Investing in Sears (SHLDQ) seems a bit like reserving a suite on a cruise ship that's both sinking and infected with coronavirus. It's possible the ship might solve one of the problems but the combination of disasters makes a full recovery unlikely.
The once-proud retailer has survived bankruptcy and downsizing from thousands to under 200 stores. Getting smaller has not resulted in a return to fiscal health and the company has resorted to taking a $100 million from hedge fund Brigade Capital Management LP, Reuters reported.
Sears now has fewer than 200 stores. Image source: Sears.
Is the end near for Sears?
Sears has survived by selling off all of its assets. Those were considerable at first including a massive real estate portfolio and numerous popular brands. The money from those sales was supposed to fund a reinvention of the core brands.
That did not work and the losses continued to mount. It's likely the company would have already gone under if former CEO Eddie Lampert did not keep the chain afloat with funds from his hedge fund. All that money has not helped and the ever-shrinking company now stands on the precipice of total annihilation.
No comeback seems likely
While Sears has a proud lineage, it no longer has a strong place in the market. Consumers don't really have a reason to shop in its stores and the company can barely keep the lights on let alone invest in a complete change to its business model.
It's hard to see why Sears still exists or why anyone would offer it more money (the terms of the loan have not been disclosed). The chain is likely nearing its end as Lampert has few assets to sell and basically no moves left to make.
