Big Box Blues: Sears, Kmart, & Sports Authority

I remember trips to Sears with my mom in the early/mid 1970s, plus I’d look through the Sears catalog at home. Much of my early wardrobe was from Sears. I also remember trips to the same Sears with my dad to buy/replace Craftsman tools.  My parents had our new house built in 1965  — the same year the 160,000+ sq ft Sears store was built 2.2 miles away (map).  That Sears store is still open, and isn’t on the recent list of Sears/Kmart closures.

One Kmart in the St. Louis region was on the list last month, the Bridgeton location at 11978 St Charles Rock Rd.

A few years ago the Bridgeton Walmart moved to just East of this Kmart. But the Sears/Kmart closures are part of a bigger trend for these retailers:

Trying to cut its way to profitability, troubled Sears Holdings announced Thursday that it will close 68 Kmart and 10 Sears stores this summer in its latest move to cut losses.

Sears’ (SHLD) move (see the list of the stores) comes atop a previous announcement that it will close 50 other stores. Sales have been falling and Sears had a disappointing holiday sales season.

“The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability,” said Sears Holdings CEO Edward Lampert in a statement. (USA Today)

From February:

Sears said Thursday that its same-store sales fell 7.1% in the fourth quarter and revenue dropped 9.8% to $7.3 billion. 

The company reported a quarterly loss of $580 million, or $5.44 per share, compared with a loss of $159 million, or $1.50 a share, the previous year. (Business Insider)

Retailing is competitive. but many put part of the blame on the libertarian leader: Eddie Lampert. From July 2013:

Every year the presidents of Sears Holdings’ many business units trudge across the company’s sprawling headquarters in Hoffman Estates, Ill., to a conference room in Building B, where they ask Eddie Lampert for money. The leaders have made these solitary treks since 2008, when Lampert, a reclusive hedge fund billionaire, splintered the company into more than 30 units. Each meeting starts quietly: When the executive arrives, Lampert’s top consiglieri are there, waiting around a U-shaped table, according to interviews with a half-dozen former employees who attended these sessions. An assistant walks in, turns on a screen on the opposite wall, and an image of Lampert flickers to life.

The Sears chairman, who lives in a $38 million mansion in South Florida and visits the campus no more than twice a year (he hates flying), is usually staring at his computer when the camera goes live, according to attendees.

The executive in the hot seat will begin clicking through a PowerPoint presentation meant to impress. Often he’ll boast an overly ambitious target—“We can definitely grow 20 percent this year!”—without so much as a glance from Lampert, 50, whose preference is to peck out e-mails or scroll through a spreadsheet during the talks. Not until the executive makes a mistake does the Sears chief look up, unleashing a torrent of questions that can go on for hours. (Bloomberg)

Why does he manage this way? From December 2013:

Once upon a time, hedge fund manager Eddie Lampert was living a Wall Street fairy tale. His fairy godmother was Ayn Rand, the dashing diva of free-market ideology whose quirky economic notions would transform him into a glamorous business hero.

 
For a while, it seemed to work like a charm. Pundits called him the “Steve Jobs of the investment world.” The new Warren Buffett. By 2006 he was flying high, the richest man in Connecticut, managing over $15 billion thorough his hedge fund, ESL Investments.

Stoked by his Wall Street success, Lampert plunged headlong into the retail world. Undaunted by his lack of industry experience and hailed a genius, Lampert boldly pushed to merge Kmart and Sears with a layoff and cost-cutting strategy that would, he promised, send profits into the stratosphere. Meanwhile the hotshot threw cash around like an oil sheikh, buying a $40 million pad in Florida’s Biscayne Bay, a record even for that star-studded county.

Fast-forward to 2013: The fairy tale has become a nightmare.

Lampert is now known as one of the worst CEOs in America — the man who flushed Sears down the toilet with his demented management style and harebrained approach to retail. Sears stock is tanking. His hedge fun is down 40 percent, and the business press has turned from praising Lampert’s genius towatching gleefully as his ship sinks. Investors are running from “Crazy Eddie” like the plague.

