Kmart Agrees to Sell Up to 54 Stores to Sears
The Kmart Corporation, announced last week that the company has signed a definitive agreement with Sears, Roebuck and Co., to sell up to 54 Kmart stores for $621 million in cash. The exact number of stores, locations, and total purchase amount are yet to be determined but will be looked at based on the satisfaction of certain conditions that are supposed to happen within 60 days for the majority of the stores and 75 days for the remainder. At this time, Kmart will continue to operate the stores that will be sold until March or April 2005. Sears has agreed to consider offering employment to any Kmart employee who is interested in being employed by Sears at the converted stores.
In a press release from Kmart, Julian C. Day, Kmart’s president and CEO, said, “Today we announced the second of two transactions involving the sale of stores. The transactions with Sears and Home Depot (which was announced June 4) represent a total purchase price of almost $1 billion for less than 80 of our stores, or approximately 5 percent of our current store base. Both transactions represent opportunities to realize value, which can be utilized to improve the remaining store base and to strengthen the company. We are not currently in discussions regarding any additional significant store sales, although we will continue to evaluate opportunities as they arise.”
Day stated further in the press release, “We are committed to achieving value for our shareholders by operating our stores and recognizing the value of our assets. After both transactions are closed, Kmart will remain one of the largest retailers in America, with over 1,420 stores and approximately $20 billion in revenues. We will be able to direct all our attention on building upon and accelerating the considerable operating improvements that we have already achieved, including the Fall Apparel launch in July and our partnership with The WB Network. We have a strong management team in place and are committed to making Kmart a better company every day.”
Kmart also announced that its board of directors has increased its existing share repurchase authorization to $100 million. Purchases made under this program will depend on the prevailing stock price, market conditions, alternative investment opportunities and other factors the press release stated.