At its height, Sears was the country’s biggest retailer. But that has not been true for more than two decades and now, the department store chain, struggling to execute on its latest turnaround, is looking to shrink again.
On Wednesday, Sears said that it planned to hire an investment bank to explore options for its 51 percent stake in Sears Canada — including a potential sale of the entire Canadian enterprise.
It would be the latest move by the company, hurt by years of declining sales, to shed noncore operations to focus on its ailing core businesses like Sears and Kmart. The retailer has said that its top priorities now include improving e-commerce sales and bolstering the Shop Your Way rewards program.
Under the latest move by Edward S. Lampert, the hedge fund mogul who controls the retailer and serves as chairman and chief executive, the company has sold off real estate and spun off businesses like Lands’ End to raise cash to cover three straight years of operating losses.
“They need liquidity,” said Gary Balter, a retail analyst at Credit Suisse.
The efforts have sometimes been met with mixed success. Though Sears reaped $500 million from the spinoff of Lands’ End, the clothier’s stock has fallen 14 percent since it began trading last month.
Other businesses could soon be on the auction block, too. Among them are the Sears Auto Center brand and its warranty business.
But the initiative has left many investors wondering whether the moves will be enough to reverse the company’s ailing fortunes. Shares in Sears fell nearly 6 percent on Wednesday, to $40.70, giving the company a market value of just $4.3 billion. The shares have fallen more than 67 percent since Mr. Lampert bought Sears and merged it with Kmart.
And with many of the better-performing businesses gone or soon to be out the door, analysts are skeptical that what remains can improve.
“He’s taking two steps back for one step forward,” Mr. Balter said of Mr. Lampert. “These are stopgap measures that don’t really solve the longer-term issues.”
Mary Ross Gilbert, an analyst at Imperial Capital, added: “It seems to me that when they talk about turning things around, I haven’t seen anything happen.”
The step to divest Sears Canada comes as little surprise. Mr. Lampert has already indicated that his company’s stake in the business was potentially up for sale.
Still, disposing of the stake would mean the end of Sears’ six-decades of operations in Canada, one that began when the company teamed up with Simpsons, a local merchandiser.
Sears Canada has performed better than its parent, reporting $446.5 million in net income last year. Still, its sales have fallen for six consecutive years, and it has lost ground to aggressive competitors like Walmart and Target.
To help stanch its own bleeding, Sears Canada has laid off 2,600 employees and sold off leases since the beginning of 2013. But the lease sale could ultimately tamp down what Sears could fetch in a sale of its Canadian counterpart, according to Mr. Balter, who said that the sold properties included some of the most desirable retail locations in Canada.
Sears and Sears Canada were partly separated in 2012, after Sears spun off part of the Canadian retailer, bringing its holdings down to 51 percent. Mr. Lampert and his hedge fund, ESL Investments, owned an additional 26.8 percent as of March 31, according to Standard & Poor’s Capital IQ. It isn’t clear whether Mr. Lampert and his firm would part with those holdings as well.
Who may emerge as a buyer for Sears Canada remains a bit of a mystery. Analysts have floated the possibility of foreign retailers, though competitors like Target have already found that starting up in Canada is largely a dismal exercise.
In a statement, Sears Canada said only that it was prepared to cooperate with its majority owner.
Even if Sears succeeds in selling off its Canadian affiliate, the company still confronts the core issue of what to do with its remaining businesses.
Part of the issue, according to analysts, is that the remaining Sears and Kmart stores have seen little meaningful improvement. Though Mr. Lampert has made it clear that he views spending money on store refurbishments an ineffective investment, critics have viewed the decision as folly, potentially costing the company the good will of customers earned over much of Sears’ 128-year history.
“People who walk into the store feel like they’re walking back in time,” Ms. Gilbert said.