Sears Hometown Stores is suing Heidi Wood, who owns three Central Oregon area stores, after demanding she close the stores last month.
According to a lawsuit filed on June 27 in U.S. District Court, the corporation is requesting damages totaling no less than $1.616 million for multiple accusations involving alleged theft of merchandise, dishonest and deceitful operation of the stores, and refusal to give Sears Hometown confidential and sensitive customer information.
The lawsuit claims that Sears Hometown terminated its dealer agreements with Wood's Prineville, Madras and Bend stores on June 6 following an audit conducted on the stores in May. The corporation claims that in April, the regional sales and store director of the West region of the U.S. "observed that the stores had an unusually large number of returns, mark outs and mark downs," prompting the audit.
During the inspection and audit, Sears Hometown claims that its loss prevention team "discovered Wood engaged in dishonest and deceitful conduct in connection with her operation of the stores."
Wood was accused of processing refund transactions for merchandise that was not actually being returned by the customer and causing refunds to be credited to her personal credit cards and gift cards. The lawsuit also claims she removed 69 snow throwers from the stores without authorization from Sears Hometown and placed them in a large storage container at her home.
Wood said that Sears Hometown approached her in May, asking her to shut down her Madras and Prineville stores because they were not profitable enough. This request coincides with an announcement that the corporation would close 90 to 100 underperforming stores nationwide.
The local store owner told the company she did not want to close the Prineville store because they had just moved into a new location, and the owners of the building had spent quite a bit of money relocating the tenant and getting the building ready for the store.
Shortly thereafter, Wood was notified that Sears wanted to conduct an audit of her stores.
"In the past 12 years, I've never had a bad audit, and my audit didn't go well. I had had a store trainer come over and go through all my paperwork to make sure that I was all good. Everybody always has areas of improvement to work on, but my audit should have gone fine," said Wood. "When they came over, it wasn't going right, and something was up, I'm not sure what."
A couple weeks later, Wood said she was notified by Sears Hometown that they were terminating her dealer agreements.
Owner disputes accusations
The local store owner disputes the accusations and the way the lawsuit presents them. For example, Wood attributed the "unusually large number of returns, mark outs and mark downs" to merchandise service issues.
"Getting service right now for Sears is really hard, and I had a bunch of appliances that were waiting for service, and so what happened when service finally came and deemed a bunch of them unrepairable, and they were marked out," she said. "When you have appliances that have been sitting back there and accumulating for over a year and all of a sudden you get four or five service techs scheduled in a day and about six of them are declared dead by the appliance technicians as unrepairable and you mark them out, of course you're going to spike in numbers."
Wood went on to blame point of sale issues when addressing accusations of putting refunds on her personal credit cards and gift cards.
"Part of the problem it became in Bend, is things would fall out of the system, and I would have to go online if I was returning something for somebody," she explained. "Sometimes I would have to return it and reorder it for them, and I couldn't do it on the computer with cash, but I have customers also who say they needed to order something and they were out of town. I've let customers use my personal cards and things like that, but no, there were no illegal transactions on my credit card whatsoever."
In response to the accusation that Wood stored snow throwers on her personal property without permission, the store owner insists she did have permission from her district manager for off-site storage.
"And instead of Sears picking up the phone and calling my attorney, they decided to accuse me of stealing them," she said.
The lawsuit goes on to accuse Wood of refusing to provide the corporation with confidential customer information that Sears Hometown says rightfully belongs to them.
"There is no confidential customer information," Wood said in response. "I have a couple of files from when I was working on the audit, but I don't have any credit card numbers. I don't have any customer personal information."
The corporation is also demanding that Wood provide access to the stores, which contain merchandise that is property of the company. The lawsuit claims that after termination of the dealer agreement, Wood surrendered the keys of the Prineville store to a field management representative. However, according to the complaint, the building's landlord told the representative that Wood had defaulted on the lease agreement, and they had changed the locks and refused Sears Hometown access to the building.The corporation goes on to claim that Wood has refused to provide Sears Hometown access to the Madras store, and the corporation only recently gained access to the Bend location.
"I'm not exactly sure what's going on in Prineville because the owners of the building have that store locked," she said. "I am working with the property management on Madras, so there's no set timeline right now on those."
Wood and her attorney are working on a counter suit.
Other stores closing
Wood believes that Sears Hometown has filed the lawsuit to intimidate her because she is trying to help other owners enduring the same situation she faces.
"I'm not in this alone. They're closing between 90 and 100 of these smaller town markets, and the problem is they're leaving these owners, leaving them holding the bag on all these leases and everything else, all these expenses with no consideration to those owners ... The more I speak out, the more aggressive (they get) and the more accusations they're accusing me of. And it's OK because I'm not guilty. I'm not guilty of theft. I'm not guilty of dishonesty, I've never had a bad inventory. I've never had a bad audit."