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What is Sears Doing After Bankruptcy?

Sears is a classic case of getting caught off guard, in that it didn’t evolve with the changing market, and paid its price in the form of a recent bankruptcy auction. Lucky for Sears its largest shareholder, Edward Lampert, came to its rescue and bought the company with his hedge fund. The rescue cost was a whopping $5.2 billion.

Lampert has already set plans to run a lean organization by cutting the number of stores to 223 for Sears and 202 for Kmart stores.

Sears: From a retail leader to bankruptcy

Sears is synonymous with the American retail industry. In its 133 years, the company led the market in toys, apparels, and appliances. After its merger with Kmart in 2005, the combined entity had over 3,500 stores and more than $55 billion in revenue. However, over the years, Sears lost sales to the likes of Walmart, Best Buy, Home Depot, and online retailers like Amazon. Sears has not returned a profit since 2010, with the number of stores declining every year.

How Lampert plans to change the future of Sears

As the current CEO of Sears, Lampert is ready to implement huge cost-cutting measures, starting with smaller stores, a rather common move in the modern retail industry. Lampert told the Wall Street Journal that the company would either sublease or sell its loss-making stores in an attempt to limit losses.

The smaller store format will come under the name of Sears Home and Life with an area of 10,000 to 15,000 square feet unlike its typical size of 160,000 square feet. Sears will start with three of these stores in Anchorage, Overland Park, and Lafayette towards the end of May.

Another major change moving forward will be a focus on appliances and hard tools in Sears stores instead of apparels. While its a good move in reshaping Sears, but experts fear that Sears no longer enjoys the top market share in once dominated appliances segment, which could affect its net sales over the coming years.

In addition to a lean operational structure, Sears plans to roll out “Shop Your Way” loyalty program to entice customers and regain their trust. The company has plans to raise up to $650 million through real estate sales in the next three years.

Conclusion: Moving forward with caution

Lampert is on the right path with a leaner operational structure and smaller stores; however, gaining its previous customers would be a challenge for Sears. Additionally, Sears will need some top management changes to make a comeback in the cut-throat modern retail industry.

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