Sears has $134 million in debt that’s due next Monday. Edward Lampert, the hedge fund manager who has managed to become Sears’ largest shareholder and biggest debtor, has said that he will not bail Sears out, as he has in the past.
Instead, Lampet, as Sears’ Holdings Corporation current Chairman and CEO, would like to see a variety of restructuring efforts including having Sears Holdings sell the Kenmore line to him. Lampert has stripped the company of many of its assets during his tenure. It seems that hedge funds buy into companies to liquidate them, not to assist them in recovering their previous standing. (For reference, see yesterday’s post, “After Toys R Us.”) For example, have you seen any rebranding of Sears in recent years – any concerted, appealing advertising that would encourage and inspire you to shop at Sears? No, neither have I. A large share owner of a struggling company would certainly have wanted to do that – that is, if the goal was to have the company survive and recover its original place in the marketplace. Thus, no effort probably provides a clue to the original intent. As of August 4th, Sears had $193 million in cash but needs most of that money to stock its Sears and Kmart stores for the holiday season. (Why did Sears Holdings wind up saddled with the Kmart stores, by the way – why hamstring a company struggling to find its stride with a distinct discount loser like Kmart?) The board has not, thus far, moved forward on Lampert’s proposal to acquire the highly-successful Kenmore line and disengage the line from participation in Sears’ stores. (It’s said that Lampert has been in talks with Walmart to take over the Kenmore appliance line – he has offered $400 million for the line – a number to remember when the sale to Walmart is announced.) In addition to delay on the Chapter 11 filing, the board also had delayed in lining up bankruptcy financing – unusual for a company of Sears’ prominence. It seems that the puzzle pieces begin to align: Against Sears – another American icon.