POSTED: 9:03 a.m. HST, Feb 23, 2012
LAST UPDATED: 12:47 p.m. HST, Feb 23, 2012
Sears said today it will sell its Ala Moana Center store to the mall’s owner and close the venerable retail establishment sometime next year.
The sale is part of a move by Sears to sell 11 stores in nine states to General Growth Properties for $270 million, the retailer said. The transactions are expected to close in 45 to 60 days, the company said.
Sears will continue to operate the stores into 2013. Final closing dates will be announced later this year.
The Sears store was one of the original tenants when Ala Moana opened in 1959.
The chain, led by billionaire Eddie Lampert, has faced slumping sales as consumers turn elsewhere for goods such as clothes and appliances. Investors have long speculated that Lampert’s long-range plan could be to unlock the value of the company’s massive real estate holdings. The company reported a fourth-quarter net loss of $2.4 billion.
Sears plans were well received by investors and shares rose 7 percent in morning trading.
Chief Executive Officer Lou D’Ambrosio said in the statement that the company was taking “immediate actions” to address the losses, including cost and inventory reductions, targeted marketing and hiring for its merchandising team.
“We’re executing actions to unlock the value of our portfolio and assets,” D'Ambrosio said in a call with analysts.
The company said Dec. 27 it would close as many as 120 Sears and Kmart stores to generate as much as $170 million in cash from inventory and lease sales.
“We will make the difficult decisions required to position Sears Holdings for the future and we will not accept such poor performance without making substantial adjustments,” Lampert said today. “We have a portfolio of businesses and assets that deserve to generate substantial value for our shareholders.”
Sears spokeswoman Kimberly Freely said the sale of the stores made “good business sense” for Sears and General Growth and was not necessarily tied to performance. She said the company does not discloses sales figures for specific stores.
“These are always difficult decisions for the company whenever we close any of the stores,” she said.
Sears has invested less money in stores than competitors as declining sales sap its earnings. Big box rivals like Wal-Mart and others typically spend anywhere from $6 to $8 per square foot on annual maintenance, which would including updating cash registers, replacing floor tiles and repainting, according to research firm International Strategy & Investment Group. But Sears over the past few years has only spent on average anywhere from $1.50 to $2.00.
A top General Growth official said the move “represents a significant opportunity to recapture valuable real estate within our portfolio.”
Ala Moana Center is General Growth’s most productive mall with sales surpassing $1,200 per square foot, said Shobi Khan, the company’s chief operating officer.
“This acquisition also enhances several expansion and redevelopment opportunities including re-tenanting the anchor space and adding new in-line GLA (gross leasable area,” Khan said.
Sears has about 850 full-line stores nationwide. General Growth owns or has an interest in 136 regional shopping malls with 143 million square feet of leasable space in the U.S.
Over the next several years General Growth expects to add 319,000 square feet of new space at its malls, mostly at Ala Moana Center, he said.
Bloomberg News and the Associated Press contributed to this story.
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