Gary Herwitz of CoMetrics Partners Examines the Case of Sears Holdings Corporation

NEW YORK, NY / ACCESSWIRE / May 23, 2017 / Since 2012, Sears has racked up a cumulative $10 billion in losses, avoiding bankruptcy only through loans from CEO Eddie Lampert, cost cuts from store closures, and the sale of key assets like the Craftsman brand and the Lands’ End clothing business. Most recently, vendors have been cutting back on shipments out of fear the corporation will be unable to pay its bills. Gary Herwitz, the managing director of CoMetrics Partners, discusses the struggling department store conglomerate and examines the factors that have led to its current condition.

Sears Holdings is a web of subsidiaries and special purpose entities, several of which are bankruptcy-remote. Gary Herwitz explained that this financial structure was engineered to comply with tax and securities regulations while also acting as asset protection. Due to the company’s complex nature, creditors have been challenged to fully understand which assets are protected from bankruptcy and which are not. As a result, the company has struggled with credit issues since 2011, when Wall Street had Sears valued at over $8 billion. Through the confidence of investors, they have been able to overcome this on a consolidated basis; but in January, years of plunging sales resulted in stock prices falling to a record low of $8.

Lampert, who owns around 60% of shares, has since enacted a number of measures to turn the business around, including a $1 billion personal loan and the closure of 150 additional stores. “Vendors had gotten really spooked,” said Herwitz, whose firm advises several of the company’s suppliers, in an interview with Suzanne Kapner of the Wall
Street Journal. “But now it seems that Sears bought themselves another year.” In May, One World Technologies, a top tool provider, threatened to cancel its contract if the retailer did not reduce its orders. Others have cut back shipments, refused increases, and even demanded earlier payment. Bankruptcy for the corporation may seem imminent, but Herwitz notes that Lampert should be motivated to find an alternate solution. A voluntary filing would put a significant portion of Lampert’s equity at risk, and at the very least severely reduce his control on assets. Instead, the CEO should commit to restoring profitability with innovation and a smaller physical footprint.

As the managing partner and founder of CoMetrics Partners LLC, Gary Herwitz has been providing strategic consulting services to middle market companies for over 30 years. Focused primarily in the consumer products sector, the company is an industry leader in maximizing efficient operations through streamlining business procedures. Herwitz has obtained a global understanding of supply chain and logistics, having spent considerable time in the manufacturing sectors in other countries. A frequent contributor to charitable causes, he has served in many volunteer positions including chairman of the Organization Rehabilitation Therapy and the Syracuse University School of Management. He is also committed to the Exceed Network, a non-profit business advisory firm that provides consulting services for small businesses.

Gary Herwitz – Founder & Managing Partner of CoMetrics Partners: http://garyherwitznews.com
Gary Herwitz – Discusses Fundamental Factors of Achieving Cost Efficiency: https://finance.yahoo.com/news/gary-herwitz-discusses-fundamental-factors-205000791.html
Gary Herwitz on The Silicon Review’s Recognition of CoMetrics Partners:
http://www.nasdaq.com/press-release/gary-herwitz-on-the-silicon-reviews-recognition-of-cometrics-partners-20170516-01335

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SOURCE: Gary Herwitz

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