Sears franchise files for bankruptcy in the US

A Sears franchise, the commercial company that owns a chain of American department stores, is in financial crisis, as is its most famous former parent company. Sears Hometown Stores Inc., a franchise owned by Sears, has filed for bankruptcy.

Sears spun off Sears Hometown in 2012 to give the parent company a much-needed cash injection. The average Sears Hometown store is about 750 to 930 square feet, a fraction of the size of the average full Sears, which is about 15,000 square feet.

The chain focuses on selling home appliances, tools and outdoor equipment.

About 100 Sears Hometown stores are currently operating — down from 700 just three years ago.

The bankruptcy filing lists assets of less than $50 million and liabilities of at least $50 million. It also lists Eddie Lampert, CEO of Transformco, the Sears holding company, as the owner of 37.75% of Sears Hometown.

Sears Hometown has never stopped depending on Sears Holdings for almost everything. Most of its product, logistics, and advertising support came from Sears Holdings.

At one point, Sears Hometown had better prospects than the major Sears chain because it focused on home goods and its smaller size is “more ideal than big department stores,” noted Neil Saunders, managing director of GlobalData Retail. , in a note to customers this Tuesday (13).

However, he said Sears Hometown wasted its potential with Transformco.

“Instead, it followed the similar pattern of continued decline that has been the hallmark of Sears, with hundreds of stores closing earlier this year. The benefits of having access to exclusive merchandise through exclusive products have also been lost as the various brands that Sears owned have been sold and are now distributed more widely in retail,” wrote Saunders.

He added: “The bankruptcy will allow for a number of assets to be sold and will likely give Transformco flexibility in deciding how to distribute its remaining brands and services.”