Sears Hometown files for Chapter 11 bankruptcy protection

By Jordan Valinsky, CNN Business

The “other Sears” is in financial turmoil, just like its more famous parent company.

Sears Hometown Stores Inc., a franchise-owned unit of Sears, has filed for Chapter 11 bankruptcy protection.

Sears spun off Sears Hometown in 2012 to give the parent company a much-needed infusion of cash. Transformco reacquired the company after it bought Sears out of bankruptcy in 2019.

The average Sears Hometown store is only 8,000 to 10,000 square feet, a fraction of the size of the average full Sears, which is about 160,000 square feet. The chain concentrates on selling appliances, tools and outdoor equipment.

Roughly 100 Sears Hometown stores are currently operating — down from 700 just three years ago. There are roughly 15 full-line Sears stores left.

The bankruptcy filing lists assets of less than $50 million and liabilities of at least $50 million. It also lists Eddie Lampert, the CEO of Sears’ holding company Transformco, as a 37.75% owner of Sears Hometown. Sears Hometown never stopped depending on Sears Holdings for just about everything. Most its goods, logistics and advertising support came from Sears Holdings.

At one point, Sears Hometown had better prospects than the main Sears chain, because it focused on home products and its smaller size is “more optimal than the huge department stores,” noted Neil Saunders, managing director at GlobalData Retail, in a note to clients Tuesday. However, he said that Sears Hometown squandered its potential under Transformco.

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

He added: “Bankruptcy will allow various assets to be sold off and will likely give Transformco flexibility in deciding how to distribute its remaining brands and services.”

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