Sears files for bankruptcy as the retail apocalypse continues apace

Gladys Abbott
October 15, 2018

Sears Holdings Corp., parent of the Sears and Kmart retail chains, has filed for bankruptcy protection - a last-ditch effort to save an American icon that shaped shopping habits for more than a century.

Sears will close 142 unprofitable stores near the end of this year, with liquidation sales at those stores expected to begin soon.

Sears capitalized on both of these realizations to build catalog and department store businesses that shaped American retail for almost a century. Lampert will remain the company's chairman.

Sears said Monday, Oct, 15, 2018, that it will close 142 more stores, part of its plans to file for Chapter 11 bankruptcy.

Sears was once the nation's largest retailer and its largest employer.

Lampert had pledged to restore Sears to its glory days, when it owned the tallest building in the world and companies that included a radio station and Allstate insurance.

"The company believes that a successful reorganization will save the company and the jobs of tens of thousands of store associates", Sears said. Negotiations over the fate of the fallen company have been continuing this week, as it faces a critical $134 million of debt that is maturing on October 15.

To fund its operations in the coming months, Sears said it has received a $300-million financing package from its existing lenders and was negotiating an additional $300 million in bankruptcy financing from Lampert's ESL.

The company made a filing under the Chapter 11 of the United States Bankruptcy Code on Monday.

With the writing on the wall that a bankruptcy was imminent, suppliers demanded Sears pay cash up front for the items in its stores, putting it at an even greater competitive disadvantage with other retailers.

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The former executive chairman of Sears Canada says his turnaround strategy was sound, but lacked the time and resources to succeed.

The Sears catalog was the way many Americans first started to buy mass-produced goods.

But it has struggled to reinvent itself in the face of online competition from companies such as Amazon.com Inc, as well as other brick-and-mortar retailers, including Walmart Inc.

Sears, an anchor of retail life for generations of Americans, filed for bankruptcy on Monday and said it was closing nearly 150 stores, the latest marquee victim of the online era.

In an earlier attempt to avoid bankruptcy, Sears past year sold its Craftsman tool brand to power tool maker Stanley Black & Decker for $900 million.

Sears was built on two brilliant observations. A long series of store closings has left it with under 900 today. Total revenue dropped 30 percent in the most recent quarter, hurt by continued store closings.

Of all the remaining big-box department stores at that time, both Sears and Montgomery Ward should have been able to exploit online sales with a solid catalog-buying customer base.

Sears' real estate footprint also is one of Kimco's largest, creating the opportunity to add more tenants.

John Germann, 46, works full-time and makes $14 per hour as the lead worker unloading merchandise from trucks at the Chicago Ridge, Illinois, store, which has been drastically reducing its staff since he started nine years ago.

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