Sears, Roebuck and Co. plans to take over four Montgomery Ward department stores and three of its auto centers in Maryland, including Wards in Towson, which will become the first Great Indoors home decorating store on the East Coast.
Sears, the biggest U.S. department store chain, said yesterday that it will acquire 18 former Wards and 10 free-standing Wards auto centers under an agreement with Kimco Realty Corp., a New York-based real estate investment trust.
Wards, which filed for Chapter 11 bankruptcy Dec. 28, is going out of business and closing all stores in 30 states. Kimco won the right to lease or sell leases for all 250 Wards stores at a February auction in U.S. Bankruptcy Court in Delaware.
Sears, which did not disclose terms of the agreement with Kimco, said it expects to close on the deal by the middle of next month, then remodel the stores and reopen them by spring.
Under separate agreements with Wards, Sears plans to take over the product service contracts of about 2.4 million former Wards customers and acquire some assets of Wards national repair business, A&E; Signature Service.
Wards stores at Westfield Shoppingtown Annapolis, Harford Mall in Bel Air and Valley Mall in Hagerstown are to be converted to Sears department stores. The Wards auto centers at those malls are to become Sears Auto Centers, Sears said.
Most of the 18 former Wards are to become Sears, but four - including one at Towson Place in Towson - would become Great Indoors stores, a retail concept Sears began in 1998 and plans to expand.
Taking over Wards stores and product service contracts will enable Sears to build market share and give it denser store coverage in key markets, Alan J. Lacy, Sears' chairman and chief executive officer said in a statement.
Sears, which has 860 stores in 50 states, "looked at the [Wards] portfolio available to us with an eye to where we could strategically get more market coverage," said Janice R. Drummond, a Sears spokeswoman. "It was an important opportunity for us, the store locations as well as product service angle."
At least one local shopping center landlord objects to the deal. F. Patrick Hughes, president and chief executive officer of Mid-Atlantic Realty Trust, owner of Harford Mall, said the bankruptcy court has overstepped its bounds and denied property owners their rights.
"While we think that a viable retailer such as Sears is certainly preferable to the situation we were in before, we believe some economic rights of ours are being ignored in this transaction," Hughes said. "We're disputing how this is being done. ... We don't believe Kimco should be the middleman. We should be free to do a transaction with anybody we like."
Hughes said his company has filed its objections with bankruptcy court.
Deal called sensible
For Sears, the deal with Kimco makes sense, said Walter F. Loeb, retail analyst with New York-based Loeb Associates. Sears has found strength in sales of appliances, tools, electronics, home furnishing and auto repair, he said.
"Sears is trying to emphasize" those categories, "and some locations Wards occupied were well- known for that," Loeb said. "Anybody can do better than Wards because of a lack of merchandising. This will be an opportunity for Sears to revitalize those locations."
Sears released no information on whether any of its 18 new locations will replace older stores. Sears has stores in Annapolis and Hagerstown, and Drummond said she could not comment on whether either will close.
The deal will help Sears speed up plans to expand its Great Indoors division, Drummond said. Sears is opening about 10 Great Indoors stores, which have a home remodeling format, this year and possibly as many next year, Drummond said.
The store at Towson Place will be the first on the East Coast, she said. The stores are designed around four rooms of the house, the bedroom, the bathroom, the kitchen and the great room, selling remodeling products and home accessories.
The store will make Towson Place more of a destination center, said Susan Anderson, a vice president of H&R; Retail, a retail real estate brokerage.
"This is just a wonderful concept and people will come from all over," Anderson said. "This is a super-regional draw."
'Successful conversion'
Loeb called the Great Indoors concept innovative and viable for Sears, especially as a way to expand in areas with Sears department stores close by.
"Taking a Montgomery Ward store close to a Sears and changing it to a Great Indoors will be a successful conversion," he said.
Sears expects to hire about 3,000 employees to work at the 18 department stores and 10 auto centers, with 160 to 300 employees at each department store, Drummond said.