The bankruptcy search saw everyone arrive at the end. Sears Holdings (NASDAQ: SHLD) announced early Monday morning that it sought…
The bankruptcy search saw everyone arrive at the end. Sears Holdings (NASDAQ: SHLD) announced early Monday morning that it sought Chapter 11 protection and had arranged funding that would enable it to continue to work, at least by Christmas. The goal is to reorganize around a few hundred profitable stores that the company hopes allows to achieve the turn that has eliminated the larger business for almost a decade.
While other companies have been reorganized and become successful in the protection of bankruptcy courts, including dealers like Payless ShoeSource, True Religion and Gymboree, do not expect the same Sears. The most important difference between the one and the others who survived his brush with death was still a brand value. Customers still want to shop for their stores, and their brands have a permanent appeal to consumers.
Not so with Sears. Under the leadership of CEO Eddie Lampert, any value once, has become all but eliminated, removed from Sears, as it sold or spared almost all assets that could make money. Orchard Supply, Sears Hometown and Outlet Lands End and Craftsman tools are all gone.
Many rings Sears on Amazon. com of its day, the place where consumers could shop for just about anything they needed, including floods, clothes, appliances, furniture ̵
1; even houses. Like today’s supermarkets, Sears tried to circumvent the local store with its catalogs that offered farmers and others a way to buy immediately everything they needed.
But the change in consumer shopping habits was first brought about by the emergence of discounters such as Walmart and Target who competed for the prize a top strategy and then by Amazon, who did shopping from home comfortably, were for much for a retailer that would not or could not answer.
It was only because Sears had its major older property holdings – about 3500 stores around the time. Lampert’s Kmart chain acquired Sears 2004 – it could prevent years from what eventually happened this week. Instead of investing in their stores, Lampert chose financial maneuvers to maintain the business, which often gave rise to health, but was found to sell goods – to erode. As a result, Sears was a slow moving train that survived longer than many suspects that it could.
Although Lampert’s old will try to rebuild a vigorous retailer’s façade in bankruptcy, it’s likely to crumble again.
At the end, Sears had $ 11.3 billion in debt and only $ 6.9 billion in assets. It has arranged $ 300 million in debt financing from its existing lenders with Lamperts ESL Investments hedge fund in negotiations with the reseller to deliver another $ 300 million. Lampert is Sears largest investor but also the largest creditor.
Lampert served as both chairman and CEO, but will now give up the latter position to a tripartite committee. Mohsin Meghji, Managing Director of M-III Partners, the company’s advisory company Sears employee to advise on bankruptcy will act as restructuring manager.
As part of the restructuring, Sears will sell about 150 of its remaining 700 stores at the end of the year, with an eye to throw 250 more sites, giving a core 300 stores to survive, which ESL can end up in all CASE. It also made a bid to buy the Kenmore device brand earlier this year.
Sears creditors had originally been pushed for liquidation, and it may still happen, but much will depend on the company’s ability to do it throughout the holiday season. Lampert has told employees that the company has to make “material progress in the next few months” if Sears is to avoid liquidation, but it probably will not happen.
Customers have fled the dealer, it does not offer compelling goods, and its stores suffer from neglect. It has not reported any profit since 2010 and sales have fallen. Worse, Lampert is still in control of operations, and according to millionaire investors and former board member Bruce Berkowitz, he is doing too much control over the bankruptcy process.
That means there is no likely difference between how things work. Sears will still be obsessed with the forces that swirled around the reseller before Chapter 11 filing, and there is no reason to believe that consumers will suddenly decide now it’s time to start shopping their stores. Any resurgence of this reseller that may happen will not be so long.