AP Photo/Charlie Riedel
A Sears store slated for closing stands alongside a mall that is being torn down.
- Sears' chairman, Eddie Lampert, has won a bankruptcy auction to keep the 126-year-old retailer from liquidating. But its future remains in doubt, according to analysts.
- "There is no way Sears is going to survive," said former Sears Canada CEO Mark Cohen. "These 400 stores are going to fail just like the 1,500 or so that preceded them."
- Lampert's bid, which will need court approval in a February 1 hearing, should keep about 400 stores open and retain up to 50,000 jobs.
- "At best ... the retailer could stagger on for longer as a going entity," said Moody's Vice President Christina Boni.
Sears is poised to emerge from bankruptcy mostly intact after its closest brush with death in the company's 126-year history.
About 400 Sears and Kmart stores will remain open and up to 50,000 workers will keep their jobs after Sears Chairman Eddie Lampert's victory against liquidators in a bankruptcy auction following several weeks of tense negotiations.
The company's advisers have elected to keep its lights on by accepting Lampert's bid, but Sears' future remains very much in doubt, according to former Sears Canada CEO Mark Cohen.
"There is no way Sears is going to survive," said Cohen, who is now the director of
"Customers have been abandoning the brand for almost 20 years and they are going to continue to do so."
Sears has been struggling to survive for years by selling off valuable brands and real estate to plug sales losses. The company's sales tumbled from $53 billion in 2006 to less than $17 billion in 2017.
Read more: Inside Sears' death spiral: How an iconic American brand has been driven to bankruptcy
Business Insider/Hayley Peterson Inside a Sears store.
Cohen said it's hard to believe the company will operate any differently post-bankruptcy than it did prior to filing for Chapter 11 protection in mid-October.
"The company could linger for a couple years, but who is going to buy a $1,000 refrigerator from Sears now?" he questioned.
The pared-down company will remain in the control of a subsidiary of Lampert's hedge fund, ESL Investments. ESL did not respond to a request for comment.
Analysts have also shared concerns about the future of Sears.
Moody's Vice President Christina Boni said reorganizing Sears around a smaller set of stores poses a "serious challenge" because "scale, which is critical to competing in retail today, will be lacking and its core customer proposition still remains in question."
Read more: Sears workers describe decay in failing stores
"At best ... the retailer could stagger on for longer as a going entity," Boni said in a note to clients Wednesday. "However, in our view the company will continue to be hobbled by the same untenable problems, given that its efforts to resuscitate performance by shrinking has mainly been unsuccessful."
Business Insider/Jessica Tyler
Inside a Sears store.
Neil Saunders, the managing director of GlobalData Retail, said Sears will struggle to recoup losses from years of brand erosion and "severe underinvestment" in stores.
"While there is 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," Saunders wrote in a note to clients on Wednesday. "In our view, Sears exits this process with almost as many problems as it had when it entered bankruptcy protection."
Saunders said he has concerns about Lampert's ability to turn the company around.
"Eddie Lampert has an extremely poor track record of creating positive change at Sears," he said. "While his ability to keep the chain alive is praiseworthy, his retailing skills leave a lot to be desired."
In a statement to the Associated Press this week, Lampert said "there is every reason to fight" for Sears' future.
"For as long as I have been involved with Sears, I have cared deeply about the company, its associates and the people they serve," he said. "While the opportunity I saw from the start for Sears to benefit from the disruptive changes in retail and technology has not worked out so far, it is still there to be taken. Every transformation involves perseverance and risk, but I am hopeful that we can execute better and faster on the smaller platform we are bidding on."
Lampert's bid still needs approval from the US bankruptcy judge at a hearing that is scheduled for February 1.
It's unclear whether the judge will approve the bid. The hearing will consist of testimony from parties representing Sears and its creditors, according to David Wander, an attorney at Davidoff Hutcher & Citron, which represents two of Sears' vendors. The judge will likely make a decision immediately following the testimony, he said.
"The judge is going to have to make a big decision," he said. "Does he go with the recommendation of the debtor that will save up to 50,000 jobs?"
"Though of course we don't know how long they will be saved for," he continued, "because the future of Sears is up in the air."
