Source at Hoffman says all Kmart’s are closing in 2017, and Sears will phase out remaining sears store locations rapidly during 2017. Corporate is being told to hold it together as long as possible to give seritage growth properties time to sell off or re-lease the sears properties that it acquired. The remaining Sears owned stores will terminate their leases, shut down, or be sold and liquidated thru bankruptcy. Source left Hoffman about 3 weeks ago. Sears will end and seritage owned properties will eventually be leased, sold or re-developed 100% to buisnesses other than Sears.
84 replies (most recent on top)
Leases don't matter one store had 5 years left and they closed. The lease all depends on the owner. If it's going to be 1 year 3 years 10 years or whatever. Most owners want Kmart to stay because who else will lease the building. Just look at all the empty buildings there are now. Everywhere. And I don't think all Kmarts are closing because we just got a new assistant manager. Why spend all that time and money. After not having one for 5 months. And signing a 3 year lease in August. Plus sales have been up for some stores this year. More than the past 2 years. Kmart is fighting to stay open but when Walmart and Meijer open one both sides it is hard to make money. Then u got online shopping that is a disgrace to America. For every 100 in store employees it takes 10 to fill online orders. So 90 people less. That's why there are fewer jobs. And for the DC's well think about it with 68 Kmarts that closed do they need that many. Some stores put some summer stuff in the back for next year so keep shopping Kmart and help keep jobs. There's not very many options where I live and Kmart employs over 50 people. It may not sound like a lot but that's 50 that need a job. There's not 50 places nore 50 jobs available.
Any new news???
Anyone heard when chapter 11 is going to be filed? Does everyone expect it to be this year or sometime in January 2017, the anniversary of Kmarts first chapter 11 in 2002. 15 years exactly ironic right?
Here is my question, how many DC's are left? Where are those DC's that are left? Are they shutting DC's down, as the stores that are serviced by that DC closes?
Distribution centers usually have a lot of inventory on garden shop and patio dept. merchandise this time of year because a lot of stores haven't been reordering and the inventory system doesn't reorder on its own toward end of season. We also have a lot of Brinkmann grills and accessories (28), garden lights (43) and landscape lighting (43 and 05) in all DC's. The Brinkmann buyout was for pennies per piece btw.
our DC is Manteno, IL. the crazy thing about the garden shop stuff is that it is already on clearance at half and three quarters off. The liquidator is giving an additional 20 percent off of that. Why would they be selling all this stuff for nothing when the stores staying open should be getting it right after Christmas to sell at a higher price/more profit. i suspect they are emptying the DCs and the stores not closing right now will get less stuff in between now and Christmas. with the stockrooms supposedly purged and the DCs empty, it will be easy to shut the chain down in January. That's my theory anyway.
Did anyone on this board go through the Orginal legacy Kmart 2002 bankruptcy?
Oops, I meant January 2017.
, 4ZCUMy guess is that the DCs that are servicing your two stores have instructions to empty the DC's ASAP and force all of the freight to the closing stores. I am thinking that those two DC's are closing.
Are other non closing stores having freight force shipped to them from these two DC's also?
I am wondering if the non closing stores are receiving trucks from these "possibly" closing DC's?
, My guess was right, they are shutting DCs down. That is what happened, they emptied out the DC's that were closing and forcing the product out to the stores that were closing. Same exact process that they did in the 2002 bankruptcy they are starting to do now.
My prediction is that as soon as the DC's are emptied in preparation for the filing of chapter 11 in January 2016 or maybe October-December 2016. I think either the DC lease is up or they are getting ready to break the lease for it as soon as bankruptcy is filed.
So all they have to do is turn over a vacated DC to the landlord.
I predict massive store closures either before Christmas like 100+ stores or right after Christmas.
What DC services you?
I remember when my store closed, Kmart 7239 in 2014. We were serviced from the Florida DC and the DC in Georgia for apparel? Do those DC's still exist? I have kept up on store closings, not DC closings.
I am in a closing store in Clarksville, TN. We are getting two trucks Monday, including one that is 2800 pieces. They are both loaded with hundreds and hundreds of garden shop stuff (dept. 43 and 28) that we don't usually get until after Christmas. It looks to me like they are emptying the DCs out. There might be something to the rumors of a Kmart shutdown in January.
I wonder what the impacts have been to the supply chain. Our store is getting holiday merchandise, but it is the exact same "stuff" that didn't sell well last year and sat on clearance for 5 months into this year. I think Sears' situation has been made exceptionally worse by stocking products that nobody really wants or needs.
Does everyone think SHC will file bankruptcy this year before Christmas or do you think they will file it in January 2017, Which ironically is 15 years exactly when Kmart filed theirs in 2002.
Eddie and Alan Lacy sold everything down the river when they merged. What a couple of greedy no good scum bags. They took an American icon and trashed it with no regard to their customers, employees or our country for their own personal greed. Get ready shld is getting ready to file bankruptcy.
I appreciate good humor.
What about this, WOW!, at least we can ring up customers on our broken out of date IT hardware, and get all the crap Eddie wants us to do on the register done.
