Shares of Sears Canada Inc. fell as much as 30 percent Wednesday on reports that the beleaguered retailer was preparing a bankruptcy filing.
At the close of the market in Toronto, the stock was down 22.5 percent to 0.62 Canadian dollars, giving it a market cap of 63.2 million Canadian dollars.
That’s a pittance for the Toronto-based retailer, which was separated from Sears Holdings Corp. in 2014, and last year logged sales of 3 billion Canadian dollars from more than 200 stores.
Sears Canada has tried to move the needle, for instance opening off-price operations in its 94 department stores, but times have been tough. First-quarter losses widening to 144.4 million Canadian dollars as revenues fell 15.2 percent to 505.5 million Canadian dollars.
This month, the company raised doubts about its ability to continue as a going concern, saying it didn’t have enough money to keep operating through the next year and started a process to address its “liquidity situation,” which could ultimately lead to a financial restructuring or sale of the business.
But in a market where few big buyers are willing to bet on department stores that are struggling, there were always great doubts about a sale. (Nordstrom Inc., which is seen as among the strongest department store retailers today, would be an exception and the Nordstrom family has been weighing a buyout of public shareholders).
Sears Canada was originally a venture between the U.S. Sears and the Simpsons retail chain in Canada. The U.S. retailer sold most of its stake in 2014 to ESL Investments Inc., which is led by Sears Holdings’ chairman and chief executive officer Edward S. Lambert, for $340 million.
Lampert’s run into retail trouble in the U.S. as well, where Sears Holdings has repeatedly required cash infusions and has also warned that it might not be able to carry on as a going concern.
The trouble north of the border also appeared to weigh on investors in Sears Holdings, which saw its stock fall 5.4 percent to $6.43 on Wall Street.
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