A lot of people—​including, at times, this publication—have a dim view of Sears' future, some even writing off the iconic American retailer entirely. One Credit Suisse retail analyst has even said that he hears the Doors singing “This is the End” whenever he thinks of the once-mighty department store retailer.

But at least one investment manager believes the retailer is being underestimated and that a comeback, while it would hardly be swift, is entirely possible.

“I just think everyone thinks it’s going bankrupt,” said Don Ingham, director at Tenth Avenue Holdings and portfolio manager of the TAH Core Fund, which have investments in Sears. “The optimism is from an investing perspective.”

Ingham told Retail Dive that, while Sears's aggressive cost-cutting—​its store closings and layoffs—​have been expensive in the short term, “those measures mask the performance and make it look worse than it is. You’re going to see the loss come down and same store sales go positive.”

But is Ingham's optimism founded? Let’s take a look.

Sears has done a lot of the hard work

One of Ingham’s fundamental arguments is that Sears has taken a series of painful and expensive steps to turn itself around. Sears is a gigantic company that has been on the American retail scene for — well, it actually depends on when you start counting. In any case, the company has been not just a part of the retail landscape for more than 125 years, but has also helped shaped it many times over. Call it the Amazon of the 19th and 20th centuries. 

And now, Ingham says, the retailer is “disrupting itself” again by shifting its massive brick-and-mortar presence in the U.S. and Canada to e-commerce and well-performing stores.

It’s tough turning such a large ship. But Sears has shed underperforming stores and made massive investments in its innovative Shop Your Way loyalty program and e-commerce site, and its marketplace, both established in 2009. 

The retailer has been criticized for the lackluster state of its stores, and when Sears closed its downtown Chicago flagship store last year, it seemed a little like admitting defeat. Credit rating agency Fitch Ratings in September cut its credit rating grade from CCC to CC, and warned that the retailer may not have the cash to operate beyond 2016, saying it expects revenue to fall as much as 9% to 10% this year. 

But Ingham says that, while it may have looked good to some investors and observers for Sears to invest in stores, the smart move has been to concentrate on e-commerce and slowly but surely decide which stores needed to close.

“If they didn’t invest heavily online and invested more in the stores, sales and profits would have looked better,” Ingham says, “but they would still be irrelevant because it would have been a waste of money.”

Sears has its strengths

In fact, Sears Holding Corp.’s Shop Your Way program, which includes Kmart and Sears customers, features among the 10 most favored online retailers in the country, outperforming the e-commerce sites of L.L. Bean, Macy’s, and Sam’s Club, among others, according to Internet Retailer magazine. 

And Ingham notes that one of Sears unique assets is its large real estate portfolio, amassed over the last century or so across North America. The company late last year announced it’s exploring a plan to leverage much of its property into a real estate investment trust (REIT), which could bring in as much as $1.9 billion. Affected stores—some 300—would be leased back to Sears. 

Further, Sears’s Craftsman and Kenmore brands still outpace most other brands in name recognition and consumer trust. Some have even suggested that those brands could survive nicely outside of the Sears brand itself. And, lest you think Sears is just a staid, old-fashioned brand, it was the​ most popular department store on Facebook over the holidays, with more than 12 million likes, comments, and shares, according to content marketing firm Searchmetrics.

Finally, in addition to its real estate portfolio, CEO Eddie Lampert’s own hedge fund has given the retailer time and breathing room to get some of these changes accomplished. While often criticized for his actions when it comes to Sears, Ingham says Lampert has made the tough choices, ones not often taken under the kind of scrutiny faced by a publicly held company.

“You almost never see this when a company is public. Dell for example went private to do this kind of disruption,” Ingham says. “Given the hand he has now, he’s making the proper choices.”

Sears has come back from the brink before

The thing about a 125-plus-year-old company is that it’s been around long enough to have had to change quite a few times over. Andrea Ovans, writing in the Harvard Business Review, chronicles the many ways and the many times that Sears has come back from the brink. 

That includes the early catalog days, its opening of brick-and-mortar stores, and its pioneering use of census data and demographics in the early 20th century, among other ground-breaking moves. Plus, over the years Sears has had to adjust to the advent of the automobile, the U.S. population shifting from farms to cities to suburbs, wartime, peacetime, and wild swings in consumer tastes and behaviors and its own brand reputation.

“The Sears transformation was more than a change in marketing strategy. It was also a change in the logic and culture of the business. In fact, the process of altering the logic is what changed the culture.” That’s from a 1998 Harvard Business Review paper, “The Employee-Customer-Profit Chain at Sears,” describing the radical turnaround at Sears then.  

The next paper has yet to be written, but perhaps the retailer has a little more time than most people think.

“They’re going to have to be careful that their expense base shrinks with their physical footprint,” Ingham told Retail Dive. “Unfortunately there are people who are going to lose their jobs. But compared to many other retailers, Sears has moved aggressively to where they need to be.”