Transformco holdings, the parent company to Kmart and Sears, issued a press release on November 7 that read “Since purchasing substantially all the assets of Sears Holdings Corporation in February 2019, Transformco has faced a difficult retail environment and other challenges.” and then stated, “we have made the difficult but necessary decision to streamline our operations and close 96 Sears and Kmart stores.”
California, by itself, is losing nine K-Marts and 19 Sears.
And one of those Kmart’s is Bishop’s
The closure represents a tangible loss to Bishop and the Eastern Sierra as a whole. This leaves Bishop with no big box department stores to supply the community “with the basics,” said Tawni Thomson, Executive Director of the Bishop Chamber of Commerce.
Residents of Bishop may feel like this is an indictment against their town, or rather a sign of the town not being able to support a big box store, but Thomson disagrees.
“The important thing to keep in mind is this store closed down for reasons that have nothing to do with Bishop. There is nothing wrong with our town.”
The history of Transformco, formerly Sears Holding, would tend to support this view.
Kmart was officially incorporated in 1899 but the first store named ‘Kmart’ didn’t open until 1962. At its peak in 1994, Kmart operated 2,486 stores globally, including 2,323 stores in the U.S. In 2002, Kmart declared bankruptcy and closed 326 stores the following year. It was kept afloat by ESL investments, a hedge fund, whichpurchased Kmart’s debt. In 2005, Kmart merged with Sears to form Sears Holdings Corporation.
Sears Holdings combined company profits peaked in 2006 at $1.5 billion. Due to retail pressure from tech giants like Amazon, Sears began to bleed money. From 2011 to 2016 the company lost $10.4 billion. And from 2010 to 2017, Sears holdings stores declined from 3,500 stores to 695.
After closing a couple hundred more stores, Sears Holdings was about to file for Chapter 7 liquidation before a judge ordered the company to strike a new deal to keep the stores open. Transformco holdings purchased 425 stores (223 Sears and 202 Kmarts) from Sears Holding for $5.2 billion in February, 2019. Stores not purchased were immediately liquidated.
On August 6, 2019, Transformco announced it would close 26 stores (5 Kmarts and 21 Sears), in October of this year.
On August 31, 2019, they announced the closures of 92 more stores (77 Kmarts and 15 Sears) to be closed by the end of 2019.
And finally on November 7, 2019, Transform announced it would close 96 additional stores (45 Kmarts and 51 Sears), with one of the stores being the Bishop Kmart.
The math is tricky, but according to the Press release dated November 7, “Transformco will operate 182 stores.”
Ashlee Alex, the assistant finance director for the city of Bishop, told the Sheet that revenue from sales tax generated by the Kmart in Bishop is “less than 10 percent.”
*The Sheet has submitted a public records request to the city of Bishop to get the exact percentage and amount
Some of the lost business should diffuse into the community but an unknown amount will be lost to non-local sources such as the Walmart in Gardnerville, Nevada or even Amazon.
The lost tax dollars and the lack of department stores in Bishop is an important issue but it ignores the loss of jobs. According to Thomson and the Chamber of Commerce, “At one point (likely the peak of Kmart’s business), Kmart had up to 70 employees working for them.”
An overt negative that Thomson chose to see optimistically: “The good news is just about every employer (associated with the chamber of commerce), is looking for employees. In Bishop we have a very low unemployment rate.”
She cited the Big 5 opening in Bishop as a part of the solution, “We know the new Big 5 is hiring about 17 people in the Bishop area which should help the recently unemployed workers.” She said.
As for the property that Kmart sits on, Elaine Kabala, the Bishop city planner, told The Sheet that Kmart doesn’t own the property; they simply lease it. The company that owns it is a third party and Bishop has been talking with the owner to ask about what might be next. “We certainly don’t want the space to stay empty,” said Kabala
Thomson brought up her worst case scenario as well, “The worst thing that could happen is Vons holds the space hostage like they did to the old Kmart spot.” She said.
Kabala confirmed that Vons is holding the space hostage by leasing the old Kmart. They don’t own the property where the old Kmart sits but have a long-term lease on the space.
Kabala believes it’s possible someone will move into the vacant building and Thomson agrees. “I am optimistic that another retailer will want to come through because there is opportunity here in Bishop as we have about 35,000 people that live in our market area.”