Sears, the chain that changed the retail industry in America, has filed for Chapter 11 bankruptcy protection just after midnight early hours of Monday, ahead of the crucial holiday shopping season,
The 132-year-old company which started out as a mail order catalog joins dozens of retailers that have filed for bankruptcy or liquidated in the last few years amid a fiercely competitive climate.
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The company has been struggling for several years but the final straw was a $134 million debt payment due Monday that it could not pay.
Retailers like Payless ShoeSource have had success emerging from its bankruptcy but others haven’t, like Bon-Ton, Toys “R” Us, RadioShack and Sports Authority, which were forced to shutter their activity soon after a Chapter 11 filing.
The company issued a statement saying it intends to stay in business, keeping stores which are profitable open, along with the Sears and Kmart online shopping sites.
It also said the company is looking for a buyer for a large number of its remaining stores and that it will close at least an additional 142 stores near the end of this year, in addition to the 46 store closing already planned for next month.
CEO and chairman Eddie Lampert, Sears largest shareholder and the owner of ESL hedge fund, have kept the company off an earlier bankruptcy. Lampert has invested his own money to the company for years.
Lampert owns 31% of Sears’ shares. His hedge fund has an 18.5% stake, according to FactSet.
“While we have made progress, the plan has yet to deliver the results we have desired,” said Lampert’s statement Monday. He said the bankruptcy process would allowthe company to shed debt and costs and “become a profitable and more competitive retailer.”
in 2017 Sears sold its famous Craftsman brand to Stanley Black & Decker Inc., following its earlier moves to spin off pieces of its Sears Hometown and Outlet division and Lands’ End.
According to Ken Perkins, from Retail Metrics LLC. the company has racked up $6.26 billion in losses, excluding one-time events, since its last annual profit in 2010,
It’s had 11 years of straight annual drops in revenue. In its last fiscal year, it generated $16.7 billion in sales, down from more than $50 billion in 2008.
For decades, Sears was king of the American shopping landscape, AP reports. “Sears, Roebuck and Co.’s iconic catalog featured items from bicycles to sewing machines to houses and could generate excitement throughout a household when it arrived.
The company began opening retail locations in 1925 and expanded swiftly in suburban malls from the 1950s to 1970s. But the onset of discounters like Walmart created challenges for Sears that have only grown. Sears faced even more competition from online sellers and appliance retailers like Lowe’s and Home Depot. Its stores became an albatross.”