Sears reopening Union Gap, WA and Burbank, CA

[storewanderer]

https://www.elvocero.com/economia/otros ... 057e3.html

PR interview with Sears.

Straightforward regarding reopenings in CA and WA. Translation is pretty easy. That should be Burbank and Union Gap. In November.

Strategy is consignment merchandise from local vendors. In PR, I can see it... but in CA and WA?

Reminds me of that reopened Kmart as a Sears Hometown Plus in WI near Chicago. Closed of course. Sears always trying new formats to the bitter end.

[pseudo3d]

Well let's face it...already they have more stores than Bed Bath & Beyond now.

[bryceleinan]

So, if I am understanding things correctly, they're basically trying the Fry's Electronics concept of mostly to all consignment merchandise and hoping the chain revives through those efforts?

Also, what an odd selection of locations. I cannot think of two diametrically opposite locations such as Burbank and Union Gap. Hope this works out for them, but I have my doubts.

[storewanderer]

So, if I am understanding things correctly, they're basically trying the Fry's Electronics concept of mostly to all consignment merchandise and hoping the chain revives through those efforts?

Also, what an odd selection of locations. I cannot think of two diametrically opposite locations such as Burbank and Union Gap. Hope this works out for them, but I have my doubts.

Somehow they must be hung on these leases (maybe they learned they can't transfer them to another party) and think they can maybe come out financially doing this.

I can't see how it is going to work...

Also it seems like they should try to restock the still open stores first? Or at the same time? Concord and Stockton are so empty...

[ClownLoach]

Of course as we all know Fry's Electronics went to this model because their credit rating was zero. The stores looked exactly like Sears and had little to no inventory in key categories such as TVs, computers, or appliances. When they were asked questions such as "what are you proposing customers use in your computer components departments for processors and operating systems, since apparently Intel, AMD, and Microsoft aren't carried anymore?". I think Fry's used this to fill space until they finished selling off any actually owned merchandise which is what enabled them to just close the doors without warning and never reopen, hold a liquidation, etc. I'm not sure if they ever actually did a true bankruptcy; they owned their buildings for the most part and had sold several in silicon valley for substantial amounts to be redeveloped. I suspect that when Fry's was done for the founders and family owners walked away with a fortune to retire off. Of course their employees got nothing but a pink slip...

Consignment is very expensive if anyone will do it at all. The retailer is usually still liable for any shrink losses at "cost" but since it's consignment the "cost" is higher as financing is baked into that price by the vendor. So basically it means that Sears is stuck paying the leases on these two buildings, they don't own them, and they don't even have enough money in the bank to buy enough junky merchandise to fill enough shelves for the store to appear to be "open."

[pseudo3d]

Of course as we all know Fry's Electronics went to this model because their credit rating was zero. The stores looked exactly like Sears and had little to no inventory in key categories such as TVs, computers, or appliances. When they were asked questions such as "what are you proposing customers use in your computer components departments for processors and operating systems, since apparently Intel, AMD, and Microsoft aren't carried anymore?". I think Fry's used this to fill space until they finished selling off any actually owned merchandise which is what enabled them to just close the doors without warning and never reopen, hold a liquidation, etc. I'm not sure if they ever actually did a true bankruptcy; they owned their buildings for the most part and had sold several in silicon valley for substantial amounts to be redeveloped. I suspect that when Fry's was done for the founders and family owners walked away with a fortune to retire off. Of course their employees got nothing but a pink slip...

Consignment is very expensive if anyone will do it at all. The retailer is usually still liable for any shrink losses at "cost" but since it's consignment the "cost" is higher as financing is baked into that price by the vendor. So basically it means that Sears is stuck paying the leases on these two buildings, they don't own them, and they don't even have enough money in the bank to buy enough junky merchandise to fill enough shelves for the store to appear to be "open."

The funny thing was that Fry's circa 2018-2019 kind of resembled Sears of the late 2000s...merchandised but worn down, too large for the space, and some categories that didn't make a lot of sense, like camping equipment.

Buying on consignment is a losing strategy. They should just sub-lease to smaller operators who will merchandise and operate inside.

[ClownLoach]

Of course as we all know Fry's Electronics went to this model because their credit rating was zero. The stores looked exactly like Sears and had little to no inventory in key categories such as TVs, computers, or appliances. When they were asked questions such as "what are you proposing customers use in your computer components departments for processors and operating systems, since apparently Intel, AMD, and Microsoft aren't carried anymore?". I think Fry's used this to fill space until they finished selling off any actually owned merchandise which is what enabled them to just close the doors without warning and never reopen, hold a liquidation, etc. I'm not sure if they ever actually did a true bankruptcy; they owned their buildings for the most part and had sold several in silicon valley for substantial amounts to be redeveloped. I suspect that when Fry's was done for the founders and family owners walked away with a fortune to retire off. Of course their employees got nothing but a pink slip...

Consignment is very expensive if anyone will do it at all. The retailer is usually still liable for any shrink losses at "cost" but since it's consignment the "cost" is higher as financing is baked into that price by the vendor. So basically it means that Sears is stuck paying the leases on these two buildings, they don't own them, and they don't even have enough money in the bank to buy enough junky merchandise to fill enough shelves for the store to appear to be "open."

The funny thing was that Fry's circa 2018-2019 kind of resembled Sears of the late 2000s...merchandised but worn down, too large for the space, and some categories that didn't make a lot of sense, like camping equipment.

Buying on consignment is a losing strategy. They should just sub-lease to smaller operators who will merchandise and operate inside.

I'd have to guess if the lease is unbreakable at this point it also would forbid sublease. They must have made a bad deal and signed a lease with both a "continuous operation" clause plus a high penalty for lease termination (that they don't have enough money to pay). They probably don't have enough money for the types of lawyers Amazon is currently engaging to screw over the landlords who built their new stores. So their only way out is a bankruptcy and I'm sure that somehow it was a better deal for Fast Eddie to reopen these as a consignment dollar store or whatever else junk operation than take a loss in the final trip to bankruptcy court.

A location like Burbank would probably always be a tough lease as most chain locations there rank in their top 10 or 20 volume units. Union Gap? Probably a wise landlord who could see through the Fast Eddie smoke screen and wanted protections. At the signing time it must have made money thus they signed it.

[SamSpade]

CenterCal certainly didn't let on that they had Sears under a bus for continuing to pay rent...
https://www.yakimaherald.com/news/local ... 2a1e9.html

[ClownLoach]

CenterCal certainly didn't let on that they had Sears under a bus for continuing to pay rent...
https://www.yakimaherald.com/news/local ... 2a1e9.html

Leases are long and convoluted documents. I was always amazed as to how a landlord would come to us and notify of a lease violation for something the store had been doing for years. They could have figured out some kind of loophole they could hold Sears to... Or maybe they had an agreement that Sears could transfer their lease to a new tenant, but then that new tenant backed out and Sears is on the hook to reopen.

[storewanderer]

Reopening dates have been announced; Union Gap set to reopen in November. Hiring has started for various store level/operating level positions.

~~~~~ttps://www.reddit.com/r/SEARS/comments/16pgpry ... _2_months/

Strange as I don't think all of the currently operating stores have been fully restocked. You would expect them to get the still open stores restocked before reopening stores?