Last dealer-run stores holding liquidation sales
By Alan Wolf, YSN
One of the last remaining bastions of the once mighty Sears Roebuck and Co. is about to go by the wayside.
Sears Hometown, the small-format offshoot that sells appliances, power tools and lawn equipment, is pulling the plug after filing for Chapter 11 bankruptcy protection in December and is holding going-out-of-business sales at its 115 remaining dealer-operated stores.
About $40 million in inventory is being offered at supposed discounts of as much as 40%, according to Tiger Capital Group, SB360 Capital Partners and B. Riley Retail Solutions, which are managing the fire sales, although it’s not uncommon for merchandise to be repriced higher during retail liquidation events. Nevertheless, BrandSource dealers should be prepared for some short-term disruption.
Conversely, members can also realize long-term gains, as BrandSource dealers are well-positioned to pick up Hometown’s dissolving market share. A number of members, including Zeglin’s Home TV & Appliance, Southeastern Appliances and Cole’s Appliance & Home Furnishings, have leveraged Hometown’s attrition to snatch up vacated storefronts and expand their own operations, while at least one past BrandSource addition — Smith Appliances in Fitzgerald, Ga. — was a former Hometown operator itself.
Hometown showrooms average 8,000 to 10,000 square feet in size and generally serve smaller, rural markets. The remaining stores span 36 states and Puerto Rico.
According to bankruptcy court documents, Hometown was starved of the inventory and services that it depended on contractually from Sears’ post-bankruptcy entity, Transformco, which acquired the chain in 2019. Under terms of the takeover, engineered by Sears majority shareholder Eddie Lampert, Hometown store operators paid for rent and store upkeep and received a commission on sales of merchandise, which is owned by the parent company.
The “lack of inventory has caused a rapid downward spiral,” the chain wrote in its Dec. 12 filing, which was compounded by rising costs and declining sales.
Turnaround efforts included direct-ship sales arrangements with vendors; searching, in vain, for potential buyers; and closing nearly 400 underperforming locations since its acquisition four years ago.