Kmart has closed its last remaining Manhattan store, and its exit says much about the current state of the erstwhile Sears empire.
On Sunday night, the low-cost retailer quietly closed the doors at its Astor Place location at 770 Broadway in Greenwich Village after its Penn Plaza location closed in February last year. A pair of Kmart stores remains open in the Bronx.
Word of the Astor Place closure surfaced from EV Grieve, a local blog on the East Village. Employees at the store weren’t told of the closure until two days before, the post said, noting that the store at been in operation for 25 years.
Social media users logged onto Twitter to express sadness over the closure, as well reminisce about their own shopping experiences at the Astor Place store.
Kmart has just a few handfuls of stores left in operation and the closures are part what many have predicted would be the last chapter of a once-storied discounter.
But it’s not just Kmart that has been exiting doors. Sears, its sibling under parent Transformco, has been closing doors too. There are only about 35 to 40 Sears stores in operation, representing the slow demise of a failed $11 billion merger in 2004—engineered by hedge funder Edward S. Lampert of ESL Investments—of Kmart Holding Corp. and Sears, Roebuck & Co. that was supposed to create $55 billion in annual revenues and a national footprint of nearly 3,500 retail stores.
Before Lampert got involved in Kmart, the chain started as S. S. Kresge in 1899, named after founder Sebastian Spering Kresge. Kresge had roots in the discount sector, first selling goods to the F.W. Woolworth Co. variety stores, and then investing in his own five-and-dime stores with John McCrory, who would go on to found his own discount chain called McCrory’s.
In the late 1990s, variety stores fell out of favor and both Woolworth and McCrory’s landed in bankruptcy court before eventually going out of business.
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Kmart’s fate was marginally better. Renamed Kmart Corp. in 1977, it was once the largest retailer in the U.S., before it fell to second place in late 1990 when Walmart took the No. 1 spot. Profitability peaked around 1992 as competitors such as Walmart and Target gained ground. During its heyday, the discounter had nearly 2,500 locations.
Kmart began closing stores and on Jan. 22, 2002, the company filed a Chapter 11 petition for bankruptcy court protection. It was during the bankruptcy that Lampert purchased a significant stake of the discounter’s debt through his fund ESL Investments. When Kmart exited bankruptcy proceedings on May 6, 2003, Lampert held a controlling 53 percent stake in Kmart, a result of the debt investment he made for less than $1 billion.
Renamed Kmart Holding Corp., Lampert a year later engineered the $11 billion merger with Sears, Roebuck & Co. While there was great fanfare at the start, there was also criticism that he didn’t know much about retail operations. As sales declined, Lampert was criticized for not investing enough in the stores. He was able to keep the retailer afloat with some financial wizardry using Sears’ best assets, including selling off Lands’ End, and the DieHard automotive battery brand, considered one of Kmart’s crown jewels. Craftsman, a tool brand, was later sold to Stanley Black & Decker. He also spun off what some considered were Sears Holding’s better real estate assets to a real estate investment trust called Seritage Growth Properties in 2015. After over 25 quarters of sale declines, Sears Holdings filed its Chapter 11 petition on Oct. 10, 2018.
The Sears Holdings bankruptcy turned litigious, as some creditors sought for a liquidation, betting that they would get more value now than later during a projected second tour of bankruptcy proceedings. They also accused Lampert of “serial asset stripping” in court. Eventually, Lampert in February 2019 prevailed on his bid to buy the bankrupt firm for $5.2 billion. Court approval helped to save 45,000 jobs, but by that point, Sears Holdings was a shell of its former self, exiting bankruptcy with roughly just 425 stores. A good portion of those stores were operating under the Sears banner. Since the retailer’s exit from bankruptcy, it has been shedding doors and shrinking the store base even further.
The company, privately held by Lampert through Transformco, no longer publicly reports store closures. The Transformco site noted that it sold five Kmart store leases in January.
Transformco says the company still has a real estate portfolio totaling 59.8 million square feet. It also operates Sears Home Services, the nation’s largest appliance repair provider and separate online operations for its Kmart and Sears banners.
Sears Holdings did not immediately respond to a request for comment.