The owner of Ala Moana Center is forcing Sears to close more than six months earlier than scheduled to demolish the 340,000-square-foot anchor store in July and start an extensive expansion of the state’s largest shopping complex.
Sears said Tuesday it will lay off 327 workers when it shutters its Ala Moana store June 2.
The venerable retailer — one of the original anchor tenants when Ala Moana opened in 1959 — originally planned to close in early 2014, but mall owner General Growth Properties Inc. "exercised its right to move up the closing date," said Sears spokesman Howard Riefs. Store employees were informed of the change Monday. The store will begin a liquidation sale March 15.
General Growth told investors earlier this month it will raze the three-level department store at the Ewa end of the mall for redevelopment that will take about 30 months to complete, pushing the project a year ahead of schedule, according to Alexander Goldfarb, managing director for New York investment banking and equity research firm Sandler O’Neill & Partners LP. The last major mall expansion was the addition of Nordstrom and adjacent retailers in 2008.
"They’re clearly eager to get at the box and do redevelopment on the mall," Goldfarb said. "They’re very excited about it, and it’s a major asset for them. They spent a lot of money, and they want to be able to show a good return, which obviously they’re hoping will be pretty lucrative."
The plan will double the retail space and includes adding an anchor tenant as well as midsize and smaller retailers, reconfiguring Centerstage and upgrades to the surrounding street-level shops. General Growth is investing $572.4 million in the redevelopment, expected to be completed in the fourth quarter of 2015, according to a supplemental report released with the firm’s year-end financial earnings.
Sears Holdings Corp. a year ago struck a deal with General Growth to sell back the lease to the Ala Moana store. That and the purchase of 10 other Sears stores on the mainland cost General Growth $270 million. The most valuable of the locations is the Ala Moana store.
"It makes total sense because they’re capitalizing on the improvement in the local economy, also the boom occurring amongst the tourism sector because those are your primary consumer markets," said Mike Hamasu, director of consulting and research for Colliers International. "You have the upswing in the economy, you have the boom in tourism, favorable exchange rates, which all support additional retail spending. Sales per square foot for Sears is definitely below what they could accomplish by (demolishing) the space and bringing in newer tenants. They’re updating not only the facade, but also the type of retailers they’re attracting into the center."
Bill Hall, 66, an appliance salesman who has worked at Sears for 15 years, paused Tuesday to consider the impact of moving up the closing date half a year. Employees are in a state of shock now that the retailer is actually closing, Hall said.
"We knew it was going to happen. We didn’t expect it this fast," he said. "I’m at the cusp of retirement. I feel for the younger people, for even our 20-year employees who are young. We have a lot of old-time people here who aren’t of age, they can’t retire. Those are the ones I feel sorry for because this actually has been their life. It’s a rude awakening for them."
Hall said the hardest part over the past year has been explaining to loyal customers that the closure is going to happen.
"The older they are, the more sad they are," he added. "They cannot fathom Sears leaving town. In their neighborhood their world is gone. They live at this place."
The Sears stores at Pearlridge Center and Windward Mall will remain open, as will the Sears Distribution Center.
Sears has also told workers that it is searching for another location in town to reopen, Hall said.
Sue Jenkins, 66, and her husband, Ray, 73, have been shopping at Sears annually for the past 30 years while vacationing from Sydney, where the retailer doesn’t operate.
"I’m very disappointed. It’s the place we come to," she said. "We used to come when J.C. Penney was here. Then that closed down; now this is closing down. It’s changing. I don’t like the change. There’s not enough stores for everyday use. They have the high-quality stores, but it’s the stores like this that you need."
Schofield Barracks resident Brittany Lowe, 20, who recently moved to Hawaii from Georgia, said she has been buying clothes at Sears for years because of the familiar brands and reasonable prices. She bought three outfits for less than $60 Tuesday for her husband, Jonathan, 24, with her 2-year-old daughter, Charlie, in tow.
"It’s definitely cheaper than shopping elsewhere in Hawaii," Lowe said. "This is the closest in prices that we’ve seen to back home. There’s no way that we’re going to shop at Gucci or Prada or any of the other places. We’ve seen so much of those stores here that we didn’t have in Georgia that we’ll never shop at. (Sears is) the perfect in-between."
