UPDATE 1-Sears Canada closing five stores, including Toronto flagship

Tue Oct 29, 2013 9:00am EDT

Oct 29 (Reuters) - Sears Canada Inc will close its flagship downtown Toronto store and four other locations in a C$400 million ($383 million) deal, the company said on Tuesday.

The struggling Canadian department store chain, controlled by Sears Holdings Corp, will terminate the leases and return the locations to the landlords. At the end of the second quarter, it had 181 corporate stores.

The move frees up sought-after real estate that could be used by competitors looking to expand in Canada, like Nordstrom Inc or Target Corp.

Sears Canada will vacate three stores by the end of February 2014, and the other two by the end of February 2015. The company said 956 employees work at the five affected stores, but some may be able to move to other locations.

Three of the stores are in the Toronto area, including one that shares space with Sears Canada's corporate head office at the Eaton Centre, a large downtown mall that boasts of being a "must-see" Toronto tourist destination.

The company said it will hold on to four floors of the building for its offices.

The two other stores are in London, Ontario, and Richmond, British Columbia, a suburb of Vancouver.

Sears Canada's chief executive, Calvin McDonald, resigned in September, and chief operating officer, Douglas Campbell, took over.

Sears Canada has suffered steep declines in same-store sales and has lost market share amid tough competition from U.S. retailers like Wal-Mart Stores Inc and now from Target, which opened its first Canadian stores in March.

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