That’s what happens when Ayn Rand is the basis for your business plan. (Salon)

Next to the Bridgeton Kmart is another retailer that’s closing: Sports Authority. Two more St. Louis area locations were to close: St. Peters & Fenton.

From March:

The retailer filed for Chapter 11 protection in federal bankruptcy court in Delaware in a move aimed at helping it shed much of its debt and clean up its balance sheet. A successful revamp would let Sports Authority improve its brick-and-mortar, perhaps with in-store boutiques similar to the Under Armour and Nike shops that have been so fruitful for rival Dick’s Sporting Goods.

Sports Authority, whose name adorns the stadium of the Denver Broncos, has been saddled with boatloads of debt ever since a $1.3 billion leveraged buyout a decade ago. At the time, the Colorado-based retailer and Dick’s  DKS -1.79%  were similar in size with annual sales of $3 billion. But since then, Dick’s has invested in its in-store experience and in-store tech, which have helped propel the retailer’s sales past Sports Authority’s. Analysts are forecasting total 2015 sales of $7.3 billion for the Pennsylvania-based company, compared to almost $3 billion at Sports Authority. (Fortune)

In early April it looked like the bankruptcy might work:

Embattled retailer Sports Authority has finally received a bit of good news: it looks to have settled a dispute with consignment suppliers that could resolve around 160 lawsuits.

The suits centered around $85 million-worth of winter gear currently being sold at the sporting goods retailer’s stores, and suppliers who had sold these products on consignment wanted them back in the wake of Sport Authority’s Chapter 11 bankruptcy filing in March.

Now, if the settlement is approved by Judge Mary Walrath of the U.S. Bankruptcy Court in Delaware, Sports Authority will be able to sell this gear throughout the bankruptcy proceedings, according to the Wall Street Journal. (Fortune)

End of April:

Vendors, however, didn’t like seeing the merchandise they had consigned sold off in liquidation sales without reimbursement, and they sued. Sports Authority countersued.

Landlords also were upset that the company filed for bankruptcy protection one day after March rents were due, stiffing them out of $27 million.

“They didn’t get very far into this before they hit snags with their suppliers. That tells me they weren’t that close to getting the reorganization done,” said Dan Schniedwind, a credit analyst and retail specialist with Denver Investments.

In the end, creditors weren’t willing to allow the company to continue making large purchases, something required to keep stocking the shelves in even a reduced number of stores. (Denver Post)

By mid-May:

Sports Authority Holdings Inc. will head to auction next week with bids in place from two groups of liquidators plus smaller offers from rivals Dick’s Sporting Goods Inc. and Modell’s Inc., according to people familiar with the situation.

However, the bids from Dick’s and Modell’s were considered “disappointing” and for fewer stores than initially expected, one of the people said. Dick’s, which one equity analyst said could make an offer for 180 stores, instead placed a bid for less than 20 stores; Modell’s made an offer for a small handful of stores, the person added. (Wall Street Journal)

Heres’s a list of the St. Louis area locations, the first three were announced in March:

1. 11982 Saint Charles Rock Rd Bridgeton , MO 63044
2. 4025 Veterans Memorial Pkwy, Saint Peters , MO 63376
3. 788 Gravois Bluffs Blvd, Fenton , MO 63026
4. 8340 Eager Rd, Brentwood, MO 63144
5. 4445 Lemay Ferry Rd, Saint Louis , MO 63129
6. 1205 S Kirkwood Rd, Kirkwood , MO 63122
7. 15907 Manchester Road, Ellisville , MO 63011
8. 6298 Ronald Reagan Dr, Lake Saint Louis , MO 63367
9. 6575 N Illinois St, Fairview Heights , IL 62208

From November 2014:

New retail tenants are moving into the space in Ellisville Square in Ellisville that Kmart vacated earlier this year.

