Sears was able to completely change shopping in America, but now the once powerful retailer is filing for bankruptcy. The retail chain has been around for 132 years and was once the dominant retailer in America. However, these past few years the retailer has accumulated millions in debt that they are unable to pay back. Sears has not managed to make a profit since 2011, making this bankruptcy practically inevitable in the eyes of many.
Filing for Bankruptcy
Upon filing for bankruptcy Sears Holdings issued a statement declaring that they intend to keep stores open. The company only had 700 stores open at the time and have announced that they will be closing 142 by the end of the year. Liquidation of stores and other assets is expected to take place within a few weeks. Now vendors are demanding the return of products that Sears had previously been selling, causing further issues for the retailer. Despite Sears intentions to remain profitable many experts believe that Sears will fail to stay afloat following the bankruptcy.
“Although this has been a long time coming, it still feels like a tremendously poignant day for U.S. retailing. It’s difficult to be optimistic that Chapter 11 bankruptcy protection will be enough to save the business,” Alan Treadgold said. “It’s not just a question of whether Sears can restructure fast enough and radically enough. The bigger question is, even if it could achieve all that, is there still a relevant and viable business here?”
Problems Plaguing Sears
The problems plaguing the company are not recent, in fact, they go back decades. While the rise of other retailers along with online shopping has resulted in issues, the real problem is deeper than that. When trying to keep up with the competition the company resorted to cutting advertising and closing stores. The remaining Sears locations have become neglected as funding for the upkeep of stores was cut.
“If you go into any Sears, physically they look like 1982,” Stacey Widlitz, president of SW Retail Advisors said. “So as a customer you’re thinking, ‘This is not a place I’m coming back to.’”
Shortly after filing for bankruptcy the CEO Eddie Lampert stepped down from his position. He has announced his intentions to bid the stores that will be going up for sale during the bankruptcy. Many have put blame on Lampert for the downfall after he merged Sears with Kmart in 2005 to form Sears Holdings. While this merger was done with the intention of bringing both stores back from the brink, the opposite seems to have occurred since the merger both retailers have steadily lost customers and public recognition. Kmart is in no better shape than Sears right now, having closed 70% of its stores since 2010.
“In my mind, they’re both in terminal condition,” Jamie Ward, the head of retail lending at Citizens Bank said.