Small Kona Sears store to get new owner

By HUNTER BISHOP

Tribune-Herald staff writer

Sears Hometown & Outlet Stores has found two prospective licensees for its Hometown store in Kailua-Kona.

Advertisements recently appeared in Stephens Media newspapers on Hawaii Island offering an opportunity to “own your own Sears store in Kailua.”

Sears Hometown & Outlet Stores, or SHOS, should not be confused with Sears stores located in large shopping malls, such as Sears in Prince Kuhio Plaza, or Sears in the Ala Moana Center on Oahu. The mall stores are part of Sears Holdings, which includes Kmart stores, owned by billionaire investor Eddie Lampert.

Last year, Sears Holdings spun off its Hometown and outlet store divisions which became SHOS, a separate, independent, shareholder-owned company, said Scott Nichols, director of franchise business development for SHOS. The spin-off involved more than 1,100 Hometown and 122 outlet stores, raising about $446.5 million for Sears Holdings.

However, while Sears Holdings continues on a financial decline — the Ala Moana Sears is one of 11 planned to close in 2013 — SHOS is one of a few large retailers in the nation that’s experiencing rapid growth.

Both of the prospective owners of the Kailua-Kona Sears Hometown Store are from the mainland, Nichols said. “We actually have a couple of people (who) plan to relocate to Hawaii,” he added. There was some interest from Hawaii residents but Nichols said they were interested in acquiring more stores than were available.

SHOS will decide between the competing applicants in about 30 days and it will take about two more months after that for the successful applicant to assume ownership under the Sears Hometown Store name. The store is currently open at 74-5583 Luhia St., in Kailua-Kona, under the company’s operation. Prospective “homestore” owners are required to have at least $25,000 in available cash and the ability to borrow $100,000, according to the SHOS website.

SHOS actually has four different types of stores, all spun off from Sears Holdings. Hometown Stores like the one in Kailua-Kona have most of the hardware goods found in a mall store, said Nichols, as well as appliances, lawn and garden equipment, mowers, patio furniture, grills, and a limited line of tools. Sears brand products with Craftsman and Kenmore names are also carried in the store. The 7,000-square-foot Kailua-Kona store is “migrating out of electronics,” however, and replacing that line with mattresses, which most Hometown stores on the mainland have already done, Nichols said.

The licensing agreement that was part of spinning off the Hometown Stores from Sears Holdings allows SHOS to continue using the Sears name and to sell its Craftsman and Kenmore brand products.

“There was not a lot of interest from Hawaii,” he said, but “the biggest problem with the interest level in the store was what else could I do? We couldn’t give them a guarantee of a timeline.”

Nichols said the spin-off has been “a resounding success” with nearly 1,200 stores and continuing growth nationwide. Forty-eight stores are currently under development. The company is keenly interested in the Hawaii market and planning to open more stores, he added, though details were unavailable.

SHOS also offers franchises to operate Sears home appliance showroom stores, hardware stores, and outlet stores, which sell returned and damaged products at discount prices. Nichols called them “ding and dent” stores. Franchise agreements “carry a lot more legal baggage” than a licensing agreements, he said.

“We are the only retail vehicle that’s growing, adding new stores,” he said. “We’re constantly looking for new ideas and opportunities.” Typically, SHOS takes over existing retail space, but some stores are being built from the ground up. “We can’t wait to get back into Hawaii,” he said.

Email Hunter Bishop at hbishop@hawaiitribune-herald.com.