My biggest question, is how much longer can the data center in Troy keep the hardware patched to avoid the system outrage again? That is the biggest concern, if all Kmarts are closing at the same time, the outdated hardware will crash from being overloaded.
Instructions from user 9055.
Close your eyes and Say: My store is not gonna close, my store is not gonna close, my store is not gonna close. Once you say it 3 times it will come true.
I misread your comment at first. Thank you for the insight in viewing the Kmart properties and leases. This will be very helpful in predicting the # of store closures.
I WASN'T asking for any internal data. I was just stating how it is hard to value the optionality of lease renewals without knowing which properties are profitable vs not. My point is that SHLD management has been very opaque with their intentions for the Kmart/Sears brands and overall corporate strategy.
Optimizing the asset base is not easy. Especially, as the company is supposedly "transforming" from a traditional retailer to a member-centric one. However, doing so in a non-transparent way diminishes the confidence of all stakeholders. There is a reason why the stock is down 40+% YTD and employees are disgruntled.
There is tremendous value in SHLD's asset base. But management's inability to communicate this continues to hurt all players involved. My point is - the majority of stakeholders do not understand what Lampert is attempting to accomplish. Is it asking too much for some transparency and communication into the strategy at hand?
I do not have access to INTERNAL real estate or lease data.
However, it would be fairly easy for one to obtain historical data on the original opening or acquisition of Kmart locations. There were over 200 stores opened in 1976-77, for example.
Someone mentioned in the comments on one of the business insider stories that Kmarts typically have 40 year leases.
Once all of the historical data is matched with store volume type, one could probably predict the order of closures for most stores.
Additionally, the 2002 (?) bankruptcy filings would have more data that can be added on store locations and leases.
One more thing for some of the others here, I am not a shill for corporate leadership, but I do view things in a more practical manner than speculative
, sounds like they are getting ready to shut down the DC that services you, they did the same thing when Kmart filed bankruptcy in 2002, closed a lot of DC's.
I understand that SHLD has a lot of optionality in its ability to extend leases at very favorable terms. However, without the ability to know what percentage of stores are profitable vs unprofitable, these lease options may not hold much value.
My biggest concern is that when Bruce Berkowitz (the largest shareholder aside from Lampert) presented his opinions in front of the Board, he asked the company to provide more guidance/transparency in understanding the asset value that SHLD holds (according to his annual call with his investors at Fairholme). Instead, the company continues to be opaque in its intention and strategy.
Examples of lack of transparency
1) Last year the company stated the wanted to achieve at least $300mln in asset sales by the 1H of 2016. This was listed on its presentation as one of the goals for 2016. This did not occur and instead of explaining what happened, SHLD inserted one line item under financial transactions stating SHLD achieved $173mln in real estate transactions and other asset sales.
2) In April, SHLD announced its intention to accelerate its efforts to return to profitability and transformation with the closing of 78 properties (68 Kmarts and 10 Sears). In the press release, the company stated, "Today's announcement follows a comprehensive evaluation of the company's store portfolio that took into account historical and recent store performance, and the timing of lease expirations." The most recent wave of closures did not have a press release nor an explanation/intention for future actions. This is not an acceleration of any sorts. If a lease is about to expire and the store is not profitable, then the store is closed. In my opinion, a lot more closures are coming in 2017 as leases continue to expire.
The list goes on and on. SHLD management needs to understand it has many stakeholders. Employees, vendors, creditors, shareholders, etc. that deserve to have a clearer picture of management's intentions for the future of the company. If Lampert and management truly believe that they have an asset rich company that will survive stronger after massively shrinking its footprint than say so. Example the value proposition and provide some sort of transparency into its strategy. Headlines of massive quarterly losses and store closures do nothing to instill confidence in the company stakeholders. The continuing uncertainty not only hurts the credibility of management, but it also permanently damages the view of all stakeholders as they are only left to believe the headlines they read.
Many posters on here correctly assume on many cases, the re-rented property can in fact bring in more $sf than is currently being received. However, a caveat worth noting, the above is more easily accomplished when the ground/stores are company owned. In the case of long term ground leases stores, which apply to many stores built in the 1960s & 1970s, those leases have maturities that vary anywhere from 15-35 yrs remaining. Very difficult to amortize the capital costs on those under 30 yrs. Not impossible, but very difficult. And only on those sites that would be considered A properties. I doubt that less 5% Kmart stores would be considered A stores. Bottom Line:
I don't give Kmart a snowball's chance in Hell, of surviving. Sears' future although dismal is somewhat better. Still likely to close but it probably still has alittle more longevity.
we are in one of the closing stores and we were just told today that we are going to continue receiving trucks until November. why would they keep sending us stuff from the warehouse ? I suspect they may be emptying them out as the whole company might be closing
To , Thankyou for that really good quote, I love your username "9055 blaster"
Life is hard
Life is even harder when your stupid
Regarding the high number of Kmart leases expiring in the next five years, keep in mind there are very favorable lease renewal options on many of those leases.
