* Job cuts average two to four people per store
* Same-store sales have dropped, competition rising
* Sears Canada in the middle of turnaround plan
TORONTO, Jan 31 (Reuters) - Sears Canada, which is struggling with shrinking sales and the looming arrival of Target Corp on the Canadian retail scene, said on Thursday it was laying off 700 workers as part of a plan to "right-size" the operation.
The job cuts will include 360 department store staff and about 300 distribution center workers, as well as some head office personnel, said company spokesman Vincent Power.
"This is part of our initiative to right-size the organization," he said in an email, noting that the job cuts amount to two to four people per store on average.
"The reductions are spread pretty well across the country as far as geography is concerned."
Sears Canada, majority-owned by Sears Holdings Corp , has experienced sliding sales in established stores. It is also facing expansion by competitor Wal-Mart Stores Inc as well as the launch of Target Corp's first Canadian stores this spring.
The company is in the midst of a three-year turnaround plan meant to improve service and spruce up stores, as well as refocus on product categories where Sears is strongest, such as mattresses and major appliances.
It operates 118 department stores, 48 furniture stores, and a handful of smaller specialty stores. It also distributes through 269 locally-owned dealer stores in small communities.
Sears Canada's shares slipped 1 Canadian cent to C$9.54 on the Toronto Stock Exchange.