Sears Hometown and Outlet Stores will be acquired by Liberty Tax for approximately $132.9 million, adding to the company’s growing retail portfolio. Liberty Tax acquired Buddy’s Home Furnishings in July and is in the process of acquiring The Vitamin Shoppe for approximately $208 million.
Additionally, Buddy’s Newco, a subsidiary of Liberty Tax, has acquired 41 Buddy’s Home Furnishings stores from A-Team Leasing, an existing Buddy’s Home Furnishings franchisee. A-Team Leasing intends to become the franchisee for five Sears Outlet locations as well.
Liberty Tax is assembling a portfolio of businesses that follow franchise-centric models — Buddy’s, in particular, franchises 90% of its 293 locations. The company may also look to acquire retailers that don’t follow a franchising model but have the potential to be franchised in the future.
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“We are excited about the acquisition of Sears Outlet and its unique model that offers its customers in-store and online access to outlet-value products across a broad assortment of merchandise categories, while serving as a valuable supply chain partner for its vendors,” said Andrew Laurence, Chairman of the Liberty Tax Board of Directors in a statement. “This is a continuation of Liberty Tax’s strategy of identifying and acquiring franchised or franchisable businesses while also building scale at attractive acquisition valuations.”
The deals follow poor quarters for both Sears Hometown and Vitamin Shoppe:
- Same-store sales at Sears Hometown fell 8.9% in Q1 2019, though the retailer has changed its appliance sourcing and reduced its reliance on promotions to improve margins; and
- Same-store sales fell 7.2% at Vitamin Shoppe, though the retailer is working with landlords to close stores and reduce store occupancy costs, and has been aiming to revive sales by carrying edible CBD-infused products and launching a new CRM program.
The Sears merger is expected to close in October, while the Vitamin Shoppe merger will close in Q4 2019. Additionally, Liberty Tax plans to change its name to Franchise Group in the Q3 or Q4 of 2019.
