Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
"Sears to Acquire Stores from Kmart, Wal-Mart"
"HOFFMAN ESTATES, Ill. -- Sears, Roebuck and Co. has agreed to acquire ownership or leasehold interest in up to 61 off-mall stores in key Sears markets from Kmart Holding Corp. and Wal-Mart Stores Inc. for approximately $620 million in cash.The majority of the stores are expected to be converted by fourth quarter 2005 to Sears nameplates, including a new mid-size format.Kmart will continue to operate the stores that are to be sold until March or April 2005. Sears has agreed to consider offering employment to any Kmart employee who desires to be employed by Sears at the converted stores."These transactions will jump start our strategy to grow the Sears brand off-mall, increase our points of distribution, and acquire well-located real estate at a fair value in key markets for Sears," said Alan J. Lacy, Sears chairman and chief executive officer. "The acquisitions will allow us to quickly open more stores and significantly boost our off-mall retail presence in priority markets that have synergies with our existing mall-based stores."Sears plans to increase the pace of growth for its Sears Grand format, targeting three of the newly acquired Kmart locations for conversion to Sears Grand stores. The company expects to be operating 12 to 14 Sears Grands at the end of 2005.The portfolio of stores to be acquired average 110,000 gross square feet and 84,000 selling square feet, compared with an average of 90,000 selling square feet for Sears' current full-line stores. Most of the new stores will be converted to the new mid-size format, modeled on Sears Grand. The new stores will offer apparel, home appliances, home electronics, home improvement and home fashions, plus consumables and transactional items, including a pharmacy in certain locations. The floor design of the new stores will be on one level, which will allow more efficient store operations and a significantly increased ratio of selling to gross square footage.Sears will fund the purchase of the stores from available cash. The company will pay a maximum purchase price of $620 million in cash for up to 54 Kmart stores, plus the assumption of existing leases. Sears will make lease payments to Wal-Mart under subleases for the seven Wal-Mart stores. The acquisitions include real estate and Kmart store fixtures, but exclude inventory and liabilities not related to leases.Sears expects to take possession of four stores in 2004, up to 55 stores in 2005 and the remaining two stores in 2006. The acquisitions are subject to customary closing conditions.Sears plans to invest $200 million to remodel and re-fixture the stores, Lacy said. The acquisitions are expected to be accretive to earnings in the first full year of operation, 2006.Sears, Roebuck and Co. reported 2003 revenues of $41.1 billion. The company operates more than 2,300 stores in the United States and Canada."