Hoffman Estates, Ill.-based Sears said that options for the unit could include a sale of just its stake or of Sears Canada as a whole. Toronto-based Sears Canada in a separate statement acknowledged Sears' plan, and said its board and management "intend to cooperate fully with Sears Holdings in this process to achieve value for all shareholders."
Sears Canada, which is valued by the market at about C$1.6 billion, is the owner of 176 corporate stores, 234 Hometown retail locations and more than 1,400 catalogue and online merchandise pickup locations. The company also owns 97 Sears Travel offices and a network of auto repair and service centers.
The Canadian company reported adjusted Ebitda of C$35.7 million on sales of C$3.95 billion in its last fiscal year.
Sears Holdings overall operates more than 2,350 Sears and Kmart stores in the U.S. and Canada.
The potential sale continues the slow unwinding of Sears Holdings, which is controlled by Eddie Lampert's ESL Partners LP. In recent years the company has also spun off its Hometown and Sears Outlet stores and its Orchard Supply Hardware Stores units.
Lampert, who in 2005 engineered the merger of Sears with Kmart Corp., in a Feb. 27 chairman's letter said that the company would seek to raise $1 billion this year through asset sales and other strategic alternatives.
The company late last year announced a planned spinoff of apparel retailer Lands' End Inc. Sears Canada was included in analyst lists of other potential assets that could be marked for sale along with the company's real estate portfolio, Sears Auto Center, its warranty business and brands including Craftsman, Diehard and Kenmore.
Sears Holdings as of Feb. 1 had $1.03 billion in cash on its balance sheet and $4.25 billion in total debt. Sears Canada reported $513.8 million in cash and just $35.9 million in debt.