Sears Holdings Corp. has sublet the second floor of its two-story Sears store in the King of Prussia Mall to Dick’s Sporting Goods.
Sears operates the 215,000-square-foot store on a long-term ground lease with Simon Property Group, the Pennsylvania mall’s owner. Sears will maintain exterior entrances on both levels, and Dick’s will have exclusive use of the mall entrance on the second floor, as well as its own exterior entrances.
“The sublease agreement with Dick’s Sporting Goods is a great example of Sears Holdings selectively redeploying its asset base to dramatically improve our retail shopping experience while working to create long-term shareholder value,” said Alan Shaw, vice president of real estate leasing and development for Sears.
David Contis, president of Simon Malls, noted that the addition of Dick’s “will bring more energy and activity to this area of the mall, where customers will find easy access to restaurants and other dining choices.”
With 2.9 million square feet of space and more than 400 merchants as tenants, King of Prussia is purported to have the largest amount of leasable retail space of any mall in the U.S. Anchors include Nordstrom, Macy’s, Neiman Marcus, Bloomingdale’s and Lord & Taylor.
Since 2011, Sears has sublet space in three stores — in Albany, N.Y.; Clearwater, Fla., and Greensboro, N.C. — to Whole Foods, and in two stores —in Costa Mesa, Calif., and Greenville, S.C. — to Forever 21. Bay Club took space in a store in Cupertino, Calif., last year, and Northgate Gonzalez Markets at a Kmart unit in 2011.
In its annual report for 2012, Sears reported $47 million in revenue from subleasing arrangements for the year versus $30 million in 2011 and $52 million in 2010. Prior to the Dick’s sublet, subleasing obligations from tenants for the years 2013 and beyond were listed at $192 million.
The sublet follows Sears’ report last week of a 7.4 percent decline in its same-store sales during November and December and a reduction in its credit rating, to “Caa1” from “B3,” by Moody’s Investors Service.
Sears’ shares Thursday gained 4.6 percent to close at $38.37 in Nasdaq trading.