TORONTO — As reported first on Travelweek.ca, in light of Sears Canada Inc.’s latest CCAA filing TravelBrands is rebranding Sears Travel as The Travel Experts, effective Nov. 1.
Sears Canada Inc. issued a statement Oct. 10 saying it was permanently closing its doors and going out of business. The company had filed for bankruptcy protection in June, hoping to find a buyer for its remaining locations. “Following exhaustive efforts, no viable transaction for the company to continue as a going concern was received,” said Sears Canada, adding that it “deeply regrets this pending outcome and the resulting loss of jobs and store closures.”
Sears Travel is a TravelBrands business and not part of the Sears Canada Inc. CCAA proceedings.
However plans were already underway (and continue) to vacate the Sears department stores and continue both from a limited number of new locations and as a home agent program.
Two years earlier, when TravelBrands filed for creditor protection in 2015, the Amended Sears Agreement – along with dwindling margins and lease obligations including $3.6 million in yearly rent on a vacant building, a holdover from the Thomas Cook Canada deal – was blamed as one of the factors dragging the company down.
With sales declining TravelBrands negotiated what’s now known as the Amended Sears Agreement to reduce its advertising commitments; adopt more flexible store hours; reduce the annual percentage of gross revenue payable as royalties; reduce its minimum annual commission payments by 27%; and reduce annual lease payments for common area charges by 13%. But sales continued to decline.
“The expense of operating a store-front operation, coupled with the decreased revenue associated with such operations, has caused a significant strain on TravelBrands’ profitability,” said the 2015 affidavit. “Furthermore, as noted above, store-front operations, like Sears Travel, are not a core part of TravelBrands’ business due to their high operating costs coupled with intense price competition across the Canadian leisure travel industry.”
The affidavit also stated that TravelBrands shoulders substantial commission and royalty payments under the Amended Sears Agreement, as well as rent and operational costs related to the staffing of 88 Sears Travel retail locations. The company’s fixed costs are payable regardless of the revenues achieved under the Sears Agreement and the Amended Sears Agreement. One industry insider called the Sears Travel deal “a bad deal from the get-go and a dying model. Agencies in stores in a chain that is shrinking and closing stores all the time … [no] upside.”
TravelBrands exited creditor protection in early 2016.
Like every other bricks-and-mortar retail chain Sears Travel has gone to great effort to keep up with changing preferences in how clients want to book travel, building up a strong online presence and making the move back in 2005 to use outside sales reps. It marked the first time a national travel brand had developed a home-based market with a specific focus on experienced agents.