Sears craters after filing for bankruptcy

15 October, 2018, 20:25 | Author: Eric Barnett
  • One of Sears' major shareholders just dumped a chunk of his stock for pennies on his original investment

Over the last decade-plus, Lampert has become Sears's biggest shareholder and creditor.

Sears, the iconic U.S. chain of department stores, has filed for Chapter 11 bankruptcy protection, buckling under its massive debt load and staggering losses.

The company has a $134 million debt payment due today. Numerous large and once-succesful businesses have fallen prey to private equity investments and predatory creditors. In its last fiscal year, it generated $16.7 billion in sales, down from more than $50 billion in 2008.

Sears will close 142 unprofitable stores near the end of this year, with liquidation sales at those stores expected to begin soon. It was not immediately clear where those stores are located or how many jobs would be affected. That's in addition to the 46 stores earlier targeted for closure.

As part of the transition, Sears will also undergo a series of leadership and board changes. The company will remain in business during the proceedings. The company created an Office of the Chief Executive - responsible for day-to-day operations - that will be filled by three officers.

The statement said the company will close another 140 stores in 2018. Customers should expect loyalty programs to continue uninterrupted.

Sears is just one of many retail stores unable to stay afloat. The company added a new director this week who is familiar with bankruptcies and restructuring.

The 125-year-old retailer was hardly the first to crumble while saddled with cavernous showrooms as e-commerce competitors soared. Many of its most valuable properties have been sold off, with the other half leased and offering little cost savings from rent restructurings since Sears already pays below market rents.

The filing, which is happening ahead of the crucial holiday shopping season, comes after rescue efforts engineered by its CEO and chairman Eddie Lampert have kept it outside of bankruptcy court - until now.

Under Lampert, the company saw a $1.5 billion profit in 2015, but it's been downhill ever since.

At various times, Sears brands have included Allstate Insurance, Coldwell Banker real estate and Discover Card.

In a March 2017 government filing, Sears said there was "substantial doubt" it would be able to keep its doors open - but insisted its turnaround efforts would mitigate that risk.

Such financial woes contrast with the promise that Lampert made when he combined Sears and Kmart in 2005, two years after he helped bring Kmart out of bankruptcy.

Lampert himself has had a controversial tenure at Sears.

Some retailers beat Sears on price, Walmart in particular, while others beat Sears on quality.



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