Sears survives bankruptcy auction, will keep 400 stores open
Sears - the iconic retail chain that was forced into bankruptcy in October - avoided a total shutdown after billionaire Eddie Lampert, the company's chairman and largest shareholder, won a bankruptcy auction for Hoffman Estates-based Sears Holdings Corp., according to a person familiar with the matter.
Last week, Lampert upped his offer to more than $5 billion as part of a pitch to keep about 400 stores open nationwide. The proposal was made through Lampert's hedge fund, ESL Investments, and will save as many as 45,000 jobs. Reuters reported the bankruptcy auction concluded early Wednesday morning, with Lampert ultimately prevailing with a $5.2 billion takeover bid.
A Sears Holdings spokesperson declined to comment on Wednesday.
For much of its 126-year history, Sears was a ubiquitous presence in American retail, selling everyday items such as toys, clothes and even houses through its cavernous showrooms and signature catalogs. But it eventually lost its hold on shoppers who turned to big-box competitors such as Walmart, or online behemoths such as Amazon. (Amazon founder Jeff Bezos owns The Washington Post.)
About five years ago, the company had 2,000 Sears and Kmart stores. When Sears merged with Kmart in 2005, Sears Holdings boomed to become the nation's third-largest retailer, with $55 billion in annual revenue and 3,500 stores. Lampert had vowed he could return Sears and Kmart to their former glory by combining the companies, selling off some of their most lucrative assets and then using the profits to revamp the stores for e-commerce.
But the company hasn't turned a profit since 2010, and Lampert sold off many of its brands, including Craftsman tools. Massive showrooms lost much of their upkeep and the stock price took a nose-dive. On Wednesday morning, the share price was 74 cents.
When Sears filed for Chapter 11 bankruptcy protection, the company had about $5.6 billion in outstanding debt. It said it would close 142 unprofitable stores at the end of 2018 - with dozens more closures announced in the past few months. As part of the bankruptcy process, Lampert stepped down from his role as chief executive and stayed on as chairman of the board.
Sears' potential demise has threatened the livelihoods of thousands of workers, with the possibility of liquidation jeopardizing their severance pay and other assistance. Through the workers-rights group Rise Up Retail, many employees have pressured Sears to create a financial hardship fund that would give workers a week's pay for each year with the company - which would cost more than $100 million.
Last week, Onie Patrick, who worked at a Kmart in northern Illinois for nine years before it closed in September, told The Washington Post that Sears' misfortune made her think about the loss of something more than her own financial stability. It was about years of memories with family members, co-workers and friends.
"You know how many times my grandma would give us those big chunky Sears books and say, 'Circle what you want for Christmas'?" she said. "Times change, but those are the memories we have. And it's heartbreaking to see that all go away."
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The Washington Post's Drew Harwell contributed to this report.