Brixmor Property Group, the New York-based commercial real estate company that owns Ellisville Square, said the space will be filled by three new tenants: a 40,000-square-foot Sports Authority, a 19,000-square-foot Michaels and a 16,000-square-foot Party City. The stores are slated to open in the third quarter of 2015, Brixmor officials said in a statement. (St. Louis Business Journal)

The Ellisville location was announced in January 2015:

Three new stores — Michaels, Sports Authority and Party City — will be opening soon at the site of what was a K-mart store at Clarkson and Manchester roads in Ellisville (Post-Dispatch)

The Sports Authority in Ellisville opened on Saturday August 8th, 2015.

Earlier we discussed the Sears/Kmart CEO, but why did Sports Authority fail?

Once one of the largest sports retail chains in the country, Sports Authority has now slipped behind outlets like Dick’s Sporting Goods and REI. These chains have positioned themselves more successfully in the market through establishing strong relationships with their suppliers, developing the leverage to keep prices low that their competitors have had difficulty matching, Rory Masterson, an industry analyst at IBISWorld, told the Los Angeles Times in April. They’ve also adapted more sucessfully to the online marketplace. Online sales at Dick’s climbed at a compounded annual rate of 39 percent from 2010 to 2015.

While Sports Authority may be faltering, the sporting goods industry as a whole is growing. It accounts for an estimated $150 billion per year globally. In 2014, the most recent year available for figures, the industry was worth $63.7 billion in the United States, an increase of 24 percent since 2009 and a jump of 2 percent from the year before.  

Sports Authority faces tough competition from traditional sports retail outlets, yet its financial struggles point to the increased diversification of the sports retail market.  A wide array of more specialized competitors have entered the field, providing both traditional sports garments and “athleisure”, or casual wear inspired by workout clothing that has exploded in popularity over the past few years. (CSM)

The Bridgeton Kmart & Sports Authority are both part of Hill Top Plaza.

Hilltop Plaza Redevelopment Area Tax Increment Financing Redevelopment Plan – Hilltop Plaza Community Improvement District; analysis of the eligibility for TIF and CID, and the planning and financial projections for the redevelopment of the 70% vacant portion of Hilltop Plaza, formerly a destination shopping area on St. Charles Rock Road. (EDR)

I was at the MetroBus stop on St. Charles Rock Rd in 2013 — had no idea at Kmart & Sports Authority were close. Was wasn’t/isn’t any pedestrian access. Even between Kmart & Sports Authority there’s no pedestrian route! I know the lack of pedestrian access didn’t cause these stores to close, but it didn’t help them either. Pedestrians do exist in the area — there are sidewalks along St. Charles Rock Rd and the parallel internal road — they just don’t connect the businesses to transit or each other.

As Gen Y moves to the suburbs they may expect a Walkscore higher than 56.

— Steve Patterson

Sunday Poll: Support or Oppose a Regional Sales Tax for the St. Louis Zoo?

In the news last month was the idea of a 5-county sales tax to support the St. Louis Zoo:

The chief executive of the St. Louis Zoo says a regional sales tax is the right way — and perhaps the only way — to preserve the zoo and its animals for years to come.

President Jeffrey Bonner, in an impassioned argument for a five-county sales tax, said the zoo needs money to repair sewers, roofs and animal exhibits on its 100-year-old Forest Park campus. And it can’t consider operating a proposed 300- to 400-acre conservation breeding site without the new tax.

An admission fee is not the answer, Bonner said. Charging nonresidents for entry would create long lines, discourage attendance, reduce visitor spending and cost the zoo an estimated $50 million in turnstiles, ticket booths and the like. (Post-Dispatch)

The tax, if passed, would be collected on sales in the following counties: Franklin, Jefferson, St. Charles, St. Louis, and the independent City of St. Louis. Currently, the Zoo receives about $20 million annual from a property tax in St. Louis city & county.

This is the subject of today’s poll:

The poll is open until 8pm.

— Steve Patterson

St. Charles County & St. Louis County Connected Via Public Transit

Five days a week people take public transit to/from St. Louis & St. Charles counties! No, MetroLink light rail wasn’t secretly extended over the Missouri River. No, MetroBus doesn’t serve St. Charles County either. “How”, you ask?

