Sears to close almost 150 more stores, files for bankruptcy

Marco Green
October 15, 2018

At its peak, Sears sold everything from toys to auto parts to mail-order homes, and was a key tenant in nearly every big mall across the United States.

The company filed for Chapter 11 protection from creditors with the US Bankruptcy Court in White Plains, New York, listing more than US$10 billion in debts and more than US$1 billion in assets.

Having so little cash available would make it very hard for Sears to pay back $134 million in debt due on Monday. ESL Investments is also Sears' largest stockholder and creditor.

"The company believes that a successful reorganization will save the company and the jobs of tens of thousands of store associates", Sears said.

The bleak figures are an outlier to chains like Walmart, Target, Best Buy and Macy's, which have been enjoying stronger sales as they benefit from a robust economy and efforts to make the shopping experience more inviting by investing heavily on remodeling and de-cluttering their stores. While Sears and Kmart stores and the online business will remain open, the company will shut 142 unprofitable outlets near the end of the year, on top of 46 unprofitable stores already slated for closure by November. The company has also formed a committee to oversee the restructuring process.

But it said it is looking for a buyer for several stores and it will close an additional 142 stores by year-end. Customers should expect loyalty programs to continue uninterrupted.

Sears plans to close about 150 of its 700 stores in malls across the United States as soon as it files for bankruptcy, Reuters reported on Friday.

Coinciding with the filing, Edward Lampert, who engineered Kmart's $11 billion acquisition of Sears, is stepping down as CEO.

The 125-year-old retailer was hardly the first to crumble while saddled with cavernous showrooms as e-commerce competitors soared. The company has roughly $5.6 billion in outstanding debt and has dwindled down to about 820 Sears and Kmart stores, down from 2,000 five years ago. The Craftsman brand of lawn equipment and tools has been sold.

One bankruptcy expert described Sears' downfall as "the slowest-moving train wreck". "Hopefully, a smaller new Sears will be healthier". This will absolutely be a hard task, given Sears hasn't turned a profit since 2011.

Lampert has often attempted to keep Sears viable with loans.

Sears was down as much as 25% ahead of the opening bell.

Lampert himself has had a controversial tenure at Sears. The company later became Sears, Roebuck and Co and began selling everything from homes to hardware, becoming the largest retailer in the country until Walmart replaced it in 1990. The company, which once had 350,000 workers, has seen its workforce shrink to fewer than 90,000 people as of earlier this year. Total revenue dropped 30 percent in the most recent quarter, hurt by continued store closings.

"Here you have what was the original Amazon on steroids", Rosenblum said.

Other reports by Click Lancashire

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