In other words, Sears is a far cry from the “$55 billion revenue, 350,000 person start-up” that Lampert, then just chairman, described in 2006.
“What [Sears] could have been is a much bigger online company, a much bigger service-oriented company, where the stores … would be smaller,” serving as showrooms and warehouses, Lampert said. “That’s what we still haven’t figured out — what the [best] business model is so we can stamp it out and do more and more.”
What stood in the way of Lampert’s vision, which he enunciated more than a decade ago? Amazon, to start with. The e-commerce giant has been grabbing market share and slashing prices online to Sears’ and others’ detriment. In addition, more consumers are opting to shop outside of the suburban shopping mall, instead at big-box businesses and category killers like Home Depot and Dick’s Sporting Goods.
“We have businesses that are profitable, and we have stores that are profitable, but we have other things that offset it. You know, it’s almost every year like these four things are working, but all of a sudden these two are not,” he explained. “Would it have been better for me as an investor for me to walk away? So far, I’ve said no.”
Lampert said he doesn’t see bankruptcy in the cards for Sears — at least not anytime soon. That’s something that’s been fresh on the retail industry’s mind ever since Sears disclosed in 2017 there was a “substantial doubt” about its “ability to continue as a going concern.” Sears said it made the disclosure because of changes with the Securities and Exchange Commission.
“I put a lot of time in, I put a lot of capital in — not just my capital. But if we didn’t raise capital over the past few years, that would’ve happened,” Lampert said. “Bankruptcy happens when companies run out of money.”
Sears burned through $1.8 billion in cash in its operations during 2017, $1.4 billion during 2016 and $2.2 billion during 2015, company filings show. It ended last year with $336 million in its cash reserves, compared with $286 million the previous year, a slight uptick thanks to asset sales.
Sears’ liabilities are also significant and a glaring red flag for those on Wall Street who still follow the company. It had roughly $4.3 billion in funded debt as of Feb. 3, 2018, along with unfunded pension and retirement obligations of about $1.6 billion.
One of Lampert’s main strategies to flush out cash has been to sell Sears’ real estate, what many industry experts agree is the retailer’s most prized asset. A combined Sears and Kmart had more than 4,000 locations in 2011.
But by the end of 2017, Sears Holdings operated a little more than 1,000 stores. Hundreds more expect to shutter as the company looks for liquidity to fund its operations. It closed more than 400 stores in 2017 and over 200 locations in 2016.