In the age of Amazon and dying retailers, Sears has emerged from bankruptcy with a new survival plan: smaller stores, fewer clothes and aisles full of tools and appliances.
Edward Lampert, whose firm ESL Investments successfully bid $5.2 billion for the retailer’s assets last month, said the new company will sell or sublease some of the 425 stores.
Though Lampert, who was responsible for Sears declaring bankruptcy last year, told the Wall Street Journal he’d rather be bigger than smaller, “we still have enough of a critical mass.”
One of the largest revenue-generators for the company is tools and appliances, which generated $36 billion in annual sales for the company, giving it almost 13 percent market share in the space. The company is expected to drop apparel to focus on this section of its business, but still trails Lowe’s, Home Depot and Best Buy, the Journal reported.
The Chicago-based retailer, founded over a century ago, filed for bankruptcy in October, following a steady stream of Sears and Kmart store closures across the country, which declined from 3,500 in 2005 to 900 by the start of this year.
Lampert’s hedge fund, which was already Sears Holdings’ largest shareholder and creditor, initially made a $4.6 billion offer for the company’s assets in December but the deal was criticized by creditors, who held concerns that Lampert would be exempted from litigation going forward.
The question of whether the plan will work has prompted some optimism from observers. “They have a shot, but it’s a long shot,” Craig Johnson, president of consulting firm Customer Growth Partners, told the Journal. [WSJ] — David Jeans