Canada, the department store is now a separate publicly traded company. In 2014, Sears Holding Corp. sold most of its stake in the chain to ESL Investments Inc., the investing arm of its chairman Edward Lambert, for $340 million.