Sears Holdings plans to close 20 more Seritage-owned stores in the U.S., in addition to the more than 200 closures that have already been announced by the department store chain.
The closures were first reported by Business Insider, which said store employees were told about the retailer’s plans on Thursday. The news was later confirmed in a filing with the Securities and Exchange Commission on Friday morning by real estate investment trust, or REIT, Seritage, which owns the properties.
In 2015, Sears sold 235 Sears and Kmart store locations to Seritage as part of an agreement in which Sears Holdings leases the stores back from the REIT. If a store is “unprofitable as defined” in the agreement between the companies, Sears has the option to exit the lease by making a payment equal to one year of rent, a Sears spokesman told CNBC.
The locations slated for closure include 18 Sears stores and two Kmart stores, which are located in Sarasota, Florida; Roseville, Michigan; Watchung, New Jersey and East Northport, New York, among other locations, according to Business Insider.
A Sears spokesman said the stores are expected to close their doors in mid-September, with liquidation sales beginning by June 30.
“Sears Holdings continues to actively manage our real estate portfolio to identify additional opportunities for reconfiguration and reduction of capital obligations,” Sears spokesman Howard Riefs said in a statement following the Seritage filing.
“We have been strategically and aggressively evaluating our store space and productivity, and have accelerated the closing of unprofitable stores as previously announced,” Riefs said.
Sears announced its first round of store closures in January, and many people believe the department store chain is headed down a path toward filing for bankruptcy, as the retailer struggles to grow its sales.
Many mall REITs, such as Simon, GGP and Macerich, have been under increasing pressure by analysts and investors, who question how the real-estate landlords will fill vacated anchor boxes, should a department store, like Sears, announce plans to close.
In its filing with the SEC, Seritage said the 20 Sears stores being closed represent 3.8 million square feet of gross leasable area, or GLA, in its real estate portfolio. The aggregate annual base rent at these stores is approximately $11.2 million, or 4.9 percent, of Seritage’s total annual base rent as of March 31.
Under their agreement, Sears will continue to pay Seritage rent until the chain fully vacates the 20 stores. Sears will also pay Seritage a termination fee equivalent to one year of the aggregate annual base rent, plus one year of estimated annual operating expenses.
— CNBC’s Lauren Thomas contributed to this article.