Sears files for bankruptcy, to close another 142 stores

Roman Schwartz
October 15, 2018

Sears Holdings Corporation, also the parent company for Kmart, which merged with Sears in 2005, said in a statement it had filed for bankruptcy protection in Manhattan. It did not specify whether the closings would be Sears or Kmart stores or their locations. Sears faced even more competition from online sellers and appliance retailers like Lowe's and Home Depot.

Sears Holdings Corp is planning to close up to 150 of its department and discount stores and keep at least another 300 open as part of a plan to restructure under U.S. bankruptcy protection, people familiar with the matter said Friday.

With this bankruptcy plan, the company's CEO Eddie Lampert-who bought Sears in 2004-will be replaced by a three-person committee (Lampert will still be chairman of the board).

One of the lingering questions for investors has revolved around the value of Sears' assets, which include prime real estate.

The chain, which comprised 863 mall-based stores and an additional 1,200 retail locations in the year 2000, had 866 Sears and Kmart stores as of August 4 and expected to close 149 of them in the second half, according to a September 13 filing.

Along the way, the company found related innovations; for example, Allstate Insurance arose in the 1930s from the realization that Sears catalogs and stores would be good channels to sell insurance to the new legions of vehicle owners.

The 125-year-old company has been struggling for several years and is drowning in debt.

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It joins a growing list of retailers that have filed for bankruptcy or liquidated in the last two years amid a fiercely competitive climate. That might be true in part, but Sears has done much to hasten its own demise.

Lampert, the largest shareholder, has been loaning out his own money for years and has put together deals to prop up the company, which in turn has benefited his own ESL hedge fund.

At its peak in the 1960s, 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.

Sears dates back to the late 1880s and its mail-order catalogues with merchandise from toys, medicine and gramophones to automobiles, kit houses and tombstones made it the Amazon of its time. Liquidation sales are expected to be completed at 46 stores by the end of November 2018. But in recent years, she's been disappointed by the lack of customer service and outdated stores. But it seems to me Sears' errors went mostly in the other direction: Trying too hard to figure out what would be the next big thing, and thereby getting into businesses it wasn't especially good at. But the onset of discounters like Walmart created challenges for Sears that have only grown.

Chicago's Sears Tower was the world's tallest building when it was completed in 1973, but in the following decades consumers increasingly turned to e-commerce and brick-and-mortar rivals such as Walmart and Target. The company now has 506 stores in operation.

Meanwhile, Sears workers are nervous about what kind of severance they'll receive if their stores close. Closing 142 stores leaves a very large hole in the economies of the malls where they exist.

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