Chairman: Sears ‘has a future’ after Chapter 11 bankruptcy

Now that Sears has filed for bankruptcy reorganization, its chairman said, the storied retail chain still “has a future” as a smaller company rather than being liquidated.

Edward Lampert said he and his hedge fund that has invested heavily in loss-ridden Sears Holdings Corp., which also owns the Kmart department store chain, “will continue to press forward with the goal of seeing Sears emerge from this process positioned for success as a smaller, less-indebted retailer.”

His comments came late Sunday in a statement accompanying Sears’ filing under Chapter 11 of the U.S. bankruptcy laws, where Sears will attempt to reorganize under the supervision of a Bankruptcy Court judge.

“The company believes that a successful reorganization will save the company and the jobs of tens of thousands of store associates,” Sears said.

But some analysts cautioned that a liquidation of Sears was not out of the question, noting that Toys R Us Inc. also had hoped to reorganize under Chapter 11 but ended up going out of business this year.

“I’m not convinced that this plan will be their salvation,” said Bert Ely, an independent retail analyst. “They’re buying time with a reduced footprint, and it will get reassessed early next year as to whether they can operate successfully with even a reduced number of stores.”

Sears already has closed hundreds of stores in recent years to survive. As part of its bankruptcy plan, the Hoffman Estates, Ill., chain said it plans to close an additional 142 unprofitable Sears and Kmart stores by the end of the year. Combined, the chains currently have just under 700 locations.

Midday on Monday, Sears posted the list of the stores slated to close; they include 65 Kmart stores, including seven in California, and 77 Sears outlets, including 10 in California. In Southern California, the closing Kmarts include stores in Ontario and Riverside, and the closing Sears stores include outlets in Cerritos, Costa Mesa and Montebello. “Liquidation sales at these stores are expected to begin shortly,” Sears said. The company said it plans “to reorganize around a smaller store platform” of profitable outlets.

In the meantime, “Sears and Kmart stores remain open for business and our dedicated associates look forward to serving our members and customers,” Lampert said.