Fate of local Sears and Kmart stores uncertain

Without a boost from holiday shoppers this season, the owner of Sears and Kmart announced yesterday it needs to close up to 120 stores across the nation as sales continue to decline.

Sears Holdings Corp. announced the closures will generate up to $170 million in cash as inventory is sold off. The company also expects to generate additional cash from the sale or sublease of the property on which the stores currently sit.

Sears has two full-line stores in San Mateo County at the Shops at Tanforan in San Bruno and the Hillsdale Shopping Center in San Mateo and Kmart has stores in San Mateo and Redwood City.

Whether the local stores will close has yet to be decided, according to the company.

"No individual closures have been announced at this time,” according to Sears Holdings. The company, however, closed a full-line Sears store in Mountain View in recent months.

But at Hillsdale, the center’s General Manager Larry Ivich has no reason to think Sears will close its department store there, which was an original tenant when the shopping center was first opened by the Bohannons in 1954.

"We don’t believe our store will be affected,” Ivich told the Daily Journal yesterday. "There is no reason to believe our store will close.”

But the general manager at Tanforan, Linda Larson, is not so sure.

"I was just reading the article” about the closures, she said yesterday. "It’s new to me. I have no information.”

Sears was an original tenant at Tanforan when it first opened in 1971. The store went through a major remodel in 1989 and was expanded in 2005, Larson said.

Sears has long-term leases at both Hillsdale and Tanforan.

The Kmart on Delaware Street and Concar Drive in San Mateo is already slated to be demolished as the city has approved a mixed-use residential development for the site called Station Park Green.

Financing for the development is still being worked out, however, and the property’s ownership wants to keep Kmart in place until it is ready to start building on the site.

"I haven’t heard from Sears,” said Alan Talansky with EBL&S Development. "We’d like to keep it going until we demolish the building.”

The Delaware Kmart is doing well, Talansky said, and signed a lease extension.

Whatever happens with Kmart, it will not stand in the way of developing Station Park Green, Talansky said.

Sears Holding indicated yesterday that Kmart stores across the country suffered a 4.4 percent decline this year, despite its holiday layaway program.

Both Sears and Kmart reported weak consumer electronics sales and Sears saw a decline in home appliance sales this year, leading to a 6 percent drop in same-store revenue.

Kmart was purchased out of bankruptcy in 2003 by investor Edward Lampert, who bought Sears, Roebuck & Co. the next year.

Since 2004, however, Sears Holdings has seen its cash and short-term investments decline by more than $700 million.

Economists announced the move by Sears Holdings added renewed worries about the company’s survivability as its stock plunged 27 percent yesterday. The 125-year-old company was once the largest retailer in the United States. Kmart was founded in 1962.

Bill Silverfarb can be reached by email: silverfarb@smdailyjournal.com or by phone: (650) 344-5200 ext. 106.