Time is running out for struggling department store chain Sears Canada to improve its financial results and the chances of survival are slim, says one retail analyst.
Keith Howlett of Desjardins published a report Friday saying it’s “now or never” for the money-losing company to make headway on a turnaround that has dragged on for several years with little progress.
“The next seven quarters are ‘make it or break it’ for Sears Canada,” he wrote. “Our current view is that an operating turnaround is improbable.”
Howlett’s prediction suggests the fate of the company will be determined some time around the 2016 holiday shopping season.
The company declined to comment on the analyst report.
The stark outlook comes after Sears Canada made dramatic reductions to its operations, laying off 2,200 employees last year — with the brunt of the cuts at outsourcing call centres — while thousands more were eliminated in 2013.
Widespread cost-cutting was rolled out as Sears dealt with the arrival of Target Canada as a new competitor. The retailer also scaled back its operations, selling leases on numerous properties and closing some stores.
Howlett said Sears Canada still has the financial resources to operate but signs point to further trouble ahead.
He has a sell rating on the stock and maintains a target price of $8.50 a share.
Howlett noted that even when fewer direct competitors were in the marketplace, Sears wasn’t able to improve its sales in any notable way. In late 2012, Zellers closed about 180 stores while they were being converted into Target Canada.
