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In its bankruptcy filing on Monday, Sears said that with enough time and less debt, Sears could reverse the decline in its retail business that has lasted for decades.
But the company's latest recovery plan is much like its predecessors: closing unprofitable stores, selling properties and borrowing more money from company president and lead investor, Edward S. Lampert.
As part of its Chapter 11 reorganization plan, Sears announced it would close 142 unprofitable stores, about 20% of what remained of its large footprint, which also includes the Kmart discount retailer. The company also plans to sell its Kenmore and Home Services brands.
These cuts would add to the 1,000 stores the company has closed over the past decade and the sale of brands such as Lands' End, Craftsman and Sears Canada.
Mr. Lampert, a hedge fund manager who has already loaned about $ 2.5 billion to the company, announced that he would extend an additional $ 300 million the cost of the retailer's bankruptcy. The loan is in addition to the more traditional financing of banks that Sears received on Monday.
Lampert hopes that by focusing only on a core group of 400 profitable stores, the company will be able to stop the bleeding and restore the trust of its customers and suppliers. Many suppliers have stopped offering products on credit to Sears and owe millions of dollars.
The plan contained no explanation as to how Sears would win the ground it had lost against big-box stores like Walmart and Amazon's e-commerce giant. In 2005, Sears accounted for 2% of all retail sales. It now represents less than 0.3%, according to research firm Customer Growth Partners.
"Honestly, Sears is already virtually dead," said Gerald L. Storch, former managing director of Toys "R" Us and Hudson's Bay, the parent company of Saks Fifth Avenue. "Maybe it's a long time. But it's a zombie that works.
Sears has a $ 11.3 billion liability in its bankruptcy filing and $ 7 billion in assets.
Industry analysts, investors and former executives in the retail sector said Sears Chapter 11 filing was only a short stop on the way to liquidation.
In recent years, bankruptcy has not been favorable to old-school retailers in search of a second life.
Toys "R" Us hoped to be able to reduce debt and reorganize into a smaller, more agile company when filing a Chapter 11 complaint last September. But instead of keeping the company operating, its lenders have decided to recover more by putting his toys in a discount sale and closing all his stores. The Bon-Ton clothing chain also sold out earlier this year and closed all of its stores.
Sears could follow a similar path, especially after Christmas, when its stores will have finished selling their holiday stocks and will be less productive.
The only asset is Mr. Lampert, who has continued to inject money into the company despite long probabilities.
In bankruptcy filings, Sears stated that Mr. Lampert's hedge fund was willing to make the initial offer to essentially buy the 400 most viable stores in the company and keep them running.
In a paper, the company's chief financial officer, Robert A. Riecker, said the "hedge fund support has kept the company's doors open and more than 68,000 people remain employed."
But Mr. Lampert may have other interests in keeping Sears on the light. He is President and a major investor in Seritage Growth Properties, a real estate company that owns 230 former Sears properties. Sears pays rent to Seritage and a liquidation would jeopardize these payments.
"Why is everyone thinking about Eddie," said David D. Tawil, co-founder of New York-based hedge fund Maglan Capital, which invests in troubled corporate debt.
"We are facing a new era in retail bankruptcies and Sears is the weakest player in the market," said Tawil. "If this succeeds in getting out of bankruptcy, it would be an amazing feat."
President Trump lamented the company's decline on Monday, saying his bankruptcy filing was a "shame". But he added that Sears "has been dying for many years".
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