LAKEPORT, Calif. – After having a presence in Lakeport for decades, the Kmart store is slated for closure at the end of this year.

The closure announcement comes amidst news that dozens of other stores across the nation are being shuttered, weeks after another closure list had been released.

“After careful review, we have made the difficult but necessary decision to close the Kmart store in Lakeport, Calif. The liquidation sale is expected to begin in mid-September and the store is planned to close by mid-December. We encourage customers to continue shopping on Kmart.com for all their product needs,” said a statement released to Lake County News by Larry Costello, public relations director for Sears Holdings Corp., Kmart’s parent company.

He confirmed that all employees had been informed of the plan but would not comment on how many employees work at the store, which city of Lakeport officials indicate is close to 100.

Costello would not offer further comment on a range of questions – from the reason for closing what is reputed to be one of the company’s best-performing stores to whether a smaller format “Home & Life” storefront might be placed in the building.

City officials said the 86,000 square foot building was built specifically for Kmart in the early 1990s. Previous to that, the store had been located in the building that now houses Bruno’s Shop Smart on Lakeport Boulevard.

On Aug. 6, Sears Holdings released a statement on its Web site that listed 26 large-format Sears and Kmart stores it planned to close across the nation in late October through mid-November. That list didn’t include Lakeport’s store.

That statement bore the name of “Transform Co.,” the company owned by Eddie Lampert, who formerly was majority owner of Sears Holdings. In February, a Lampert-owned hedge company, ESL Investments, closed the purchase of Sears Holdings, which at that time was reported to have just over 220 Sears stores and about 200 Kmart stores.

That number of Kmart stores is now expected to drop to just over 110; that’s compared to the company’s peak in 1994 of 2,486 stores – 2,323 in the United States, 127 in Canada and 36 in other areas – according to the company’s 1997 report to the US Securities and Exchange Commission.

Transform Co.’s Aug. 6 store closure announcement states: “Over the past several months, we have worked hard to strengthen our vendor relationships, return our inventory levels to normal, and improve customer satisfaction and operations; however, we have faced a number of challenges returning our stores to sustainable levels of productivity, including differences with Sears Holdings over our purchase agreement and a generally weak retail environment. These challenges have unfortunately affected our performance and limited our strategic choices.

“After careful review of where we are today, we believe the right course for the company is to accelerate the expansion of our smaller store formats which includes opening additional Home & Life stores and adding several hundred Sears Hometown stores after the Sears Hometown and Outlet transaction closes. We have made the difficult but necessary decision to close 26 large-format Sears and Kmart stores in late October through mid-November. The Sears Auto Centers at any of these stores will close in late August. Liquidation sales at these stores are expected to begin around August 15. As we promised, all eligible associates will be offered the same number of weeks of severance as offered to employees of Sears Holdings Corporation prior to that company’s Chapter 11 filing in October 2018,” the statement read.

The company said it would “continue to evaluate our network of Sears and Kmart stores and cannot rule out additional store closures in the near term. Our goal remains to return the company to profitability and preserve as many jobs as possible in the communities we serve.”

Sometime in the weeks since that statement came out, Lakeport’s store – located at 2019 S. Main St. – came into the crosshairs after having survived numerous previous rounds of closures.

Recent hearings and documents in the voluminous bankruptcy filings in federal court also haven’t given a clear idea as to why it was decided to close the store.

Over the holiday weekend, the store appeared relatively busy. On the front glass doors are taped three pieces of paper, two of them informing customers – in English and Spanish – that effective immediately the store no longer offered Western Union, California Lottery tickets or Scratchers, new layaway orders, Coinstar, Bill Pay, purchase orders or 30-day orders.

A third notice stated, “Due to the store closing, this store will not be participating in the TV promotions, circulars, coupons, or mailers. Thank you.”

Inside, however, there are so far no signs that the store will close, with “blue light” specials listed and some back to school sales offered, but no liquidation announcements posted.

There already has been a contraction in what the store offers.

Over the past year, much of the store’s garden section offerings have been diminished, with the garden area on the side of the building now storing kayaks, tents and other recreational gear, with some plants on stands outside.

The amount of stock has been reduced and often there are long lines with few checkers.

The store has had other issues over the years as well.

In October 2017, the Lakeport Kmart pharmacy closed. The company did not report the reasons.

In January 2018, then-California Insurance Commissioner Dave Jones announced a $1 million settlement with Kmart Corp. for alleged insurance fraud in California through prescription overbilling practices at Kmart pharmacies, which was part of a multimillion dollar national settlement alleging public and commercial insurance fraud through prescription over-billing practices.

