By Alan Wolf, YSN
Sears Hometown dealers say their inventory is being choked off and that they are unable to compete on price with sister retailer Sears on the few products they have in stock.
According to a report in the Wall Street Journal, inventory became tight after Sears owner Edward Lampert acquired the balance of the 375-store Hometown chain last year. Since then shipments have dried up, dealers say, along with sales and profits.
The small-format Sears Hometown stores are largely located in rural towns and sell appliances, tools and lawn-and-garden equipment. Originally an arm of Sears, Hometown, along with its scratch-and-dent sibling Outlet, were spun off by their parent company in 2012. After buying 425 Sears and Kmart stores in a 2019 bankruptcy sale, Lampert purchased the remaining 45 percent of Hometown that he didn’t already own for $36 million.
Lampert’s new company, Transformco, has since pared its store base down to 182 Sears and Kmart locations, and vendors have either cut off the retailer or curtailed shipments, which is also impacting Hometown. “We were able to work with vendors like Samsung and LG,” a Hometown dealer in Kansas told the newspaper. But after Lampert took over, “our shelves became empty,” he said.
What’s more, when Hometown stores do have merchandise — the chain still maintains separate buying agreements with some vendors — they are penalized for matching prices with Sears.com, which are often lower, a Vermont Hometown owner said. Compounded by the inventory shortage, his once profitable store is now barely breaking even, he said, and he’s struggling to pay his bills.
A third Hometown dealer said he finally closed his Idaho store Jan. 1 after sales went from $1.2 million to less than $500,000 in two years and the wait for a Maytag oven was three months.
According to the Journal, Hometown owners pay for rent and store upkeep and are paid a commission on sales of merchandise, which is owned by Transformco. Dealers also report a lack of communication from their parent company, and in some instances have received misleading information.
“All communication has stopped,” said an Alabama owner who sits on a Hometown owners council. He told the newspaper that about a third of all Hometown owners’ agreements are set to expire in July and that many, like him, don’t plan to renew.