Just four years ago, many Sears Hometown stores were profitable, but now many are barely breaking even, the Wall Street Journal reported. Sears Hometown is a collection of smaller stores selling tools, appliances, and lawn and garden equipment. There are about 375 locations in mostly rural towns, and the majority of them are run by independent contractors. The Hometown stores had nearly $960 million in sales in its most recent fiscal year, which ended in February 2019. Both Sears Hometown and Sears are controlled by Edward Lampert, although the smaller stores weren’t part of the Sears bankruptcy in 2018. Originally part of Sears Holdings Corp., the division was spun off into a separate publicly traded company in 2012 called Sears Hometown and Outlet Stores Inc. Lampert, the former Sears chairman, chief executive and largest shareholder, became a majority investor in the chain as a result of the spinoff. The Hometown and Outlet chain continued to operate independently after Sears Holdings filed for bankruptcy protection in the fall of 2018. Lampert blocked an attempt by the spinoff’s board to liquidate the money-losing Hometown stores last spring, while he was in negotiations to buy full control of the chain. In a letter to the Hometown and Outlet board, Lampert argued that liquidating the Hometown stores would hurt Hometown owners and their families, as well as their employees and the communities that they serve. In October, Lampert paid $36 million for the 45 percent of Hometown that he didn’t already own. At the same time, Hometown agreed to sell assets including its Outlet business, which mostly sells used and discontinued goods, for about $133 million. Sears Hometown and Outlet investors have filed a lawsuit in Delaware Chancery Court that accuses Lampert of buying the company for an unfairly low price. Lampert has denied the allegations.
