Feb. 13, 2019 5:30 a.m. ET
Edward Lampert has a plan for Sears after its trip through bankruptcy: smaller stores and less apparel.
The hedge-fund manager, who steered Sears into bankruptcy and kept it alive with a $5.2 billion offer for its assets, says he will sell or sublease some of the 425 remaining stores. He plans to devote more of the retail space to tools and appliances. He also wants to open more smaller stores, similar to one in Oak Brook, Ill., which at 62,000 square feet is about one-third its original size.
“Our goal is to continue to shrink the size of our stores,” Mr. Lampert said in his first interview since his rescue plan was approved by the bankruptcy court this week. “If I had my druthers, I’d rather be bigger than smaller. We still have enough of a critical mass.”
The restructured company, which doesn’t yet have a new corporate name, will be composed of 223 Sears stores and 202 Kmart locations, as well as the Kenmore and DieHard brands. Sears sold its Craftsman brand to Stanley Black & Decker in 2017 but retains a license to sell products under the name.
Mr. Lampert said he would remain the company’s chairman but would hire a new CEO to carry out his vision. The billionaire, who rescued Kmart from bankruptcy and merged it with Sears in 2005, had served as chief executive since 2013, but he relinquished that role when the company filed for bankruptcy in October.
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The shrunken Sears will compete against bigger retailers such as Home Depot Inc., Lowe’s Co s., Best Buy Co. and Amazon.com Inc. After closing hundreds of stores in recent years, it will lack the economies of scale and negotiating clout with suppliers that the larger players wield.
Sears, an American retail staple since 1886, has been struggling in recent years, closing stores, selling off assets and borrowing money. But it wasn’t always this way. Gordon Weil, author of “Sears, Roebuck, USA,” looks back on the history of the retailer. Photo: Getty
“They have already been category-killed by the big box chains,” said Burt Flickinger, managing director of consulting firm Strategic Resource Group. He said Mr. Lampert’s idea of focusing on so-called hard lines was a good one, but is a decade too late. “They have lost the confidence of the vendor community,” he continued. “Sears and Kmart prices are no longer competitive.”
Once the largest seller of major appliances in the U.S., Sears has fallen to fourth place, behind Lowe’s, Home Depot and Best Buy, according to research firm TraQline. But it still commands a 12.9% share of the market, which has $36 billion in annual sales, giving it a position from which to rebuild. With J.C. Penney Co. recently announcing it would no longer sell appliances, Sears has one less competitor in the mall.
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“They have a shot, but it’s a long shot,” said Craig Johnson, president of consulting firm Customer Growth Partners. “Most of the profits on appliances are made on the servicing side, and Sears still has a good service business.”
