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.
The company filed for Chapter 11 protection from creditors with the US Bankruptcy Court in White Plains, New York, listing more than US$10 billion in debts and more than US$1 billion in assets. While Sears and Kmart stores and the online business will remain open, the company will shut 142 unprofitable outlets near the end of the year, on top of 46 unprofitable stores already slated for closure by November.
Paula Rosenblum, co-founder of Retail Systems Research, wrote in Forbes that Lampert would emerge from a Sears bankruptcy as the least-sympathetic victim and perhaps the largest beneficiary.
Sears Holdings, the parent company of Sears and Kmart, faces an October 15 deadline to pay $134 million on its debt.
In July, Sears closed its last store in Chicago, once its hometown.
Sears, which sold everything from Craftsman tools to Kenmore appliances, lost its footing in the 1980s with expansions into financial products such as banking, mortgages, insurance and credit cards. "While we have made progress, the plan has yet to deliver the results we have desired, and addressing the Company's immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer". Lampert, who remains chairman, acknowledged in the statement that turnaround efforts so far have fallen short. The company is negotiating an additional $300 million in financing from ESL Investments, a hedge fund run by Sears' former chief executive, Eddie Lampert. That's in contrast with chains like Walmart, Target, Best Buy and Macy's, which have been enjoying stronger sales as they benefit from a robust economy and efforts to make the shopping experience more inviting by investing heavily in remodeling and de-cluttering their stores.
But the retail landscape is littered with brands that tried to reorganize in the bankruptcy process and liquidated their businesses instead, such as RadioShack, Toys "R" Us and Sports Authority. The company added a new director this week who is familiar with bankruptcies and restructuring.
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. Such a plan could potentially keep a slimmer Sears alive as a going concern, the sources said.
One of the lingering questions for investors has revolved around the value of Sears' assets, which include prime real estate. Lampert also became Land's End Inc's biggest shareholder when the clothing manufacturer was spun out of Sears in 2014. It has had 11 years of straight annual drops in revenue.