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Sears To Stay Open After Edward Lambert Predominates In Bankruptcy Auction



Billionaire Edward Lambert won a bankruptcy auction for Sears Holdings Corp., keeping the troubled chain of department stores shut down all other stores, according to a person familiar with the matter. Lambert, a hedge fund manager who runs Sears's bankruptcy, is prevailing, sweetening his bid of about $ 5 billion over several days of talks with Sears' advice and creditors, he said. The proposal rejected the offer, which was backed by most of Sears's creditors and owners, by Abacus Advisory Group LLC to close all the stores and sell the inventory.

Sears's long-standing leader, who is his largest creditor and largest shareholder, tried to keep control of the company after filing an application for protection from creditors in October. He then resigned as Chief Executive Officer, but remains Chairman.

1

26-year-old Sears was once the dominant trader in America. However, it will appear as bankruptcy as a shadow of its former self-government with about 425 locations, making it more difficult to compete with healthier chains with thousands of places –

Walmart
[19599004] Inc.


WMT 1.37%

and

Home Depot
[19599007] Inc.


HD -1.31%

– as well as the growing presence of

Amazon.com
Inc.

"I do not know what's left to shop there," said Patrick Garrett, a retired consultant. From Sears near his home in Calabasas, California, closed in November, he visited

Low
Co

with tools for artisans,

Best Buy
Co.

for appliances and. t

J.C. Penney
Co.

for clothes. "I will now have to drive 40 miles to get to the nearest Sears," said the 70-year-old trader.

Retail has become a massive game to cover fixed costs for the operation of shops, warehouses and e-commerce. sites and a supply chain that connects them all together. Sears, on the other hand, has been shrinking for years by shutting down stores and losing business and brands, including

End of the lands
Inc.

At its peak in 2006, a year after Mr. Lampert took control of the merger of Kmart and Sears, the company operates more than 2300 stores. In October, she went into court defense with less than 700 seats and gained seven years of loss. Annual sales fell to $ 16.7 billion, down from $ 49 billion in 2005

During the merger of Kmart, Mr. Lampert fell into Wall Street, which is often compared to legendary investor Warren Buffett. Sears's failure not only damaged the company's reputation, but also Mr. Lambert

Now he has the last chance to prove that his opposite strategy is right. He has long argued that because retail is moving online, chains need fewer large stores. His mantra for Sears is to turn it into a company that is "active light".

However, there are several precedents for major retailers that are reducing their path to prosperity. A rare exception is the federal stores that filed for insolvency protection in 1990 as part of Campeau Corp. and began to swallow their competitors to become current

Macy
Inc.

"Sears is so far below the critical mass," says Steve Dennis, a consultant and former CEO of Sears, who leaves the company before Mr Lambert takes over. "What does it have to have fewer stores that does not allow you to spend so much on marketing or have supply chain performance that suddenly makes it a successful strategy?"

In recent years, chains like "Toys" "Us Inc., Sports Authority Inc., Bon-Ton Stores Inc. and RadioShack disappeared after filing an application for bankruptcy protection. Others, such as the Mattress Company and Payless ShoeSource, went out of bankruptcy after losing debts and closing hundreds of stores.

n. Lampert also buys the Kenmore and DieHard brands, Sears Auto Centers, and Home Services, as well as inventory, intellectual property, and other assets. The rescue plan will save up to 50,000 jobs.

"Our proposed business plan provides for significant strategic initiatives and investments in a large-scale network and small shops, digital assets and interdependent ventures," Mr. Lambert. writes in a letter to Sears' financial advisors by December 28. "We believe our strategy will enable Sears to prosper in the integrated consumer and retail-landscape market." They objected to the fact that $ 1.3 billion from Mr Lambert's proposal took the form of debt remission for his hedge fund ESL Investments Inc.

Unsecured creditors also struggle with a provision that exempts Mr Lambert and others from responsibility for the sales of assets and the spin that they say may have shifted value from the company. An ESL spokeswoman said the transactions were approved by independent directors and are designed to raise money for Sears until it can return to profitability.

To overcome resistance, the hedge fund manager raised its $ 600 million bid last week. The revised offer did not include new cash but promised to take on obligations that could cause the trader to continue in debt. It also includes additional 57 real estate, as well as receivables and inventories

Not all sees Sears as a lost cause. Some of the surviving stores are in rugged shopping malls, and other places in rural areas face less competition as competitors have closed their stores or left the business. But big changes have to happen for Sears to become viable, analysts say.

"We think there is a way to survive, but they have to throw away clothes and dedicate the entire store to hard lines," says Craig Johnson, president of the customer growth consultancy. "Sears still has a lot of confidence in the appliances and they can restore this business."

Former executives say the idea was considered years ago, but it is considered impossible, as consumers buy a lot of tickets as appliances too rarely. It will also depend on Sears' ability to reduce the size of its stores, something he is trying to do by giving up excess space to grocery stores and competitive retail chains. in Oak Brook, Illinois, which was opened in October. At 62,000 square meters is about one-third of its original size. The redundant store no longer sells consumer electronics and jewelery, although most other product categories are available.

Maybe a bigger stumbling block for Sears is Mr. Lambert himself. Although he has put money into the company through short-term loans and said he has tried to do everything to keep it up, his counter-approach to trader management – including restraint in upgrading shops without the promise of return on that investment – has been catastrophic.

"Every model with Eddie is involved," said Mr. Johnson.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Lillian Rizzo on Lillian.Rizzo@wsj.com


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