Even before the holiday season reached its official close, Sears Holdings Corp. is admitting defeat. After posting a 6 percent drop in same-store sales for its Sears division and a 4.4 percent drop in sales for its Kmart stores for the quarter ending Dec. 25, the department store chain decided to close up to 120 underperforming stores.
Even though the 2011 holiday season has delivered decent results for many other retailers, Sears has been struggling with unimpressive sales results and waning brand appeal for years. Even in recent months, Sears' management has been focusing more on subleasing unprofitable stores and cutting expenses than on turning around the retailer's core operations. So it will come as no surprise to anyone in the retail universe that Sears Holdings will be closing stores.
The more interesting question will be how much interest those stores will garner from alternate space users. By all accounts, Sears stores tend to be in some of the best locations in the country since the department store has served as a staple mall anchor for so long. Meanwhile, many expanding retailers have complained recently that they can't find good enough real estate for new stores.
Given where we are in the real estate cycle, how much interest do you think those newly vacant Sears stores will attract and which chains are likely to end up snapping them up?