About 25% of the U.S. population waits until the last minute to purchase gifts. At one time, Americans would head to their local mall and rifle through all the department stores for last-minute gift ideas. Sears was once the perfect department store for last-minute holiday shopping, as well as everything from housing fixtures like entry doors, which steel remains the dominant material at just over 50% market share, to clothing and appliances.
Unfortunately, Sears, which has been a retail icon for more than a century, has officially filed for bankruptcy.
According to Business Insider, in addition to the company filing for Chapter 11 bankruptcy, Eddie Lampert stepped down from his CEO position and they will shut down 142 unprofitable stores before the end of the year. Lampert will, however, remain the company’s chairman.
Lampert has blamed Sears’ downfall on the media, shifts in consumer spending, and the rise of E-commerce. Global retail E-commerce sales are expected to almost double between 2016 and 2020.
“Over the last several years, we have worked hard to transform our business and unlock the value of our assets,” Lampert said. “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.”
After 125 years of business, Sears was once one of the most profitable retail stores in the world. As of mid-October, the company’s stock plummeted 32%, falling to 40 cents per share. Sears also has a $134 million debt payment that it previously said it will likely not be able to cover.
CBNC reports Sears last had a profitable year back in 2010. Financial and market analysts would need to generate more than $1 billion a year in order to remain in business, as its sales continue to erode.
Over the last 10 years, Sears has been forced to close 1,000 of its stores. Now, the company has fewer than 900 stores in business across the U.S. with fewer than 90,000 employees, compared to the more than 3,500 stores that once existed, along with hundreds of thousands of employees.
“That failure has manifested itself in lost customers, lost market share, and a brand that has become tarnished and increasingly irrelevant,” added Neil Saunders, GlobalData Retail Managing Director. “The firm simply has no reason to exist.”
Despite the bankruptcy filing, Sears still has a chance to remain in business in the future, but they are going to need a lot of help. Wall Street lenders have agreed to lend the company $300 million and Sears is currently negotiating with its hedge fund, ESL Investments, for an additional $300 million loan.
“Will Sears be relegated to the dustbin of history, and will 68,000 Americans lose their jobs, or will Sears enter the next chapter of its life as an iconic American company,” said Robert A. Riecker, the company’s chief financial officer (CFO).