Sears gets saved but still same ol' retailer

Former Sears CEO Eddie Lampert is on a mission to save the bankrupt retailer, but even if his latest bid to keep hundreds of stores open receives approval, there remains a rough road ahead for the once-iconic department store chain.

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Lampert’s revamped $5.2 billion bid – submitted through his hedge fund ESL Investments – to keep hundreds of stores open and prevent the 126-year old retailer from liquidating still faces approval in bankruptcy court – but a judge is far from the final hurdle the businessman faces to keep the retailer alive.

According to a recent note from Moody’s Investors Services, the bid offers a chance for the retailer to “stagger on for longer as a going entity.”

“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,” researchers wrote.

Sears has decreased store count by about 70 percent since January 2017, and, as Moody’s noted, so far that strategy has been unhelpful in boosting the retailer’s ailing sales and profitability.

The retailer – once the country’s largest – has not posted a profit since 2012.

A smaller store base presents a challenge for any reorganization process as well, since scale is becoming more important in the current retail environment. Moody’s notes that Sears largely lacks a viable strategy to attract a core customer, which will persist with an ever-smaller brick-and-mortar presence.

Additionally, a diminished store count offers competitors – like Macy’s and J.C. Penney – with shops at similar locations the opportunity to pick off would-be Sears customers.

At its peak, Sears operated nearly 4,000 stores.

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Sears confirmed on Thursday that it reached a $5 billion deal with Lampert to keep the company – and more than 400 stores – open, preventing potential liquidation proceedings. Lampert’s bid was said to be approved during a private bankruptcy auction, after weeks of negotiations. As many as 45,000 Sears employees will be able to keep their jobs.

Sears filed for bankruptcy in October and has since shuttered hundreds of stores in an attempt to restructure and return to profitability.