Sears Canada announced it will convert its seven Eaton’s stores to the Sears brand, a move that will eliminate a 133-year-old retail icon from the Canadian market.

Sears Canada, which took over Eaton’s in 1999, announced it will convert the seven stores by the end of July. They’re located in six cities: Toronto, Ottawa, Winnipeg, Calgary, Vancouver and Victoria. About 600 people will lose their jobs as a result of the move, the company said.

A hometown department store chain originally founded in the 19th century, Eaton’s is one of Canada's best-known retail names. In addition to its stores, the company for decades ran one of the few catalogue operations able to bring goods to even the smallest hamlet on Canada's Prairies. The catalogue continued under the Eaton’s name after the buy-out by Sears.

Although an established retail icon, Eaton’s had struggled financially since the 1990s. The retailer, which filed for bankruptcy in 1997, had been hurt by the 1990s recession and by competition from U.S. discount retailers such as Wal-Mart.

After taking over 19 Eaton’s locations in 1999, Sears Canada began converting 12 of those locations to Sears stores. At the same time, the company declared its intention to rescue the Eaton's name, hiring identity specialists at Toronto-based Design Vision to assist in the resurrection of the remaining Eaton's stores.

The design team's goals included simplifying the Eaton's identity and message, broadening the customer age base, and keeping the surviving stores engaging enough to be shopping destinations. See RETAIL DESIGN TRENDS: Resurrecting an icon (SCW, Nov. 2001).

Nonetheless, operating under the Sears name, the 12 converted stores performed at or above market expectations while the Eaton’s stores, considered more upscale, suffered.

Sears Canada noted the greater value of the Sears brand in today's market and said the store conversions will enable the company to make more efficient use of its buying and advertising dollars. In a statement, Chairman and CEO Mark Cohen said the decision resulted from "a painful but necessary" recognition of the realities of the marketplace.

"We are aware of the historical significance of the Eaton's banner but must act in the best interests of our shareholders, associates and customers," Cohen said.

Sears Canada said it will take a one-time pre-tax charge in the first quarter of about $180 million, including $30 million in cash for severance payments, third-party commitments and transition costs, and a $150 million non-cash write-down of fixtures and leasehold improvements.

The company said savings gained by the conversions could lead to an improved annual pre-tax yield of about $40 million.

Two Canadian centers bear the Eaton’s name. But their owner, Cadillac Fairview, has no plans to rename either Victoria Eaton Centre or Toronto Eaton Centre, according to corporate communications director Vivienne McCuaig. She says Cadillac Fairview is working with Sears as it carries out the conversion plan.

-- Staff and wire reports