Us re­tail gi­ant sears files for bank­ruptcy pro­tec­tion

Belfast Telegraph - Business Telegraph - - News - BY ANNE D’IN­NO­CEN­ZIO

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.

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