Sears Holdings reached a deal with its Chairman Eddie Lampert and his hedge fund ESL Investments early Wednesday, according to a source familiar with the situation, reports CNBC. The $5 billion agreement will leave roughly 400 stores open and keep the iconic retailer in business, saving close to 50,000 jobs. This comes after Sears rejected Lampert's original offer last week, causing a bankruptcy court to offer the company's chairman one final chance to pay a $120 million deposit and re-enter into bidding. However, the deal is still not secured, as Sears’ unsecured creditors do not support Lampert's bid and the bankruptcy judge hasn't yet approved the deal, which the court will review on Jan. 31. To reach the deal, ESL Investments increased its offer by $150 million and took on more liabilities, reports a person familiar with the situation.
Total Retail's Take: Although it seems likely this deal will save Sears Holdings, the bankruptcy court has yet to give final approval and not everyone backing Sears is on board with the agreement. If this deal is approved, Sears must begin the long uphill battle back to profitability, starting by addressing neglected stores, outdated digital efforts and technology, and a host of other issues weighing the brand down. The company hasn't been profitable since 2010, and an extreme overhaul of its physical locations and e-commerce offerings is needed to bring Sears back into competition with other big-box retailers. John Nash, chief marketing officer of RedPoint Global, commented, "To succeed in this new environment, brands and retailers must provide a consistent and seamless experience across all possible channels of engagement, informed by context and past interactions. Keeping up with a customer’s pace and understanding what messages to provide requires a single customer view in a way that's accessible in real-time." Sears will need to invest heavily in customer data technology to have any chance of resurfacing as a relevant brand to modern consumers.