Like Buddy Holly’s love, two legacy retail names, Sears and Toys”R”Us, are refusing to fade away.
Yesterday former Sears chairman, CEO and chief investor Eddie Lampert closed on his $5.2 billion deal to buy the retailer out of bankruptcy. The revived Sears will retain 223 Sears and 202 Kmart stores, considered the most profitable, and substantially all its other assets, including the private-label Kenmore, DieHard and Craftsmen brands; the chain’s auto repair centers; and its prized product repair/home improvement and delivery/installation businesses (Sears Home Services and Innovel Solutions).
The new entity, which was acquired by Transform Holdco LLC, an affiliate of Lampert’s ESL Investments hedge fund, also gets a fresh start with significantly lower overhead, reduced debt and more than $400 million in credit at its disposal. The funds will be used to pay past liabilities; open new, smaller stores; invest in technology; and fuel new marketing efforts, Transform Holdco said.
The “new” Sears will be led by its current management team, including chief financial officer Robert Riecker, chief digital officer Leena Munjal and softlines president Greg Ladley, until a new CEO is appointed.
“The best possible outcome has now been realized for all stakeholders, including Sears’ many associates, Shop Your Way [loyalty club] members, vendors and other partners,” Lampert said. “ESL looks forward to a new era at Sears and Kmart that builds on their proud histories, while finding new ways to innovate and grow to adapt to the forces transforming the retail industry. We are ready for this exciting opportunity to help return Sears to profitability and will apply ourselves every day in pursuit of that goal.”
Meanwhile, also planning a return from the great beyond of bankruptcy is Toys“R”Us, which gave up the ghost last year. Now, a management group led by Richard Barry, the retailer’s onetime global chief merchandising officer, has been put in charge of the company’s iconic Toys“R”Us and Babies“R”Us brands by the hedge fund lenders that inherited the intellectual properties.
Operating under the name Tru Kids Inc., Barry and company are plotting out “a newly imagined omni-channel retail experience” that may swap the prior big-box strategy for smaller showrooms, in-store sections and/or pop-up shops, CNBC reported, along with an online component.
“Despite unprecedented efforts to capture the U.S. market share this past holiday season, there is still a significant gap and huge consumer demand for the trusted experience that Toys’R’Us and Babies’R’Us delivers,” said Barry, who serves as president/CEO of Tru Kids Brands. “We have a once-in-a-lifetime opportunity to write the next chapter of Toys’R’Us.”