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* Sears Canada pushes for a turnaround
* Sears Holdings recently cut stake in Canadian unit
* Stock up 4.2 pct to C$11.79 by midday
Dec 13 (Reuters) - Shares of Sears Canada Inc, majority owned by Sears Holdings Corp, rose on Thursday after the Canadian department store operator said it would pay a C$1.00-a-share special dividend.
It will pay the cash dividend, announced after markets close on Wednesday, on Dec. 31 to shareholders of record as of Dec. 24.
The move comes as Sears Canada struggles to turn its business around ahead of U.S. retailer Target Corp's Canadian launch this spring, a debut that's expected to shake up the country's retail landscape. In the third quarter, sales in established Sears Canada stores fell 5.7 percent, following a 7.8 percent decline a year earlier.
Chief Executive Calvin McDonald has said his turnaround plan - which in part involves refocusing on company's stronger categories such as mattresses and major appliances - is working, albeit more slowly than expected.
In November, Sears Holdings trimmed its stake in the Canadian company from about 95 percent to 51 percent, distributing the stock to Sears Holdings shareholders.
On Wednesday morning, Sears Canada said it had agreed to sell 40 percent of its leasehold interest in Medicine Hat Mall in Alberta for C$43 million ($44 million). It said the mall's Sears store would continue to operate as usual.
In March, the company said it would shut three major downtown stores in Vancouver, Calgary and Ottawa. A C$164.3 million gain on those lease terminations boosted its earnings in the first quarter.
Sears Canada shares rose 4.2 percent on Thursday to C$11.79 on the Toronto Stock Exchange.
$1=$0.98 Canadian Reporting by Allison Martell; Editing by Peter Galloway