Sears to shutter business as Chairman Eddie Lampert’s bid fails
Sears has rejected Chairman Eddie Lampert’s bid to save the company, setting the storied retailer on a path to liquidation, people familiar with the situation tell Imagala.com. Sears plans to announce its liquidation plans this morning, the people said.
Lampert had put forward a $4.4 billion bid to save Sears and 50,000 jobs by buying it out of bankruptcy through his hedge fund ESL Investments. His offer, though, was deemed insufficient by Sears’ advisors, the people said. The two parties were unable to come to a resolution.
The people requested anonymity because the information is confidential.
A liquidation could still salvage pieces of storied retailer, like its home services business. Still, it marks the end of an era for the company that started more than a century ago as Sears, Roebuck & Co., and was once nation’s largest retailer. Its fall from grace saw it swing from being the “first everything store” to a business that couldn’t compete when “everything” was found online after Amazon arrived.
It will be what many deem the ultimate proof of failure in Lampert’s grand plan to fortify two struggling retailers, Sears and Kmart, by combining them in 2005. The combined companies became victim of savvier competition, changing shopping habits and, many have argued, poor management.
Lampert’s background as a hedge fund manager, once deemed the next Warren Buffett, proved to be poor preparation for battling retail titans like Walmart, Target and Amazon. Lampert believed that a strong loyalty program and data made investing in stores and advertising optional, people familiar with the situation have said. As Sears’ losses piled up, it didn’t have a choice, it couldn’t invest.
Sears’ last profitable year was in 2010. For the past five years, the ratio of Sears’ capital expenditures to sales has been less than 1 percent, even as its sales have more than halved in the same time period.
Without proper attention, Sears lost relevancy and its customers’ loyalty.
Sears had a little under 700 stores when it filed for bankruptcy in October, but it has since whittled that down to an expected footprint of roughly 400. It employed 68,000 workers at the time of its filing.
ESL declined to comment. Sears did not immediately respond to requests for comment.