Can Sears Survive? CEO Eddie Lampert Made A $300 Million Bet It Can

Struggling retailer Sears Holdings Corp (NASDAQ: SHLD) received a new lifeline this week when its CEO and largest shareholder, Edward "Eddie" Lampert, provided a $300 million loan on Thursday.

As noted by Bloomberg, "It's Eddie to the rescue once again at Sears" — because other capital raise initiatives have failed. For instance, Sears raised cash over the past few years by selling assets, including spinning off 235 stores into a real estate investment trust, and sold or spun various business segments, including its Lands' End clothing line.

Bloomberg cited Matt McGinley of Evercore ISI who pointed out that the cash Sears raised just offset the company's mounting losses of $9 billion over the past four years.

McGinley, one of the few Wall Street analysts who still cover Sears, told Bloomberg that Sears' woes "comes down to cash burn." He added that without Lampert's $300 million lifeline, navigating the holiday season would be "problematic" for the company.

Related Link: Sears CEO Lampert Says, "We Continue To Face A Challenging Competitive Environment"

The analyst also pointed out that Sears' stores are now holding just 61 percent of the average inventory found in other big box stores. Less items for sale naturally translates to less sales.

Finally, McGinley suggested that Lampert is in a difficult position. In addition to being the company's largest shareholder, he also holds around $673 million worth of its debt. Simply closing all stores and liquidating the entire company would cost billions of dollars in lease-termination fees, pensions and other obligations — and that is even before factoring in Lampert's equity losses.

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