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Sears Auto Center closed at Westfield Countryside mall

 
Sears Auto Center stores will soon be closing across the country as the struggling company tries to sell or lease the spaces to other retailers. Sears owns more than 700 auto centers, which are described as only marginally profitable.
Sears Auto Center stores will soon be closing across the country as the struggling company tries to sell or lease the spaces to other retailers. Sears owns more than 700 auto centers, which are described as only marginally profitable.
Published Sept. 16, 2014

CLEARWATER — Sears has closed its standalone auto service center at Westfield Countryside mall as part of a nationwide strategy to save the struggling retailer.

The Sears Auto Center closed Saturday after decades at the Clearwater mall. A mall spokesman said a new tenant was taking over the space but couldn't release the name.

The closure is part of Sears' efforts to unload some of its vast real estate holdings by leasing space to other retailers or closing locations altogether.

"Sears is actively shopping its auto centers and hopes they can sell them off, but there has been zero interest,'' said Brian Sozzi, CEO and chief equities strategist of Belus Capital Advisors. "They want an AutoZone or a Pep Boys to scoop up the locations, but that's a big outlay.''

Sears Holdings, which owns Sears and Kmart, said last year that it wanted to divest its Sears Auto Center and Lands' End businesses to improve its financial flexibility and focus on core concepts. It spun off Lands' End in April but still owns more than 700 auto centers.

"The auto centers have been an afterthought. You don't hear them talked about,'' Sozzi said. "I think they will disappear faster than the actual (department) stores.''

A spokesman for Chicago-based Sears said Tuesday that the closure is "part of a series of actions to reduce ongoing expenses, adjust our asset base and accelerate the transformation of our business model.'' The 21 employees will receive severance pay and are eligible to apply for job openings at area Sears and Kmart stores.

The Clearwater auto center is one of the first nationwide to close and lease to a tenant. Another center in Illinois has leases pending with several smaller tenants, including a Moe's Southwest Grill.

"They can make more money as a landlord with that space than they can make running it as an auto center,'' said Chad Brand, president of Peridot Capital Management, which has compiled a list of spaces Sears has leased. "They have a lot of centers, and they aren't minting money. They are only marginally profitable.''

Brand expects Sears will start closing other auto centers in the next six to 12 months as leases are signed. Some of the buildings will be turned into mini strip centers with restaurants and stores. Larger ones like Countryside's could get a single tenant such as Nordstrom Rack, which is expanding and has only one store in the Tampa Bay area. (A second, in Brandon, is opening Oct. 24.)

Closing the Clearwater auto center is Sears' latest move at Countryside. Sears recently renovated its department store there to make way for Whole Foods Market, which leased 38,000 square feet of the first floor.

Sears' automotive business has lost its vroom in recent years amid stronger competition from brick-and-mortar as well as online retailers. Tighter profit margins for tires haven't helped, either.

The company doesn't break out sales or earnings for its business units but, overall, is struggling. Last quarter, it posted a $573 million loss.

On Monday, the retailer said it is borrowing $400 million from its CEO, billionaire Edward S. Lampert, who is also the company's largest shareholder. The company said it would use the money for "general corporate purposes."

Contact Susan Thurston at sthurston@tampabay.com or (813) 225-3110. Follow @susan_thurston.