Sears Bounces Back After Court Approves Edward Lampert’s Deal
Sears managed to remain open after being saved at the last minute. Its chairman, Edward Lampert, won in the bankruptcy auction for the chain of department stores founded in 1893 by Richard Warren Sears and Alvah Curtis Roebuck. With the win, 400 stores can continue to operate and saved thousands of individuals from losing their jobs.
However, there is still a lot of work to do for Edward Lampert and the company. Sears is saved for now and major haul is needed for it to bounce back completely and overcome bankruptcy.
The New York Times reported that a federal bankruptcy judge accepted Lampert's deal to purchase Sears but the executive was also advised by the magistrate to start afresh to secure the company's future. Judge Robert Drain told the Sears chairman to "take action that would, in fact, be of great meaning to the company's constituents, particularly its workers."
Sears filed for bankruptcy in October 2018 and it was put up for auction. Lampert was the only person who bid on it for $5 billion and this week, he got the approval of the judge run the company again.
Lampert gave up his CEO title after filing for bankruptcy last year but he believed that the company can still get back up and do well. When the Chapter 11 bankruptcy protection was filed in October 2018, Sears already closed down more than 200 stores and it rendered thousands jobless.
In any case, while Sears is saved, for now, some business and economic analysts said that they are not certain if the company can really manage to stay afloat. They said that although Sears may have been granted a reprieve, the issues that it is facing are still there and it may persist unless real change is implemented.
"While there's no doubt that a shrunken Sears will be more viable than the larger entity, which struggled to turn a profit, we remain extremely pessimistic about the chain's future," the Market Watch quoted Neil Saunders, managing director of GlobalData Retail as saying in a statement. "In our view, Sears exits this process with almost as many problems as it had when it entered bankruptcy protection. In essence, its hand has not changed, and the cards it holds are not winning ones."
Further, the experts opined that to make sure that Sears will survive and get past the hurdles, the bosses must modernize the aging store and give it a major facelift. It was also suggested that Sears should try focusing on the sales of tools and appliance since there are so many clothing stores already. With fewer competitors, the better the company can regain good profits.
Meanwhile, Edward Lampert owns 31 percent of Sears's shares. His hedge fund also has an 18.5 percent stake in the company. He is the CEO who merged Kmart and Sears 13 years ago and this move helped Kmart to come out from bankruptcy.