CNN reports that the “hedge fund controlled by Eddie Lampert bid $4.4 billion for the company's operating assets. The deal by Sears' chairman would keep about 425 Sears and Kmart stores open for business — 260 or so fewer than the retailer had when it filed for bankruptcy on October 15.” While “Sears' attorneys said that multiple parties were interested in buying the company's assets,” it now appears that Lampert may in fact be the only bidder, though his bid could also serve as a “stalking horse” bid against which other bids will be measured.
It remains to be seen whether the bankruptcy court overseeing Sears’ affairs will approve the bid; it seems likely that Sears will. A decision is expected in a few weeks. CNN reports that “Lampert is Sears' biggest creditor, but he's not the only one. Sears owes billions of dollars to thousands of vendors, landlords and others. Many of them believe it would be better to shut all of the remaining stores and sell off Sears' assets to raise cash to repay the debts.”
The story goes on to say that “Lampert is not offering to put up much new cash. Instead, he wants the new company to borrow money, and says he has arranged financing from three major financial institutions.”
It remains to be seen whether the bankruptcy court overseeing Sears’ affairs will approve the bid; it seems likely that Sears will. A decision is expected in a few weeks. CNN reports that “Lampert is Sears' biggest creditor, but he's not the only one. Sears owes billions of dollars to thousands of vendors, landlords and others. Many of them believe it would be better to shut all of the remaining stores and sell off Sears' assets to raise cash to repay the debts.”
The story goes on to say that “Lampert is not offering to put up much new cash. Instead, he wants the new company to borrow money, and says he has arranged financing from three major financial institutions.”
- KC's View:
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Lampert’s end game has to have more to do with the real estate than the retail business, because he has pretty much proven definitively that he’s incompetent at being a retailer. He must be a helluva salesman, though, if he’s convinced three financial institutions to lend him more than three dollars for anything to do with Sears. I can’t even figure out why any manufacturer would ship Sears or Kmart anything (unless it was C.O.D.) … and it’ll be a big surprise to everyone, I’d guess, if Sears had a good end of year holiday sales season.
Sears isn’t alone. There was a CNBC story the other day about how “U.S. department store chains are struggling more than ever headed into the new year. The products they sell from the likes of Nike or Coach can just as easily be bought directly from those brands’ own stores or online. Department stores accounted for 14.5 percent of all retail purchases in 1985 in North America. Last year, that fell to 4.3 percent and is still dropping, according to Neil Saunders, managing director of GlobalData Retail.
“J.C. Penney, for instance, heads into 2019 with a bleak outlook; its stock fell below $1 per share for the first time last week. Meanwhile, Hudson’s Bay, the parent company of Lord & Taylor and Saks Fifth Avenue, has been shutting some of its flagship stores in the U.S. Separately, Neiman Marcus has significant debt coming due in 2020 and 2021.”
There are some discounters that are doing fine - Walmart, Target, and companies such as T.J. Maxx, Ross Stores and Burlington Stores.
Yeah, sure. Sears can survive in this environment. In a pig’s eye.
