Here's the article the PAVED blog alludes to:
Retail: Trading Sears For La Maison Simons?
by Zena Olijnyk
Rumour has it, Quebec retailer La Maison Simons could move into Sears headquarters at Toronto's Eaton Centre.
2005-09-26
For fashionistas, a trip to downtown Montreal isn't complete without a spree at La Maison Simons on St. Catherine Street. Whether to check out end-of-season deals on cool designer threads--a salmon pink Juicy Couture linen jacket marked down to $60 from $250, for example--or to pick up the latest in hip, moderately priced fashions, shoppers can bet the store will be packed.
Out-of-province fans often wonder if the "junior" department store chain, headquartered in Quebec City, will ever expand outside la belle province. The answer, says president Peter Simons, a member of the fifth generation to run the family business since its founding in 1840, is a definite maybe. "You never say never, " says Simons, who admits he's had many offers to venture beyond Quebec. And opportunity could soon open up. Industry watchers speculate whether the Sears Canada location at the downtown Toronto Eaton Centre might become available. The troubled retailer plans to reduce costs by cutting staff and shedding unproductive retail space.
Right now, however, Simons has no specific expansion plans--he's concentrating on internal growth at the chain's seven stores. One reason for looking inward: size. "A Simons store at 80,000 square feet is almost a development," says Simons. "It has to go with a development. That's a little tougher for landlords; there aren't many malls being developed now." Besides, Simons is not a believer in growth for growth's sake; he's more concerned with whether it will deliver above-average return on capital. Simons points to what happened when Quebec department store retailer Les Ailes de la Mode tried to reach beyond its grasp. In August, the Fairweather Group in Toronto bought Les Ailes for $6.2 million; it had been unsuccessful in restructuring after seeking protection from creditors in December 2003.
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Sears goes shopping -- for the rest of Sears Canada
December 6, 2005
BY SANDRA GUY Business Reporter
Sears' largest shareholder, hedge-fund guru Edward S. Lampert, left experts scratching their heads again Monday after Sears announced it had agreed to buy Sears Canada and operate it as a subsidiary.
Sears Holdings already owns 53.8 percent of Sears Canada's shares, but most analysts had predicted that Sears would sell its stake in its Canadian sibling rather than acquire it.
Yet the takeover would repeat a common Lampert tactic: Sears shareholders gain a dividend payment, while the retailer pumps out a sharp improvement in earnings and sheds massive amounts of jobs and costs.
Sears offered $718.5 million for the Canadian company's shares, an 8.7 percent premium over Friday's closing stock price. A major Canadian shareholder, Natcan Investment Management, has agreed to support the deal by tendering its stake of more than 9 percent of Sears Canada's outstanding shares. The deal is expected to close in the first three months of 2006.
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The deal calls for Sears' shareholders -- Lampert is the biggest single shareholder -- to gain a one-time dividend payment from the sale of Sears Canada's credit-card business to JPMorgan Chase & Co.
In many ways, the Canadian deal aims to achieve the same kinds of cost cuts and cost savings as Lampert envisioned when he engineered Kmart's $12.3 billion buy of Sears Roebuck on March 24.
Sears can wield its larger size to squeeze cost savings from suppliers in Canada, and to use the two retailers' North American distribution network more efficiently.
Lampert will take charge, getting rid of many of Sears Canada's executives and their administrative functions.
And Sears Canada will no longer report its finances in the detailed way it did as a standalone company.
The cost-cutting would make Sears a more viable rival in Canada against competitors such as Wal-Mart, Lowe's and Home Depot, which are growing in Canada but aren't as deeply rooted there as they are in the United States.
"If Sears centralizes lots of Sears Canada's functions, it would save a fortune," said Howard Davidowitz, chairman of Davidowitz & Associates, a retail-consulting and investment-banking firm based in New York.
Sears could also save money by putting the same merchandise in its Canadian stores as it does in the United States, and vice versa, opening the way for Martha Stewart Living to take a bigger presence in Sears stores here. Sears Canada has sold Stewart's home furnishings for more than two years.
Sears took a similar step in the United States Monday by naming executives to oversee merchandising for both Sears and Kmart. The executives, Peter Whitsett and Dan Laughlin, will report directly to Lampert.
Analysts played a guessing game Monday about Lampert's other interests in Sears Canada: Lampert may want to fend off a rival suitor for Sears Canada; sell Sears Canada's real estate; set up Sears Canada for a merger with fellow Canadian retailer Hudson's Bay, or simply realize a tax advantage.
Lampert long ago declared he was less interested in sales results than in realizing profits.
Indeed, sales at Sears stores open at least a year -- a key measure of retailing strength -- are expected to have declined when Sears reports earnings today. Sears Canada reported in October that its same-store sales in the third quarter dropped 8.2 percent from a year earlier.
