Galleria at Crystal Run Losing One of its Anchors

John Jordan | January 2017

The Sears department store and Sears Auto Center at the Galleria at Crystal Run in the Town of Wallkill in Orange County will close by mid-April.

TOWN OF WALLKILL—The Sears department store and adjoining Sears Auto Center at the Galleria at Crystal Run mall here will close by mid-April. Sears has been a staple in the retail market in Orange County and particularly in the Middletown-Wallkill area for decades.

Sears is an original anchor of the Galleria at Crystal Run, which opened in April 1992, and was previously an anchor tenant of the Orange Plaza Mall on Route 211 in Middletown. The enclosed Orange Plaza Mall ceased operations in 1992 but was later repositioned as an open-air shopping center by current owner National Realty. The Galleria at Crystal Run is owned and operated by the Pyramid Cos. of Syracuse, NY.

Howard Riefs, a spokesman for Hoffman Estates, IL-based Sears Holdings, said that a liquidation sale of the Sears and Sears Automotive stores at 1 North Galleria Drive will begin on Jan. 6 with a closing scheduled for mid April. Riefs did not supply the size of the two-floor Sears store at the Galleria at Crystal Run, however, a published report puts the store’s size at approximately 144,000 square feet. Other major anchors at the Galleria at Crystal Run include Macy’s, JCPenney, Target, Dick’s Sporting Goods, and H&M.

Riefs characterized the store closing as a “difficult, but necessary decision.” He added in an e-mailed statement, “We have been strategically and aggressively evaluating our store space and productivity, and will be accelerating the closing of unprofitable stores as we have previously announced.”

According to a Worker Adjustment and Retraining Notification (WARN) Act Notice filed on Dec. 27th with the New York State Department of Labor, a total of 96 workers at the Sears Galleria at Crystal Run store will lose their jobs—88 affected workers from the retail store and eight from the automotive retail operations. The retailer’s filing said the employee terminations would begin during a 14-day period beginning April 9.

Struggling Sears Holdings, which also operates Kmart, announced in April that it would close 68 Kmart and 10 Sears stores during the summer. Since then, reports have surfaced of further store closings. The only New York store to close earlier this year was a Kmart location in Poughkeepsie.

In addition to the Galleria at Crystal Run store closing, Riefs confirmed that Sears locations in Western New York in Amherst and Cheektowaga would also be closing by mid-April. In addition, Sears filed a WARN notice with the New York State Department of Labor of the impending closure in mid-April of the Sears department store at the Rego Park Center Mall on Queens Boulevard in Rego Park. That closure will result in the loss of 200 jobs. The Amherst closing will affect 105 workers, while the Cheektowaga shutdown will impact 76 employees there.

Other Hudson Valley Sears locations are unaffected by the closings. Sears also has Hudson Valley stores in Nanuet, Newburgh, Kingston, Poughkeepsie, White Plains, Yonkers and Yorktown Heights.

On Dec. 8th, Sears Holdings announced disappointing third quarter results, including a net loss of $748 million ($6.99 loss per diluted share). The company also reported that revenues fell approximately $721 million to $5 billion for the quarter ended October 29, 2016, compared to revenues of $5.8 billion for the quarter ended October 31, 2015. The year-over-year decline in revenues was primarily driven by having fewer Kmart and Sears full-line stores in operation, which accounted for $323 million of the decline, as well as a 7.4% decline in comparable store sales during the quarter, which accounted for $304 million of the revenue decline.

Edward S. Lampert, Sears Holdings’ chairman and CEO, said, “We remain fully committed to restoring profitability to our company and are taking actions such as reducing unprofitable stores, reducing space in stores we continue to operate (including through the Seritage lease arrangement), reducing investments in underperforming categories and improving gross margin performance and managing expenses relative to sales in key categories.”

Jason M. Hollar, Sears Holdings’ CFO added, “We will continue to take actions to generate liquidity, adjust our overall capital structure, and manage our business while meeting all of our financial obligations. Actions may include additional expense reductions, financing transactions and asset monetization including exploring alternatives for our Kenmore®, Craftsman and DieHard brands, our Sears Home Services business and our real estate portfolio.”

Website Business Insider reported that a total of 30 Kmart and Sears locations would close in early 2017. The list, which included the Sears stores in Western New York, Queens and Orange County, also included a Kmart location in upstate New Hartford, NY.

John Jordan
Editor, Real Estate In-Depth