Must show ‘material progress’ to avoid liquidation

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In a Tuesday morning town hall, former Sears CEO Eddie Lampert gave 1,000 of his employees a rallying cry as the company gears up for its most important holiday season.

“We need to show material progress over the next few months to establish to our senior lenders that a reorganization of the company is realistic and to avoid a shut down and liquidation,” Lampert said at the retailer’s headquarters in Hoffman Estates, Illinois, according an exclusive audio obtained by CNBC.

The retailer filed for bankruptcy Monday morning, saddled by debt and declining sales. Under chapter 11 protection it is closing unprofitable stores and will try to sell roughly 400 of its better performing stores as it looks to stay alive.

Lampert, who stepped down as CEO on Monday after five years in the role, said the speech marked the “second most difficult public speaking event” in his lifetime. The first was speaking at his father’s funeral 41 years ago.

In the speech, Lampert admitted both missteps and unexpected challenges.

“When Sears and Kmart merged in 2005, I envisioned a company that would be different and relevant for the 21st century. … These were two, iconic companies that had lost their way,” Lampert said, adding he had seen an opportunity in transforming the two together as a different kind of retailer.

“As we all know, we haven’t capitalized on this opportunity the way I would have liked,” he later added. “Instead of growth and investment we have faced retrenchment and restructuring.”

Sears hasn’t turned a profit since 2010, limiting its ability to invest in the company and for the future. It’s faced bigger competition from better capitalized competitors like Walmart and Target, while also combating the rise of online shopping. Its 140,000-square-foot stores have begun to seem monstrous as foot traffic has dropped.

“There were mistakes along the way, for which I take responsibility. Those failures have affected me in many ways far greater than any successes I have had,” Lampert said.

The company has more than 68,000 employees, according to bankruptcy documents filed Monday.



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