UPDATE 1-Sears Canada to shut three major stores

Fri Mar 2, 2012 9:24am EST

* Will return stores to developer for C$170 mln

* Follows similar moves at parent Sears Holdings

TORONTO, March 2 (Reuters) - Sears Canada Inc said on Friday it is shutting down three major downtown stores in Vancouver, Calgary and Ottawa, in a move that will allow it to raise capital to reinvest in store refreshes at other locations.

The department store chain, majority-owned by Sears Holdings Corp, plans to close outlets at the Vancouver Pacific Centre, the Calgary Chinook Centre and the Ottawa Rideau Centre by Oct. 31. The Calgary store has been operating for nearly 50 years.

It will return the locations to developer Cadillac Fairview Corp Ltd for C$170 million. The transaction is expected to close on or around April 20.

"While we had no plans to close stores, the transaction for these three specific locations provides an attractive financial benefit," said Chief Executive Calvin McDonald in a statement.

Sears Holdings said late last month it will raise about $770 million by spinning off parts of its business and selling prime real estate.

That announcement helped reassure Wall Street that the retailer had enough assets to tap to pay down debt, sending shares up nearly 19 percent.

Both companies have struggled with falling sales. In early February Sears Canada cut regular prices for more than 5,000 products, part of a "transformation" to help it compete more effectively.