Sears Canada to acquire buying group Cantrex
By Michael J. Knell -- Furniture Today, January 9, 2005
Toronto — Major furniture merchant Sears Canada is set to acquire home furnishings buying group Cantrex from a Canadian subsidiary of General Electric Capital Corp. for an undisclosed sum.
The transaction, which is subject to regulatory approval, is expected to close in April.
The deal could make Sears Canada this country's No. 1 retailer of furniture and bedding, a position it lost when The Brick acquired United Furniture Warehouse in early 2004.
Cantrex is Canada's second-largest buying group and represents independent merchants in such categories as furniture, appliances, electronics, floor coverings and photography. Its members operate some 1,000 stores nationwide; about 600 sell furniture and bedding.
Among its furniture banners are Furniture Plus, a full-line retailer in English Canada, and Decocentre/Tendances, its Quebec counterpart. Cantrex also operates Accent in Quebec and Mattress World, a sleep specialist in English Canada. Included in the deal is 27-unit Corbeil Electrique, its successful specialty appliance banner in Quebec and the Ottawa Valley in Ontario.
In 2003, Sears Canada has estimated furniture and bedding sales of C$620 million, while Cantrex members had sales of about C$317 million.
"This is a strategic acquisition that will provide Sears Canada with an opportunity to further develop its merchandising, buying and logistics services in the furniture and appliances sectors," said Sears Canada President and CEO Brent Hollister.
He stressed the deal wouldn't affect Sears' off-mall businesses such as its dealer stores, floor covering centers, catalog agents and Sears Home stores.
Leading the Sears Canada team as project manager during the early stages of the proposed acquisition is Dan Weare, formerly national business manager/furniture for the department store chain and a respected figure in the furniture industry.
Weare said Sears Canada's initial plan is to retain Cantrex as a freestanding subsidiary, while Corbeil will remain a subsidiary of the Montreal-based fee-for-service buying group. "Right now, we're looking for the synergies and finding out about their business," he said.
In addition to expanding opportunities for the Sears card, the largest credit card operation in Canada, Weare believes the acquisition would open new markets for the multi-channel retailer, even though Sears says it already has an outlet within a 10-minute drive of 93% of all Canadians. "They have stores in secondary and tertiary markets that we don't have," he said.
Observers have noted that Cantrex, as a retail-driven marketing group, didn't fit into GE Capital's business model. A GE spokeswoman said GE intends to continue to provide inventory financing to Cantrex members.
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