Sears Holdings Corp. said Monday that its has entered into agreements with Primark to lease roughly 520,000 gross square feet of retail space in mall-based Sears stores in the Northeastern U.S.
Ailing Sears, which has been making every effort to stay alive, will maintain a presence at six of the seven locations with a “streamlined store format” of up to 100,000 square feet of selling space in each store.
Sears Holdings CEO and chairman Edward S. Lampert said, “Partnering with a globally recognized brand such as Primark to help establish its store base in the Northeastern United States is testimony to both our attractive store locations and our focus on transforming Sears by working with other retailers, mall owners and brands.”
Primark is expected to open the first of these stores as a subtenant of Sears at the King of Prussia Mall in Pennsylvania, where the retailer will occupy more than 100,000 gross square feet on the lower level. Dick’s Sporting Goods, another Sears subtenant, currently occupies roughly 75,000 gross square feet on the upper level. Sears will no longer operate a retail store or auto center at the King of Prussia location.
Staten Island could also see a Primark store at the Staten Island Mall in 2016. Sears said it will still operate roughly 70,000 square feet of selling space adjacent to Primark at this location. Primark will lease 70,000 gross square feet, joining Lands’ end as a direct tenant of Sears.
The other five locations and projected store openings have not yet been outlined.
Separate from its Sears space, Primark plans to open a 70,000-square-foot store in a former Filene’s Basement location in Boston late next year.
The struggling Sears has been selling off and leasing out its real estate over the last year in an effort to drum up much needed liquidity as part of its turnaround effort. The retailer also commenced a rights offering last week to sell off most of its stake in Sears Canada, which is expected to generate $380 million, and borrowed $400 million from Lampert-owned ESL Investments as a short-term loan in order to sustain its business.
But despite these efforts, analysts have said that Sears’ cash won’t carry the retailer beyond the next couple of years. Sears, however, stands by its turnaround efforts and says it has “an asset rich portfolio that provides us with what we believe to be substantial financial flexibility.”
In a blog post responding to a Bloomberg article earlier this month claiming that a vendor was halting shipments to the cash-strapped Sears for fear of not being paid, Sears said it has all the money it needs to execute its transformation and meet its obligations.
With the $380 in proceeds from the Sears Canada rights offering, the retailer explained in the post, the $500 million dividend it received from the Lands’ End spinoff, the $165 million in proceeds from real estate transactions, and the $400 million short-term loan, Sears Holdings will generate as much as $1.445 billion in liquidity in fiscal 2014.
Sears Holdings president of real estate Jeff Stollenwerck said, “These lease agreements with Primark illustrate how Sears Holdings is strategically transforming one of the largest retail real estate portfolios in the United States over time while continuing to operate its existing stores in large, but rationalized selling space.”