Edward Lampert has a plan for Sears after its trip through bankruptcy: smaller stores and less apparel.

The hedge-fund manager, who steered Sears into bankruptcy and kept it alive with a $5.2 billion offer for its assets, says he will sell or sublease some of the 425 remaining stores. He plans to devote more of the retail space to tools and appliances. He also wants to open more smaller stores, similar to one in Oak Brook, Ill., which at 62,000 square feet is about one-third its original size.

“Our...