Kmart Corp. will sell up to 54 stores to Sears, Roebuck & Co. for as much as $621 million.
That follows Kmart’s sale of up to 24 stores to Home Depot, announced June 4. In all, Kmart will get $1 billion for fewer than 80 stores, about 5% of the 1,504-store chain.
Kmart isn’t planning any other significant divestitures, but it won’t rule them out. “We are not currently in discussions regarding any additional significant store sales, although we will continue to evaluate opportunities as they arise,” said Kmart CEO Julian Day in a statement.
Sears will buy stores in large, urban markets; the number and location will be decided by October for most stores, by mid-December for the rest. Kmart will operate the stores until April or May 2005. Sears will spend $200 million to remodel and convert the stores by fourth-quarter 2005; three will become part of Sears’ new mid-sized sub-brand, Sears Grand.
Sears will open four Sears Grand stores by yearend, with plans to have 12 to 14 Grand stores by 2006.
Separately, Sears will lease seven Wal-Mart stores in mid-sized markets; that and the Kmart deal will jumpstart Sears’ off-mall growth, increase its reach and give Sears prime real estate in key markets. “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,” said Sears Chairman-CEO Alan Lacy in a statement.
Despite Kmart’s sales to Home Depot and Sears, “Kmart will remain one of the largest retailers in America, with over 1,420 stores and approximately $20 billion in revenues,” said Day. “We will be able to direct all our attention on building upon … the considerable operating improvements that we have already achieved, including the fall apparel launch in July and our partnership with The WB Network” for back-to-school advertising and promotions (July PROMO).
Network
