Washington, US, Oct 15 – Sears an anchor of retail life for generations of Americans, filed for bankruptcy Monday and said it was closing almost 150 stores, the latest marquee victim of the online era.
Founded in 1886 as a mail order catalog company, it went on to pioneer departmental stores that sold all things to all people and by the mid-twentieth century had built a vast empire that stretched across North America.
But it has closed hundreds of outlets in recent years amid a retail shakeout caused in part by the rise of Amazon and other e-commerce players.
“The Company and certain of its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York,” a statement by Sears Holdings Corporation said.
Chapter 11 of the US Bankruptcy Code allows firms to restructure and pay their creditors over time.
Sears had been drowning in debt exceeding $5 billion and reportedly could not afford a $134 million repayment that had been due on Monday.
Edward S. Lampert, Chairman of Sears Holdings, said the insolvency filing would give the company the “flexibility to strengthen its balance sheet” and enable it to accelerate a strategic transformation.
The company said it intended to reorganize around a smaller store platform, a strategy it said would help save tens of thousands of jobs.
Sears Holdings had 89,000 employees as of February, according to a filing with the Securities and Exchange Commission — down from almost 350,000 a decade ago — as well as 547 Sears and 432 Kmart stores (the two retailers merged in 2004).
It announced Monday it would close 142 unprofitable stores near the end of the year, in addition to the previously announced closure of 46 stores by November.
While retaining his chairmanship, Lampert will step down as CEO, with the role handled by other senior executives as part of a new “Office of the CEO.”
Sears added it had received commitments for $300 million in debtor-in-possession financing and was negotiating for an additional $300 million.
– ‘American institution’ –
Reflecting on the move, Jerry Hancock, a self-described Sears scholar and historian told the broadcaster NPR Sears was an “American institution.”
“For the older generation, it’s the changing of the times. Sears was just such an integral part of their childhood, building that American family. I think Sears was a backbone of that. And you could actually go to the Sears catalog and order an entire house.”
Going back further to the 1890s, Sears catalog “completely changed American life,” said Hancock, offering consumers exotic items they had seen at the World’s Fair or had read about, like cream separators and Singer sewing machines.
“That catalog was sort of a window into this new consumer world, and it really made a connection with people,” he added.
Sears is far from the only iconic retailer to fall by the wayside as more consumers do the bulk of their shopping online.
In March, iconic Toys “R” Us announced it was shuttering all of its US stores while other big names such as Macy’s and JC Penney have also been forced to close numerous locations and lay off workers.
American shopping malls in turn have pivoted toward a new generation of stores, food and entertainment, including players that began online before graduating to brick-and-mortar.
Other additions include trendy gym chains, and Dave & Buster’s, whose video game and pro-sports viewing restaurants are emblematic of the “experiences, not stuff” mantra now resonant among consumers.