Eaton's fading into history
By Michael J. Knell -- Furniture Today, February 25, 2002
TORONTO — After dominating the Canadian retail landscape for most of its 133 years, the department store founded by Timothy Eaton will cease to exist when Sears Canada converts the seven remaining stores into full-line Sears units.
The conversions, set to be completed by the end of July, may prove a boon to Sears Canada's furniture and bedding business.
The high-end furniture floors in the Eaton's stores in the Toronto Eaton Center and in the Pacific Center in Vancouver, British Columbia, will be converted into Whole Home Furniture & Appliance stores, a store-within-a-store format. This format is used at three other Sears full-line stores, two in Edmonton, Alberta, and the other in Burnaby, British Columbia.
And when the Eaton's stores in Ottawa; Calgary, Alberta; and Victoria, British Columbia, are converted, each will have a bedding department, something they didn't have under the Eaton's banner.
The fate of two Eaton's stores remains undecided. The units in Toronto's Yorkdale Shopping Center and at the Polo Park Center in Winnipeg, Manitoba, are next to existing Sears stores.
Mark Cohen, chairman and chief executive officer of Sears Canada, said the conversions would allow Canada's largest single retailer to better leverage its buying and advertising efforts and take more powerful advantage of the Sears brand.
He said the Eaton's banner lacked "critical mass." Sears doesn't break out Eaton's numbers.
The conversions will involve a one-time pretax charge of about C$180 million, but eventually should yield improvements in annual earnings of some C$40 million, Cohen said.
Sears Canada now projects full-year earnings in excess of C$1 per share before one-time charges, up from previous guidance of 86 Canadian cents per share, and compared with 59 cents last year.
About 600 positions will be affected, although most associates are expected to be employed at the converted stores.
Sears acquired 19 Eaton's stores in 1999. The 12 stores converted to the Sears format at that time are unaffected. "These stores are profitable and are performing at or above expectations," Cohen said.
There will be no wide-scale liquidations and all stores will remain open during the conversions.
In addition to the seven Eaton's stores, Sears Canada operates 118 mostly mall-based department stores, 37 freestanding furniture and appliances stores, 20 dealer-owned furniture stores and 38 dealer-owned floor covering stores.
Founded in 1869, Eaton's became a Canadian cultural icon, and throughout most of the 20th century was this country's dominant retailer and arbiter of fashion and style.
"We are aware of the historical significance of the Eaton's banner but must act in the best interests of our shareholders, associates and customers in ensuring long-term growth and profitability of the company," Cohen said.
