Hoffman Estates, Ill. — Sears Holdings Corp. plans to close 96 underperforming stores by February 2020, according to the retailer’s parent company, Transform Holdco LLC.
The closings will consist of 51 Sears stores and 45 Kmart stores, leaving 182 operational Sears and Kmart stores remaining in the United States. The closing stores are scattered throughout all regions of the country, including 28 located in California. A full list of store closures can be found here.
“Since purchasing substantially all the assets of Sears Holdings Corp. in February 2019, Transformco has faced a difficult retail environment and other challenges,” the company noted in a press release. “We will endeavor to create and deliver value through a strategic combination of our better-performing retail stores and our service businesses, brands and other assets, and expect to realize a significant return on our extensive portfolio of owned and leased real estate.”
Ahead of the holiday season, Transform secured a $250 million lifeline financing from lenders including its owner, Eddie Lampert. Lampert bought Sears out of bankruptcy for $5.2 billion in January and, at the time, the sale prevented liquidation of 425 properties.
“None of this is a surprise. Sears continues to morph from a retail company into a real estate holding company,” says Jeff Green, partner with Hoffman Strategy Group. “Big-box retailers such as Bed, Bath & Beyond and J.C. Penney are in real trouble — watch for a large store closing announcement after the holiday season.”
As more big-box retailers succumb to the rise of e-commerce, landlords have found opportunities to redevelop properties with mixed-use entertainment, dining and sometimes residential tenants. But Green adds that there are only so many of these tenants that can fill the empty boxes, and big-box and mall landlords are going to have to get more creative to repurpose those spaces.
“The day and age of customers wandering into top-line department stores and spending a few hours in different departments will continue to decline,” says Rick Scardino, a principal with the Chicago office of Lee & Associates. “Sears often had wonderful mall positions that are often sought by mall landlords to repurpose for entertainment, health clubs, movie theaters or to be razed for multifamily in today’s work-play-live lifestyle that Millennials and Gen Z may be attracted to.”
In late September, Summit Design + Build began redevelopment of 1900 W. Lawrence Ave., a historic Sears department store which opened in 1925 and closed in 2016. The project involved conversion of the 105,000-square-foot building into a mixed-use development with 59 apartment units and 30,000 square feet of retail space. DeVry University will occupy approximately 15,000 square feet of the space. Completion of that project is slated for fall 2020.
“There will always be room for well-positioned retail stores and the experiences that they can bring a consumer that often seldom can be duplicated by an e-commerce experience,” says Scardino. “A well-positioned, brick-and-mortar location with knowledgeable sales staff will continue to be a top option for many that want to feel the fabric, weight and craftsmanship of a shoe or garment that can’t be determined in the same manner online until it arrives at their doorstep.”
— Alex Patton