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SHLD Store Closures


krazeenyc

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"According to the terms of their revolver they cannot close stores at this pace throughout the entire year. (they are limited to a specific number annually)."

 

-ve covenant allows for 250 per quarter and 500 TTM (iirc prior revolver was 100)

 

Even then the collateral agent will waive that covenant.

 

Spin

 

Yeah. 500 TTM is sufficient to move the ball fast enough.

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With this pace of closing, I expect another brutal quarter for Q1. The revenue will likely get a hit.

I am curious if Eddie simply waited until these cash burning stores' leases to expire to close? He could have closed these stores 3-5 years earlier.

People were saying that the stores were not aggressively closed because Eddie has to wait until RE value goes up. But that is for owned stores, not leased ones, right?

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With this pace of closing, I expect another brutal quarter for Q1. The revenue will likely get a hit.

I am curious if Eddie simply waited until these cash burning stores' leases to expire to close? He could have closed these stores 3-5 years earlier.

People were saying that the stores were not aggressively closed because Eddie has to wait until RE value goes up. But that is for owned stores, not leased ones, right?

 

Well if you have a lease on the store. You need to pay the lease till it expires. The annual loss from the store may be same as or less than the annual lease payment. Just a guess.

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Norwalk Kmart to Close Mid-May 2014 (Lease not renewed)

 

http://www.norwalkreflector.com/article/4088291

 

Fergus Kmart to Close Mid-March 2014 (Lease not renewed)

 

http://www.inforum.com/event/article/id/425308/

 

Alexandrea Kmart to Close Mid-March 2014 (Lease not renewed)

http://www.echopress.com/content/alexandria-kmart-store-close-soon

 

Kmart in Wise to Close (Mid April 2014) Lease not renewed.

http://m.tricities.com/news/article_581cd604-8aa0-11e3-939d-0017a43b2370.html?mode=jqm

 

 

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Newport News Kmart in Denbigh to close

http://www.dailypress.com/business/tidewater/dp-newport-news-kmart-in-denbigh-to-close-20140207,0,4248075.story

 

Mention store closings in 2012 and 2013, also another SHC Realty plug:

 

"The company announced at the start of 2012 that it would close up to 120 Kmart and Sears stores after a dismal holiday shopping season. It closed 61 Kmart stores and 131 Sears stores in the first nine months of 2012 and 52 Kmarts and 16 Sears stores in the first nine months of 2013, according to a financial filing submitted with the Securities and Exchange Commission.

 

The company is actively selling or leasing its closed properties through its real estate unit called SHC Realty. The online list also includes the Denbigh Kmart and the attached Auto Center and the closed Sears property at the Military Circle Mall in Norfolk, among other operating stores in Hampton Roads."

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It says it's owned by Baker and Baker.  Not Kmart or SHLD.

 

Good example of valuable real estate, though.

 

Berkowitz has referenced tax assessment values as his method of a base-line valuation.  Nice to see some more evidence that his estimates might be extremely conservative.

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