Us retail giant sears files for bankruptcy protection
US retail giant Sears has filed for Chapter 11 bankruptcy protection, buckling under its massive debt load and staggering losses.
The company began as a mail order catalogue in the 1880s, featuring items from bicycles to sewing machines to houses. It 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 and it faced even more competition from online sellers and appliance retailers like Lowe’s and Home Depot.
The operator of Sears and Kmart stores began to incur massive losses, joining a growing list of retailers that have filed for bankruptcy or liquidated in the last few years.
Some like Payless Shoesource have had success emerging from reorganisation in bankruptcy court but plenty of others have not, including Toys R Us and Bon-ton Stores, both of which collapsed after a Chapter 11 filing.
“This is a company that in the 1950s stood like a colossus over the American retail landscape,” said Craig Johnson, of retail consultancy Customer Growth Partners. “Hopefully, a smaller new Sears will be healthier.”
Given its sheer size, Sears’ bankruptcy filing will have wide ripple effects on everything from already ailing landlords to its tens of thousands of workers.
The filing comes after rescue efforts engineered by chief executive and chairman Eddie Lampert have kept it outside the bankruptcy court — until now.
Mr 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.
Last year, Sears sold its famous Craftsman brand to Stanley Black & Decker following its earlier moves to spin off pieces of its Sears Hometown and Outlet division and Lands’ End.
Mr Lampert has been pushing for a debt restructuring and offering to buy some of Sears’ key assets like Kenmore through his hedge fund as a $134m debt repayment was due yesterday.