Just the way Madison County Transit enters the City of St. Louis, St. Charles Area Transit (aka SCAT), enters St. Louis County. In late February I took the last morning SCAT bus from the North Hanley Transit Center into St. Charles. Over four hours later, I took the first SCAT bus back.

We departed North Hanley on time — here’s the official schedule for the last SCAT bus leaving St. Louis County:

• 8:55am North Hanley
• 9:19am St. Joseph Health Center/Main St St. Charles
• 9:24am Ameristar Casino
• 9:31am Cave Springs Commuter Lot
• 9:38am Zumbehl Commuter Lot
• 9:46am Fairgrounds Commuter Lot
• 9:50am Streets of St. Charles — where I got off
• 10:16am last morning drop off at North Hanley

The route, logically, is designed to serve St. Charles residents needing to get into St. Louis County for the day. Just 30 minutes to go from the Fairgrounds Commuter Lot to North Hanley four times each weekday morning, starting at 5:44am!  Still, my bus from North Hanley into St. Charles had about 10 other passengers — people I presume were going to work.

In the afternoon the SCAT I-70 bus runs four times, starting at North Hanley at 1:38pm, the last on 5:59pm.

• 1:38pm North Hanley
• 1:45pm Fairgrounds Commuter Lot
• 1:52pm Zumbehl Commuter Lot
• 2pm Cave Springs Commuter Lot
• 2:11pm St. Joseph Health Center/Main St St. Charles
• 2:16pm Ameristar Casino
• 2:20pm Streets of St. Charles — where I got on
• 2:42pm arrival at North Hanley — next departure is 2:48pm

I’m so glad to see the City of St. Charles operating transit buses, connecting to the rest of the region — via St. Louis County. However, the webpage and route maps need improvement. Online maps for the four St. Charles routes must be viewed separately. No system map exists, at least not online.  Still, it’s a start.

— Steve Patterson

Minoru Yamasaki’s Lambert Airport Terminal Dedicated 60 Years Ago Today

The non-profit STL250, set up to celebrate the city’s 250th in 2014, posted fascinating history during its campaign. I saved links to the ones I thought would be interesting to share on anniversary’s. Today’s was posted in 2013 — about an event sixty years ago today:

This Day in St. Louis History, March 10, 1956:
Lambert’s “Ultra modern” airport terminal is dedicated

St. Louis Mayor Raymond Tucker dedicated the new main terminal at Lambert Field, replacing the old terminal that had been built in the 1930s. Minoru Yamasaki designed the four-domed, concrete shell terminal, which would later inspire similar airport designs at John F. Kennedy International Airport in New York and Paris-Charles de Gaulle Airport in France. Minoru Yamasaki was one of the most prominent architects of the mid-20th century, but two of his projects would meet famously tragic ends – the Pruitt Igoe Housing Complex of St. Louis in 1972 and the World Trade Center Twin Towers of New York on September 11, 2001.

This dawn photograph of the Lambert Main Terminal was taken in June 1956, less than 4 months after its opening. Photograph by Ralph D’Oench, Missouri Historical Society Collections

Yamasaki’s airport commission was around the same time as his commission for Pruitt-Igoe, probably just after.

Many changes inside & out have altered the original clean lines, but it still looks good to my eyes.

— Steve Patterson

St. Louis Shouldn’t Build Light Rail, Modern Streetcar, or Bus Rapid Transit; Rapid Streetcar May Be The Answer

There are several camps in the transit world:

• Light rail advocates
• Bus rapid transit advocates
• Streetcar advocates

These don’t mix — build their classic model or nothing. However, in the last decade a new group has emerged advocating a hybrid of these: The Rapid Streetcar. For example, Portland is looking at Rapid Streetcar for future expansion of its streetcar line.

The rapid streetcar concept aims to combine the best features of streetcars and light rail transit (LRT) to achieve faster commute/travel times than streetcars and lower system costs than light rail. Streetcars are typically designed to go shorter distances in central cities, densely populated mixed-use centers and neighborhoods. Streetcars are also typically designed to operate in mixed traffic, preserving street traffic patterns.

