Sears Reveals Further Store Details of Primark Agreement - Analyst Blog

Sears Holdings Corporation SHLD revealed details about the two remaining stores, which form part of its previously announced lease agreement with Primark, a leading fashion retailer in Europe.

Per the agreement dated Oct 2014, Sears had announced plans to lease seven retail locations to Primark. Out of these, five locations were announced earlier, including Danbury Fair (Danbury, CT), Freehold Raceway Mall (Freehold, NJ), King of Prussia Mall (King of Prussia, PA), Staten Island Mall (Staten Island, NY), and Willow Grove Mall (Willow Grove, PA).

The company now stated that the remaining two outlets will be housed at Burlington Mall in Burlington and South Shore Plaza in Braintree, both located in Massachusetts. However, Sears’ retail presence in both these malls, which are owned and operated by Simon Property Group Inc. SPG, will continue to be significant.

Primark is expected to get all its space over a period of 4–8 months from now. Also, it is likely to attract store traffic and enhance customers’ shopping experience at all aforementioned malls, thus improving productivity at Sears’ stores.

Sears has been making continuous attempts to unleash its real estate value and gain financial flexibility.

As evidence, the company recently announced a joint venture (“JV”) with Simon properties, per which Sears contributed 10 of its properties to Simon malls in return for cash and additional terms. In fact, the Sears store at Burlington Mall forms part of these 10 properties.

Prior to this, the company also announced its entry into a similar JV contract with General Growth Properties Inc. GGP. Per the deal, one of Sears’ subsidiaries added 12 of the company’s properties to the JV, all operating at GGP malls. In return, GGP paid $165 million in cash to Sears to get an equal stake in the JV.

Further, Sears had announced plans to sell roughly 250 of its properties to a new real estate investment trust – Seritage Growth Properties ("Seritage"). Additionally, the company declared that it has registered statements on Form S-11, concerning its plans to offer all Sears’ shareholders the rights to buy Seritage shares.

Sears further stated that in case of completion of the rights offering, the company anticipates selling its stake in both the aforementioned JVs to Seritage. Consequently, Sears’ Burlington Mall store will end up being part of this stake sale.

These moves undertaken by Sears mark a step toward the company’s transformation as it has been reporting losses over several quarters. These announcements highlight the company’s strong asset position as well as the numerous options it can exploit to acquire financial flexibility and create shareholder value.

Management has been focused on working toward operating Sears as a membership company by removing the asset content of its typical retail business. Thus, all aforementioned announcements complement this goal of the company.

Stocks to Consider

A well-ranked stock in the retail-discount industry includes Gordmans Stores Inc. GMAN, with a Zacks Rank #1 (Strong Buy).

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