Sears move hints at BSC sell-off

Sears, the embattled retail group, has shelved a plan to create a single distribution centre for all its consumer-products divisions because of uncertainties over the future of its British Shoe Corporation (BSC) subsidiary.

The move by Sears, coming days after it warned that its profits would be significantly lower than last year's pounds 100m, is the clearest sign yet that the company is preparing to dispose of BSC in the next few months.

The plan to turn a 600,000sqft site near the M1 in Leicestershire into Sears's distribution centre was to cost an estimated pounds 60m, but would have yielded immediate returns of around pounds 30m from sales of redundant warehouse space. It was central to Sears's plans to streamline its supply chain and produce savings of around pounds 8m by 2000, and contracts were on the verge of being signed.

However, this weekend Alan Oliver, Sears Group Properties development director, confirmed that the deal had not been signed and the plan had been postponed indefinitely. "It is all related to the restructuring of BSC. Until it is on a proper footing, it was felt that this was too big an investment to make," he told the trade publication Estates Gazette.

Instead, Sears plans to consolidate its womenswear distribution in Solihull, and look for a new distribution centre for Selfridges. BSC's distribution would remain unchanged, and the total cost of this alternative plan was put at pounds 12m.

A spokeswoman for Sears vigorously denied that the abandonment of the central distribution system for BSC and other Sears subsidiaries meant that the lossmaking footwear company was for sale.

When asked why the plans had been postponed, she said: "British Shoe has been through a long restructuring process, and we wanted to minimise further disruption to the business."