LRT typically functions as regional high-capacity transit (HCT), generally traveling in a separated right-of-way with relatively fast-moving, larger-capacity vehicles designed to rapidly transport large numbers of people between suburban and urban centers.

The rapid streetcar concept would apply some of the LRT features to streetcars to improve travel times while keeping capital costs lower. It would combine features of a semi-exclusive transitway and transit priority features within the street right- of-way to achieve faster travel times and maintain lower system capital costs. This could introduce two new levels of service to Portland’s system.

Several corridors under consideration for the Streetcar System Concept Plan are prime candidates to introduce Enhanced Local Service. These corridors are major arterials with 4 to 5 lanes and on-street parking such as NE Sandy Boulevard and SE Foster Road.

In Portland there are potential corridors for introducing priority service. Currently, the region is undertaking a study to extend the existing streetcar system along a former railroad right-of-way from the South Waterfront District, through Johns Landing and south to Lake Oswego. SE Foster Road and 122nd Avenue are also candidates where there may be sufficient right-of-way width to introduce streetcar priority lanes.

Drawing from the experiences from other cities around the world, enhancements to the streetcar operations can significantly increase average speeds:

Service/average Speeds

• Urban Circulator Service:10 to 15 mph
• Enhanced Local Service:  15 to 25 mph
• Rapid Streetcar: 20 to 35 mph

(City of Portland, p14)

According to Wikipedia, our light rail has an average speed of 24.7 mph — within the same range as a rapid streetcar.

Streetcars are cheaper [than light rail] because of their lower infrastructure requirements. Often there is no need to relocat[e] utilities, right of way does not need to be purchased and the stops are smaller and the vehicles more pedestrian oriented. Streetcar stops are also closely spaced if the goal is to be a circulator or short line transport mode. However if a longer distance transit mode that mimics light rail is what you’re looking for, but your city is on a budget, the rapid streetcar might be your choice.

Many cities have taken up the mantle of the rapid bus to be their cost effective alternative to light rail, but only do this based on cost, not because its what the citizenry wants. Recent Rapid Bus movements in Oakland, San Francisco, and Charlotte have shown that people really want light rail on a budget but haven’t been able to engineer their systems to reduce costs and are therefore left with an inferior transit mode for their stated goals.

But by using streetcars in center lanes with single tracking and passing sidings at stations you can get the same performance as light rail on 10 minute headways. Streetcars aren’t single vehicles either. Skoda streetcars have couplers on them as well that would make them multiple car consists. The lighter vehicles are about 66 feet long as opposed to 90 foot LRVs yet you can still get increased passenger capacity and lower infrastructure needs. (The Overhead Wire)

Typically streetcars & light rail have double track — one per direction. But like BRT, if passing is done at stops, money can be saved by using single track in between.

From the person who presented this idea in 2004, Lyndon Henry:

North American planners only thought of streetcars as a slow, circulatory mode competing with pedestrians. Meanwhile, de facto high-performance streetcars were taking Europe by storm, and it was clear that streetcar technology could approach the service capabilities of “full” light rail transit (LRT) — in fact, streetcars could be deployed as a kind of “junior LRT”.

Another factor was the “gold-plating” disease—over-design—with each new LRT startup trying to “one-up” the last new start in another city. LRT railcars were getting bigger and beefier, and station designs were escalating from originally simple shelters into “palaces.”

This led me to recall the original inspiration of LRT—Europe’s invention of a rather bare-bones upgrade of ordinary mixed-traffic streetcars into a faster mode with lots of dedicated lanes, reservations, and exclusive alignments, only occasionally running in street traffic. This notion was expounded in the 1960s and early 1970s by transit visionaries like H. Dean Quinby and Stewart F. Taylor; interestingly, Taylor branded his version of the concept a “Rapid Tramway.” (Railway Age)

We shouldn’t cling to a mode from the past, we need to build a north-south transit line by establishing goals then designing a line to meet those goals. At the same time I’d look at doing what Houston did — redesign all transit routes & schedules from scratch.

— Steve Patterson