Sears Holdings Corp. said it signed a long-term lease with fast-fashion apparel chain Forever 21 to occupy about 43,000 square feet of a Sears department store in an upscale mall, located in Costa Mesa, Calif.
The deal, the first of its kind, for Hoffman Estates-based Sears, gives the struggling retailer a template to make more productive use of its mall stores, many of which anchor premium shopping centers but lag the retail industry in sales per square foot.
Forever 21, a Los Angeles-based bargain retailer that has been expanding throughout the recession, gains entry into one of the biggest U.S. luxury malls.
“This agreement is a great example of Sears Holdings selectively redeploying its asset base to improve the retail experience for consumers while working to create long-term shareholder value,” said Jeff Stollenwerck, president, Real Estate for Sears Holdings
Forever 21 said it plans to open its large format concept Forever XXI store at the Sears-owned property. The retailer will lease space on both Sears levels and have its own entrances from the mall and the street, distinguishing it as a separate entity from the Sears store.
Sears will continue to operate in the remaining roughly 250,000 square feet.
The store is expected to open next spring.
Fast-fashion rivals H&M and Zara have set up shop at the South Coast Plaza, joining a mix of 280 stores that includes Prada, Harry Winston, Burberry, Chanel and Christian Louboutin.
The agreement follows the unveiling in March of a Sears Web site called SHCRealty.com, a searchable database that lists thousands of Sears and Kmart stores of varying sizes as available for sale, rent or partial lease.
C.J. Segerstrom & Sons, the wealthy California real estate family that owns South Coast Plaza, opened the mall in 1967 and brought in Sears as one of the first anchors.
Forever 21, for its part, is in the market for bigger stores. In recent years the company has taken over spaces once occupied by Mervyn’s, Gottschalks, Lord & Taylor and Saks Fifth Avenue.
Forever 21 operates 480 stores in the United States and Puerto Rico, with international operations in Canada, Korea and Japan. Sears operates about 3,900 Sears and Kmart stores in the U.S. and Canada, including 848 full-line Sears department stores.