That was followed in March 2018 by the US Attorney’s Office for the Eastern District reporting that Kmart Corp. had paid $525,000 to settle False Claims Act allegations of improper Medi-cal billings that were not supported by applicable diagnosis.

That federal case was brought in 2015 in a whistleblower lawsuit by a former pharmacist in charge at the Lakeport Kmart pharmacy, Loyd Schmuckley Jr.

A top sales generator

Despite the Lakeport Kmart store’s woes, it has remained a critical sales tax generator for the city of Lakeport.

While sales tax numbers for companies are confidential information, Community Development Director Kevin Ingram said Kmart is in the top 10 sales tax generating businesses in the city.

Ingram said the city received no formal notification from Kmart or its parent company about the plans to close the store.

“We’ve heard these rumors forever,” he said, so it came as a surprise when it was confirmed.

Both Ingram and Lakeport Police Chief Brad Rasmussen, whose department has been headquartered next to Kmart since late 2016, have interacted with Kmart management and said they were told that the Lakeport store was among the top 25 performing stores in the country.

Rasmussen said the city has had a good relationship with the store and its manager who had taken over within the last year. He said the manager has done a lot of community outreach, including sponsoring the city’s August National Night Out event, donating prizes and 80 pizzas from the Little Caesar’s restaurant inside the store.

In addition, Rasmussen said the Lakeport Police Department has also had a great relationship with Kmart’s loss prevention staff in dealing with shoplifting issues.

While big box stores have been the source of large amounts of crime in some areas, Rasmussen said that Kmart – which is in the top three businesses in the city for shoplifting calls – hasn’t presented a major crime problem for the city of Lakeport.

His staff ran statistics from Jan. 1, 2014, through Friday, and Rasmussen said the store was the focus of approximately 926 calls – ranging from shoplifting to general services, medical aids, suspicious circumstances, case followup and traffic stops – during that time period.

That breaks down to 248 in 2014, 160 in 2015, 179 in 2016, 139 in 2017, 135 in 2018 and 93 calls year to date. For context, the Lakeport Police Department averages about 9,000 incidents per year.

“It’s disappointing to see it or any business close because it’s going to have an economic impact on the city,” said Rasmussen.

The significant amount of sales tax revenue the store generates goes into the city’s general fund, and Rasmussen said the general fund is the source of 99 percent of the police department budget.

Rasmussen said that it was his understanding that the manager herself had no idea the store was to be closed until a short time ago.

Next steps

“I would like to see something significant go into that location so we don't have it sitting vacant,” Rasmussen said of the Kmart storefront.

That’s the overall goal of the city, said Ingram, noting Kmart already was a priority concern for the city and now it’s a bigger one.

Company officials so far have not made any statements about plans for the Kmart building itself. Ingram said said the company owns the building, which is held by Lany Lakeport LP, a California limited partnership which filed its registration with the California Secretary of State’s Office in June 2004.

Richard Ridloff, who signed the registration paperwork, is owner of The Richardson Co. Ingram said the city’s correspondence with Lany Lakeport LP has been directed to a New York address, in care of the Richardson Co.

County records show that the Board of Supervisors, at Lany Lakeport’s request in late 2012, approved reducing the tax assessment for the building and property from $6,979,976 to $5,890,000 for the 2010 tax year and from $7,032,534 to $5,890,000, for the 2011 tax year.

The city already is poised to address the situation with the store’s closing, having hired The Retail Coach in July to work on recruiting new retailers to the city in an effort to address the retail “leakage” – in which residents travel to other communities or out of county to shop – impacting local revenues, as Lake County News has reported.

“This was one of the reasons we brought Retail Coach on in the first place, we were concerned it was a possibility,” Ingram said of the Kmart closure.

In addition to retail attraction, Ingram said one of the reasons the city went with The Retail Coach was because of its experiencing strengthening existing businesses.

He said Austin Farmer, the project manager with The Retail Coach who is working with the city, already is taking the initiative to look at how to address the loss of Kmart.

Ingram said that, later this month, Farmer is attending the International Council of Shopping Centers’ Western Conference in Los Angeles, a smaller regional version of a national retailers conference, to do outreach for the city.

Ingram said he thinks the city has the pieces in place to quickly bring in new retailers.

However, anticipating the loss of sales tax to the city in the short-term, Ingram added, “It’s going to probably hurt for a little bit.”

Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it. . Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.