North American retailer Sears, Roebuck and Co. has closed its deal with Kmart Holding Corp. to acquire or lease 50 stores for U.S. $575.9 million. Sears said it paid 30 percent of the overall purchase price for the properties, with the remaining 70 percent to be paid upon Sears taking possession of the stores.
The newly acquired stores are located primarily in large, densely populated markets with home, family, and income demographics that fit well into Sears’ market and demographic profile. Sears will assume possession of the stores in spring 2005 and the majority of the stores are expected to be converted by fourth quarter 2005 under the Sears’ name.
Included in the company’s initial June 30 announcement, Sears also said it would acquire additional off-mall locations from Wal-Mart. Sears will make lease payments to Wal-Mart under subleases for six Wal-Mart stores. These stores are located in mid-size markets that fit within Sears’ targeted consumer markets.
With this transaction, Sears is doubling its total number of U.S. stores in San Diego, adding five new stores to the New Jersey market and significantly increasing the total number of stores in key markets including Florida, the northeast, and U.S. commonwealth Puerto Rico.
The transaction moves Sears another step closer to its strategic goal of growing its store base and the Sears brand off-mall. Representing the largest full-line store growth in company history, these new stores are reported to give Sears a stronger presence in markets where opportunities to find sites for store growth would be limited.
“Opening more doors in these strategically selected locations allows Sears to compete more effectively and operate in areas closer to the customer,” Jerry Post said, senior vice president, Sears off-mall strategy.
The new, mid-sized, Sears format will provide customers with traditional Sears product categories, such as apparel, home appliances, home electronics, home improvement and fashions, plus consumables and transactional items.
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