How many more stores are left to sell to seritage? Does anyone know?
To Poster SHCAnon
You stated Sears wouldn't be transferring over value to Seritage because Seritage already owned the properties. Thats true, they do own the properties because Sears sold them to Seritage. Now Seritage takes the 4-5 bucks per square foot rent they are getting from Sears and Turns it into 20-25 dollars per square foot by kicking sears out. Point being, the value goes to Seritage. In all aspects of this deal, Value goes to Seritage, more debt, less profit, less sales, and less jobs go to Sears.
What is a shorter
Here is what I am wondering, with this "one touch" crap. Are DC's going to be shut down the first of next year for the Kmart division? And slowly closed with the Sears division as stores are sold?
FYI: once a DC closes, that mean all freight in the DC is forced out to the stores so the DC can be emptied and the keys returned to the landlord or the property put up for sale.
Once all of the DC's close completely/emptied of product, then the massive store closings will happen like all 750 remaining Kmart stores will go into liquidation chain wide.
If SHC declares chapter 11 early next year before the Kmart store closings start, that means once all of the freight is out of the store, they can leave the store with all fixtures,remaining equipment, ect.
They do not have to empty the building like they have to do now. They can leave the building in poor condition and the landlord has to deal with all fixtures and junk they left behind.
So to explain, SHLD would turn into a REIT. Which means no more store operations unless they maintain the Sears.com/Kmart.com/SYWR.com/sears outlet.com. As divisions of SHC?
The rent is actually increasing for Sears- firstly they have to pay a years rent to get out of a lease and every store they transfer to seritage that they owned incurs rent once it has moved to seritage- to the poster talking about strategic alternative for kcd- one thing they cannot do is sell those brands as they no longer control the rights to them. If pointless for lambert to talk about how many Kmart store leases are up within 5 years- this company cannot survive much beyond 2 years- and the last few months of that timeframe would be grim for the all- aside of shorters.....
In terms of Lampert only wanting to transfer value to Sertitage, this would only occur if we saw SHLD sell more properties to SRG. The 17 stores that are currently closing are already owned by SRG and leased by SHLD. As part of the Master Lease, SHLD has the right to terminate leases by paying a year of rent upfront. Is there a conflict of interest in which stores are closed? Probably, as Lampert would want to close those stores that offer the best opportunity for redevelopment. However, on the plus side, the rent expense for SHLD will continue to shrink as SRG recaptures space or SHLD terminates leases.
I believe SRG is the model that Lampert wants to use for SHLD. A majority of stores will be closed (as explained in my earlier post). A smaller footprint and redevelopment will turn SHLD into a real estate company vs what we now think of Sears/Kmart.
While I'm not an employee at SHLD, I have been following the story very closely. As unfortunate as it is for such a storied brand, many more closing are likely to come. In SHLD's most recent presentation 656 of Kmart's leases are expiring in the next 5 years (around 83% of all Kmarts). To-date, ~130 closing have been announced. As poster 9055 has noted, if a store is unprofitable and its lease is coming up, the store is likely to close. It is my belief, that this has been Lampert's plan since he realized he could not turn around the retail operations. There definitely is an asset base worth value in SHLD; however, with ongoing retail losses, this value erodes on a daily basis.
I would expect an update on strategic alternatives in the upcoming quarter with Kenmore, Diehard, and Craftsman). It took approximately six months to complete the review of the Seritage REIT, and November will mark six months since the announcement.
Does anyone know by chance?
I am wondering of the 750 +/- Kmart stores that remain. The bulk are from the early 1960's- to late 1970's the ones that have "cancer causing ceiling and floor tiles" that are left?
Are most of the stores that remain are the 1960s & 1970s units?? Or are there some 1980-2002 built stores still open?
It is becomming very evident that the end goal by Eddie is to transfer value of sears over to Sertiage ( A company he is a also a big stakeholder/owner of ) Seritage increases value, sears increases debt. Seritage gets the best properties and locations, Sears gets stuck with the run down remaining structures filled with mildew and asbestos. None of these scenarios return Sears to profitability. Sell the best properties to Seritage, Seritage then develops and resells or re leases to someone other than Sears, Seritage keeps 100% of the profit. Sears is virtually left with nothing.
Agree. The game is trying to stem the loses so that they can get out of leases (happening now), transfer the property to Seritage for cash, or sell the property. The key is keeping your eye on how fast Seritage can develop properties. When the properties get developed and rented then they close more stores.
That is why they only close under 100 each round.
That is why Eddie keeps lending money (with interest) to keep the company going.
I believe this company would have been gone a few years ago if 2008 collapse didn't happen.
Just a comment on Seritage. they are a mid-sized developer. Their capacity for projects is somewhere in the 20-30 footprints every 4-6 months area. - it takes a tremendous amount of work and people to put all the pieces together to develop a new project. Even the huge guys can't take on dozens/hundreds of new projects per year, simply isn't feasible. Think that's partly why Eddie is struggling to keep the doors open, but there is still no way for him to effectively monetize the real estate working only with Seritage, they simply don't have the capacity.