Zellers to close last 64 stores as Target moves into Canada
The name Zellers could soon join the ranks of Woolworths, Kresge’s and other five and dime department stores that have disappeared from the retail landscape.
Zeller’s parent company quietly told employees in an internal announcement Thursday that it would close most of the remaining 64 Zellers stores in Canada next March.
Those that remain will likely operate under new banners, the company said.
The stores employ about 6,400 people.
“After a lengthy review and numerous discussions with various parties it became apparent that continuing to operate the Zellers banner in its current form was not viable,” according to a statement released by the company.
“Zellers is considering options for certain locations, including potentially rebranding some stores, which will result in certain stores remaining open,” the company also said.
The company did not provide further details. Zeller’s parent, Hudson’s Bay Co., operates several other chains, including the Bay and Home Outfitters in Canada.
The timing of the closures coincides with the opening of the first Target stores in Canada, Zellers said.
The American retail giant is entering Canada in a big way next spring, opening its first 125 stores in former Zellers’ locations, including four in the Toronto area at Centre Point Mall, Cloverdale Mall, East York Town Centre and Shoppers World Danforth at Victoria Park Ave.
Target originally bought the rights to 189 Zellers’ leaseholds from HBC for $1.825 billion. After reviewing the sites, it chose to keep up to 135 of the locations. It sold some to Wal-mart and the rest were returned to their landlords.
A Hudson’s Bay Co. spokeswoman said each of the affected Zellers stores has about 100 employees and the stores aren’t considered viable.
HBC had tried to sell the remaining 64 Zellers stores as a group but was unable to find a buyer.
The chain, which competes with Wal-Mart, had been underperforming for a number of years when the U.S. based investment firm, NRDC Equity Partners, bought Hudson’s Bay Co. in 2008 for $1.1 billion.
It has invested heavily in the Bay, bringing in veteran retail executive Bonnie Brooks to make over the department store’s image as an upscale, fashion-forward retailer.
But Zellers continued to struggle.
The United Food and Commercial Workers union has launched a campaign to organize the Target stores.
Zellers’ employees at stores that will be converted to Target have begun receiving layoff notices.
About 15 Zellers stores across Canada are unionized.