Sears is closing its store of the future just 6 months after it opened, and it's an ominous sign for the company's recovery
- Sears is shutting down a store in Oak Brook, Illinois, just six months after celebrating its grand reopening.
- Sears reopened the store in October after renovating it to make it smaller, sleeker, and more modern than its traditional department stores.
- The store's failure "underlines the fact that Sears does not have a credible plan for its long-term survival," said Neil Saunders, managing director of GlobalData Retail.
- A Sears spokesman said the store is not profitable.
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Sears spent a year renovating a 56-year-old store in Oak Brook, Illinois, then trumpeted its grand reopening in October with a live band, celebrities, and a giant ribbon-cutting.
Six months later, the store is liquidating its inventory and closing permanently.
The failure of the store, which was viewed as a prototype for future Sears locations, casts considerable doubt over the company's recovery post-bankruptcy, according to Neil Saunders, managing director of GlobalData Retail.
Read more: Decaying stores, plunging sales, and a remote CEO: How Sears was driven to the edge of bankruptcy
"It underlines the fact that Sears does not have a credible plan for its long-term survival," Saunders said. "Making stores a bit nicer and reducing space are sensible steps, but they do not represent a holistic solution."
Before reopening the store, Sears had spent a year renovating the space. It was downsized from 250,000 square feet to 62,000 square feet and modernized to provide a "refreshed, improved shopping experience," the company said.
It carries a small selection of premium brands and features a "Welcome Center" with a lounge for members of Sears' Shop Your Way rewards program.
In an interview with the Chicago Business Journal at the time of the store's reopening, Sears Chief Brand Officer Peter Boutros called the Oak Brook location "contemporary and design driven." He said he imagined women might seek refuge in the lounge while their male counterparts shopped.
"A wife could have a coffee there while her husband is off looking at gardening equipment," he said.
But it seems that Sears' vision for the store didn't pan out.
Read more: Eddie Lampert wins court approval to buy Sears out of bankruptcy and save 45,000 jobs
The store is not profitable, according to Transform Holdco, which purchased Sears out of bankruptcy.
"As part of Sears Holdings' bankruptcy proceedings, our go-forward company, Transform Holdco LLC, has the right not to acquire various contracts that were entered into by Sears Holdings," a Sears spokesperson said in a statement to Business Insider. "As such, Transform Holdco decided not to acquire the current lease for the unprofitable Sears store at Oakbrook Center and the store will close on April 28."
Sears employees that are eligible will receive severance and have the opportunity to apply for open positions at area Sears or Kmart stores, he said.
Large-scale renovations like those at the Oak Brook location could have helped revive Sears years ago, but the company has already alienated too many customers through years of underinvestments in its stores, Saunders said.
"There is not enough time, capital nor goodwill to make the changes needed," he said. "That leaves Sears in a very tough position that throws major doubts over the future of the firm."