Johnson City Press: Johnson City Sears, Kingsport Kmart appear safe, as company announces more closings
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Johnson City Sears, Kingsport Kmart appear safe, as company announces more closings

Nathan Baker • Oct 15, 2018 at 6:52 PM

The Mall at Johnson City’s Sears anchor has still not been put on any lists of stores to close, as the parent company, Sears Holdings Corp., announced 142 more locations closing in its court filings for Chapter 11 bankruptcy protection Monday.

So far, the North Roan Street store has been spared the worst ramification of the floundering company’s financial struggles as it paired down its namesake brand from a high of more than 3,500 stores eight years ago to 695 last year.

At one time, it seemed there was a Sears in nearly every community in America, but now, after the store at Knoxville’s West Town Mall closes as part of those announced in the bankruptcy filing, the only full stores within 100 miles of Johnson City are in Hickory, North Carolina, and Maryville.

Though it appears Johnson City is keeping its store for now, the Tri-Cities have still been affected by the ailing company’s business decisions. Last year, Sears stores in Kingsport and Bristol closed, and Johnson City’s Kmart, another flagship brand of Sears Holdings, shut for good in September 2017.

Kingsport now holds the region’s only remaining Kmart location. It was not included on the list of expected closures announced Monday.

In court documents, Sears Holdings said the debt-restructuring strategy relies heavily on closing unprofitable stores. To determine what stores to close, Sears leaders said they reviewed each of the company’s stores, analyzing their occupancy costs, historical and projected profitability, recent and projected sales trends, geographic markets and potential to renegotiate lower rents with landlords, among other factors.

According to the company’s estimation, liquidating the assets of the 142 stores expected to close by the year’s end will generate $42 million in net proceeds to help repay some of its debt and the cost of the Chapter 11 proceedings.

Eddie Lampert, the company’s former CEO, has resigned, but is still chairman of its board. He also is its largest investor.

“The Chapter 11 process will give (Sears) Holdings the flexibility to strengthen its balance sheet, enabling the company to accelerate its strategic transformation, continue rightsizing its operating model and return to profitability,” Lampert said in a statement.

“Our goal is to achieve a comprehensive restructuring as efficiently as possible, working closely with our creditors and other debtholders, and be better positioned to execute on our strategy and key priorities."

As the company’s sales declined, Lampert’s hedge fund extended several rounds of debt financing to keep the company afloat, a move some financial experts have criticized. In bankruptcy, he will be both a debtor and a creditor.

Industry analysts pointed to problems plaguing many retailers — competition with online marketplaces, big-box stores and specialized chains — but said some of Sears’ pain was self-inflicted, like failing to keep up with the changing tastes and habits of its customers.

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