There is no doubt that Sears Holdings (SHLD) is struggling to stay relevant. Now CEO Eddie Lampert is hoping to provide some life support by suggesting that the retail store chain sells the valuable parts of its business to bring in more cash and reduce debt. The CEO has even volunteered to buy the assets himself. Lampert is offering to buy the Kenmore brand along with the Sears Home Improvement and PartsDirect businesses.
Sears is already looking to sell some of its real estate from store closures with the help of a commercial real estate firm to generate as much cash as possible.
However, many experts believe that these efforts are futile, the prime reason being that the Sears brand has lost a lot of its charm. The company proved incapable of competing against stronger competitors like Target (TGT), Walmart (WMT) and of course, Amazon (AMZN).
Sears already sold its Craftsman and Diehard brands and with the sale of Kenmore, the company will have nothing great left to offer. Moreover, customers now have other options like Amazon to buy Sears’ once-prized brands.
It is also speculated that the Kenmore brand might not actually end up garnering its full value when sold, just like in the case of Craftsman. Craftsman was valued at $2 billion but eventually sold for $900 million. Additionally, the proceeds from the other two businesses and the real estate sales might not be adequate to offset the cash burn or reduce debt significantly. On another note, it is not a smart move to sell off valuable brands.
Sears already sold its Craftsman and Diehard brands and with the sale of Kenmore, the company will have nothing great left to offer.
Sears’ troubles have been mounting for a long time. The company closed a large number of stores and laid off employees but still failed to see an increase in sales compared to other retailers. While many Sears stores closed, some stayed half empty due to decreases in inventory as a result of loss of suppliers. The lack of income and the risk over payments led to many suppliers canceling business with Sears.
Last but definitely not the least, Sears raked up a huge debt hoping to turn its business around but this effort did not pay off. Sears also lost many of its top executives. Although Eddie Lampert’s intentions may be noble, there are those who believe his strategy is flawed, and that in the end, neither he nor anyone can actually save Sears.