Edward Lampert, chairman of Sears Holdings has thrown another lifeline to the troubled department store retailer in the form of a $4.4bn bid to keep the business afloat.
Media reports say the bid from Transform Holdco LLC, an affiliate of Lampert’s ESL Investments hedge fund, includes $1.3bn in financing, will protect 50,000 of the company’s 68,000 jobs, and keep about 425 stores open.
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However, the bid for the bankrupt US retailer still needs to be approved by the bankruptcy court.
Lampert’s move came after a court-imposed deadline of 28 December for bids for the retail chain’s remaining stores. Ahead of this deadline, Sears Holdings announced it would close another 80 Sears and Kmart stores in late March 2019 – on top of the previously announced closure of 182 stores.
Sears filed for Chapter 11 bankruptcy protection in October, and secured US$350m in emergency funding the following month to enable it to continue trading through Christmas. In the half year to August, the company made an operating loss of US$419m.
Neil Saunders, managing director of analyst GlobalData Retail, fears Sears will fall into liquidation if the courts do not grant an extension to the bid process Eddie Lampert is seeking.
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By GlobalData“In our view, the lack of bids and the difficulties Eddie Lampert is having in raising finance for his own offer reflects the fact that Sears is essentially worthless,” Saunders says. “Not only is the business deeply unprofitable, but it also suffers from a tarnished brand and the lack of a clear proposition.
“This means any purchaser would need to undertake both severe financial engineering as well as brand reinvention – a costly and risky process with little guarantee of success.”
He adds that Sears’ attempts to shrink its way to success by closing stores “have helped to temporarily boost footfall and revenue at some shops, they have done nothing to put the firm on a sound footing.
“Nor have the efforts improved perceptions. Our data from the holiday period show that overall customer usage of both Sears and Kmart has fallen, and perceptions of both brands are down on last year’s low scores. In our opinion, this is a brand now at rock bottom.”
