Sears and Kmart have received a last-minute lifeline that may enable some stores to see another day. After talks of liquidation threatened to shutter both companies for good, Sears's chairman Edward S. Lampert made a $5.3 billion bid at a bankruptcy auction hoping for a lifeline, Reuters reports.
The chains' financial woes have dragged on throughout the past decade as the traditional brick-and-mortar stores have unsuccessfully adapted to increasing online competition. Sears and Kmart — both brands more than a century old — could now keep some remaining stores open given a judge's sign-off later this week.
Here's what the latest news means for Sears and Kmart customers:
Will Sears stores close?
If approved, the deal would keep about 425 remaining Sears stores open, but the other recently closed locations will remain shut down for good, according to USA Today.
At its peak, Sears operated thousands of stores across the country, a number that fell substantially in the past 10 years. After it sought Chapter 11 bankruptcy in October, it made plans to close 182 stores. In December, Sears announced another round of 80 closures slated for March.
Sears continues to face the same problems with winning back shoppers as it did before the auction, so more stores could still shutter in the future.
Will there be big sales?
Previously announced closings in December may have ongoing fire sales through the spring, including on tools and appliances. The remaining locations — the company's most profitable ones — could continue to operate as usual, but keep an eye out for future rounds of closings. Those could lead to big discounts if you want to snatch up goods for cheap.
What does this mean for my Kenmore appliance?
If Sears does reorganize as an ongoing business, it will respect Kenmore warranties as they'll want to preserve customer goodwill, Henry Sommer, a lawyer and president of the National Consumer Bankruptcy Rights Center, told Consumer Reports back in October.
Future financial trouble could invalidate them though. "Be aware that there is a chance that the Kenmore warranty, or any warranty from Sears itself, won't be honored if Sears liquidates without another owner taking over," he added.
What about Sears gift cards?
Even though the company received a big break this week, you'll still want to use any you have ASAP. Some creditors plan to object to the bid and still push for liquidation, according to Reuters. If the stores do end up closing permanently, you'd have to file a claim in bankruptcy court yourself to try to get any money back.
"The court will ultimately decide whether Sears will honor its gift cards, and if so, for how long," Christina Tetreault, senior staff attorney at Consumers Union, told Consumer Reports. "It could take years for cardholders to recover funds — if they get anything at all."
What does this mean for Lands' End?
Fortunately, the clothing retailer has already taken steps to distinguish itself from Sears' financial troubles. In 2014, Sears spun off its catalog clothing business as a separate company to raise some much-needed cash. Last year, Lands' End CEO Jerome Griffith also refocused efforts on creating stand-alone locations versus relying on its Sears storefronts for sales.
"It’s our expectation that our Sears business at a point in time will go away and that we’ll be talking directly to the consumer through our own stores," Griffith said in January 2018. The company's strategy looks promising so far: Lands' End reported its sixth straight quarter of sales growth in December.