Sears to buy Kmart, Wal-Mart units
By Carole Sloan -- Furniture Today, July 19, 2004
Hoffman Estates, Ill. — In a move that will allow it to expand in existing markets, Sears has agreed to acquire up to 54 Kmart stores and seven Wal-Mart units.
Sears will pay about $620 million for the Kmart stores, most of which will be used as the basis for a new midsized retail format modeled on Sears Grand, according to Alan Lacy, chairman and CEO.
The one-level stores, with average selling space of 84,000 square feet, will include apparel, home fashions, home electronics and home improvement. Specific merchandise allocations are still to be determined, Lacy said in a conference call after the deal was announced last week.
Sears has been adding mattresses to many of its units, but the company did not say whether the new stores would sell bedding.
Sears will convert three Kmart sites to the Sears Grand format, which offers a different selection of products from the company's mall stores, including some groceries and pharmacy goods. Most of the rest will be in the new mid-sized format.
Two Grand prototype units are open now and five more sites have been announced, four to open this year and one in 2005. With the Kmart deal, the rollout will include an additional five to seven units for 2005, bringing the total to 12 to 14.
Sears Grand remains "a work in progress regarding the size and the merchandise mix," said Ted McDougal, the retailer's director of business communications. The Las Vegas store that opens this month will be 135,000 square feet, compared with the first Sears Grand that opened last year in suburban Salt Lake City with 210,000 square feet.
Sears expects to take possession of four of the newly acquired stores this year, up to 55 in 2005, and the remaining two in 2006. The Kmart stores are located primarily in large urban markets and the Wal-Marts are in mid-size markets.
Sears has about 2,300 Sears-branded and affiliated stores in the United States and Canada.
