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USA Today reports that while Sears Holdings CEO Edward Lampert keeps saying he wants to restore the iconic retailer to “former glory,” an examination of public filings and analyst research indicates that the company’s investment in its stores is “stark” when compared to its brethren.

Furthermore, the story says, loans made by Lampert’s hedge fund to the business have been structured so that if Sears Holdings goes into bankruptcy (which many would say is a matter of ”when,” not “if”), “Lampert's hedge fund will be positioned at the front of the line when loans are repaid.”

Some excerpts from the story:

• “Sears stores, on the other hand, have fallen into disrepair. Stained carpeting, broken fixtures and dim lighting are commonplace. Analysts, industry watchers and even shoppers predict the iconic retailer doesn't have much time left.”

• “While Sears has steadily lowered its investment in store upgrades over the last five years, the company has loaded up on loans due to Lampert himself. 
By extending almost exclusively secured loans to the company, Lampert's hedge fund  has racked up more than $2.4 billion in Sears debt.”

• “As the company bleeds cash and puts prized brands up for sale, some industry watchers question whether a greater focus on its stores — or even a declaration of bankruptcy some years ago — could have put it on the path to profitability. Now, instead, the company's demise may be inevitable.”

• “Lampert has previously said he does not believe in pouring money into stores that would not provide sufficient return on the investment. Instead, he has pursued partnerships, including recent deals with and Citi that have earned praise from investors, and made loans to the company that have been personally lucrative.”

• “Lampert has put the hedge fund in position to snap up some of the company's prime assets, analysts said. This would come after the CEO orchestrated a series of complex financial deals in which he effectively has played the unusual role of both seller and buyer or lender and borrower.”

For the record, Sears says it “disagrees” with the assertion that it has not sufficiently invested in its store fleet.

You can read the entire analysis here.
KC's View:
I have no reason to disagree with the USA Today analysis, which makes me wonder why anyone would sell a product to Sears or Kmart under these conditions. If Lampert is getting ready to shear Sears, it sounds like the stage is set so that everybody else gets the shaft.