UPDATE 1-Sears Canada to cut more than 1,600 jobs

Wednesday, 15 Jan 2014 | 5:37 PM ET

TORONTO, Jan 15 (Reuters) - Sears Canada Inc plans to cut more than 1,600 jobs this year as it reorganizes and outsources some of its business, the struggling department store operator said on Wednesday.

Sears Canada, controlled by Sears Holdings Corp, said it has signed an agreement with IBM to take over work currently handled internally, a move that affects 1,345 jobs at three Customer Contact Centres over the next nine months.

A further 283 jobs will immediately be cut in a related reorganization of its logistics unit.

The news comes just days after the U.S. parent company reported a steep 7.4 percent plunge in sales at established stores during the fourth quarter.

Sales at the parent company have been falling since 2005, when billionaire hedge fund manager Edward Lampert merged Sears and discount chain, Kmart, in an $11 billion deal.

The retailer has closed about 300 U.S. stores since 2010, tightly managing inventory and selling real estate. The Canadian unit has also been shedding assets as it also tries to engineer a turnaround.

In Canada, Sears has lost market share as it faces tough competition from U.S. retailers like Wal-Mart Stores Inc and now Target, which opened its first Canadian stores last year.

Sears Canada, whose website says it has over 25,000 associates and operates 181 department stores, said in November it would lay off nearly 800 workers, with 712 jobs cut at its services business and 79 at its head office.

Separately on Wednesday, U.S. luxury department store, Nordstrom Inc, announced it is opening a store in the heart of Canada's largest city, taking over the flagship space at Toronto Eaton Centre soon to be vacated by Sears Canada.

  Price   Change %Change