Sears Holdings CEO Eddie Lampert Proposes Buying Kenmore Brand
ESL Investments, the hedge fund led by Sears Holdings CEO Eddie Lampert, is proposing to buy the Kenmore brand, Sears' Home Improvement business, its PartsDirect division and some of the chain's real estate. In a letter to Sears’ board on Friday, ESL said: "We continue to see value in Sears and its underlying assets, and believe strongly that with an appropriate runway Sears will be able to complete its transformation to respond to the challenging retail environment." In the letter, ESL, Sears’ second-largest shareholder behind Lampert himself, called Kenmore an "iconic brand" and said it would be prepared to close a deal for this asset within 90 days.. ESL also said it valued Sears’ Home Improvement and PartsDirect businesses together at $500 million and would pay for them in cash.
"In our view, pursuing these divestitures … will provide an important source of liquidity to Sears and could avoid any deterioration in the value of such assets," ESL said. Sears confirmed receipt of ESL's letter Monday morning, adding the proposal would be reviewed by an independent board of directors. The companies said Lampert, along with ESL President Kunal Kamlani, wouldn't participate in any discussions, negotiations or decisions "except to the extent specifically requested by that committee."
Total Retail's Take: Will this move be the one that keeps Sears Holdings alive? As we've been reporting now for several years, Sears is in dire straits. The retailer saw its sales drop nearly 30 percent during the holiday quarter, and it's still heavily in debt. Earlier this year, Sears also announced a round of more than 100 store closures under both the Sears and Kmart banners, all expected to be completed by the end of this month. But perhaps this will be the lifeline that the retailer needs to survive. Shares of Sears Holding Corp. are up 4 percent in recent trading after ESL's letter became public, and the company did successfully sell its Craftsman brand to Stanley Black & Decker for $900 million in 2017.