Sears To File For Bankruptcy, Several Stores To Close

Sears To File For Bankruptcy, Several Stores To Close

Sears To File For Bankruptcy, Several Stores To Close

The company been drowning in debt exceeding $5 billion and reportedly could not make a $134 million payment that had been due on Monday.

Sears Holdings Corp., parent of the Sears and Kmart retail chains, has filed for bankruptcy protection - a last-ditch effort to save an American icon that shaped shopping habits for more than a century. The filing could come as soon as Monday morning.

Sears store is pictured with a sign indicating the store remains open during the ongoing redevelopment of the neighboring Granite Run Mall in Media, Pennsylvania, U.S., October 10, 2018. Those store closings are in addition to 46 others that were expected by next month.

The question now is whether a smaller version of the company that once dominated the American retail landscape can remain viable or whether the iconic brand will be forced out of business.

Sears added it had received commitments for $300 million in debtor-in-possession financing and was negotiating for an additional $300 million.

But while retailers typically file for bankruptcy with the intention of staying in business, many end up going bust after filing.

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In the UK, Toys R Us went into administration, closing 105 stores across the nation, after taking a huge hit in sales.

The critical holiday season will be a particular challenge for Sears.

Sears said in a statement: "The company expects to move through the restructuring process as expeditiously as possible and is committed to pursuing a plan of reorganisation in the very near term as it continues negotiations with major stakeholders". Maybe this will let them turn things around, but it unfortunately looks more like a last stand before annihilation.

But many of Sears' problems were self-inflicted.

As of May, it had fewer than 900 stores, down from a 2012 peak of 4,000. It slashed spending on advertising and it failed to invest in the upkeep and modernization of its outlets.

These are decent discounts, but it's hard to tell what constitutes a true deal because regular prices at Sears and other department stores are so inflated nowadays.

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The company has racked up $6.26 billion in losses, excluding one-time events, since its last annual profit in 2010, according to Ken Perkins, who heads the research firm Retail Metrics LLC. Debt mounted, and the company's cash reserves disappeared.

It ditched Lands End in 2014.

Richard Sears had launched Sears Watch Co in 1886 to sell watches by mail.

Lampert personally owns 31 percent of the company's shares, while his hedge fund has an 18.5 percent stake, according to FactSet. The Sears board never accepted the offer.

Sears said it intends to continue payment of employee wages and benefits, honor member programs, and pay vendors and suppliers in the ordinary course for all goods and services provided on or after the filing date. Sales have plunged 60% since then.

The real estate investment trusts that own the malls and shopping centers where many Sears stores are anchor tenants have waited years for the retailer's demise to renovate the sites and boost rent, although redevelopment costs may strain some plans.

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When Do Sears Liquidation Sales Start? The bankruptcy court must greenlight this financing.

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