Sears has finally filed for Chapter 11 bankruptcy protection. It might be the beginning of the end for the company that dominated the American retail industry for over a century. For the time being though, Sears will keep hundreds of its stores open pursuant to an agreement that it entered into with its creditors
Sears merged with Kmart in 2005. At this point in time, it still has about 700 Sears and Kmart stores up and running. Many of those stores have never been visited by millennials. The retailer intends to close 142 of those stores by the end of 2018. They’re simply not making any money. On top of those, there are another 46 stores that it intends on closing by the end of November, 2018. In all, Sears employs about 70,000 people. Sears had about $134 million of loans that were due on October 15, 2018. It filed the Chapter 11 proceedings that morning.
Sears sold everything from clothes to it’s famous Craftsman tools to Kenmore appliances. At one time it even sold prefabricated homes. According to CNBC, Richard Sears began the Sears Watch company in 1886. He sold watches by mail. He partnered with Alvah Roebuck, and the two began offering consumer products in a catalogue with delivery by mail. Sears Roebuck opened its first store in Chicago in 1925, and by the end of the year, it opened seven other stores. In 2006, only a year after the Kmart acquisition, Sears was worth more than $20 billion. Walmart, Target, Lowe’s and Home Depot kept opening stores though, with a wider variety of home improvement materials and tools. Then, the Great Recession came, and with the rise of Amazon, buyers started buying products online.
Now, Sears hasn’t shown a profit since 2010. A drastically reduced cash flow doesn’t allow Sears to invest very much in itself anymore. The company’s ratio of expenditures to sales is less than one percent. Even its famous Craftsman Tool brand has been sold to Stanley Black & Decker, and 250 of its top properties have been sold. In addition to it’s present woes, Sears has 100,000 retirees, and it’s pension fund is underfunded by $1.5 billion. What comes to issue now is whether Sears will come out of bankruptcy. Few retailers have successfully done so.