Former Sears CEO and hedge fund billionaire Eddie Lampert got his wish as a bankruptcy judge approved his $5.2 billion plan to save 425 stores and 45,000 jobs, keeping the iconic retailer alive, but many are still questioning if that will actually happen.
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While Lampert’s bid through his hedge fund ESL overcame tough opposition from a group of unsecured creditors, including mall owners and both current and past employees who questioned his motives, experts still believe store closings and job losses are on the horizon.
“In admitting that 156 stores are weak performers, ESL is almost certainly setting the stage for additional store closures,” Matthew Mason, managing director at Conway MacKenzie and former Sears attorney tells FOX Business.
Mason, who worked with Sears Holdings from 2002 to 2005, adds that while Lampert’s successful bid is positive news for the 45,000 employees for now, that may be short-lived.
“The long-term impact is still a major question mark,” he says.
Ray Wimer, assistant professor of retailer practice at Syracuse University’s Martin J. Whitman School of Management agrees, saying he doesn’t see how selling the stores to Lampert will help the company stay “viable into the future.”
"Sears ended up in this predicament because of his leadership over the past decade. They haven’t innovated or adapted to the changing times and are still in the same financial straits that bind their ability to change, adapt or invest in technology,” Wimer says, adding that he believes Kenmore will likely be sold and the money will go to enrich Lampert and his ESL fund and will not “used to help Sears.”
As for the 45,000 Sears and Kmart employees who now get to keep their jobs, many say they have “mixed feeling” about the news.
“I’m relieved and glad that 45,000 people get to keep their jobs, but I’m still angry. My store is still closing, there are still people that don’t have their severance. If anything I’m more resolute than ever to keep fighting,” Gabe Maquire, a seven-year associate at Kmart in North Carolina, whose store is shutting down in March, tells FOX Business.
Maquire, like others, is urging Lampert to set up a fund for all workers that lost their jobs because of store closures.
Victor Urquidez, assistant manager at Sears Auto Center in California, who has worked with the company for eight years, says while he is relieved to still have a job, he is concerned that the company is back in the hands of Lampert.
“He has proven he only cares about his own wealth and does not care about our families and our livelihoods. And what about the thousands of my coworkers who already lost their jobs? This fight isn’t over. Lampert needs to keep his promise to keep our stores open and invest in our stores, and he needs to make sure that all employees who dedicated years to the company and whose jobs he destroyed get financial support for themselves and their families.”
In a previous statement to FOX Business, ESL said despite the backlash, its bid was the “only long-term opportunity to save and create jobs, honor the extended warranties that were purchased by so many customers, generate new volume and grow.”
Additionally, ESL added that its “intent for the new Sears” is to operate as many stores as reasonably possible, including “new smaller stores that emphasize our stronger capabilities.”
“Continuing to operate a meaningful network of stores is essential to achieving our goal of returning Sears to profitability,” an ESL spokesperson said.