Sears Holdings, the parent of Sears and Kmart stores, announced today it had filed for Chapter 11 bankruptcy protection.
The company also said it was closing 142 unprofitable Sears and Kmart stores nationwide by the end of the year. That’s in addition to the closure of 46 unprofitable stores that had already been announced earlier.
The good news for Northeast Mississippi is that the Sears store at The Mall at Barnes Crossing in Tupelo is NOT on the list. Neither is the store in Meridian, the only other Sears location remaining in the state.
As of May, it had fewer than 900 stores, down from a 2012 peak of 4,000.
The Associated Press says the question now is whether a smaller version of the company that once towered over the American retail landscape can remain viable or whether the iconic brand will be forced out of business.
Sears, which started as a mail order catalog in the 1880s, has been on a slow march toward extinction as it lagged far behind its peers and incurred huge losses over the years.
“This is a company that in the 1950s stood like a colossus over the American retail landscape,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy. “Hopefully, a smaller new Sears will be healthier.”
Others don’t share Johnson’s optimism.
“That a storied retailer, once at the pinnacle of the industry, should collapse in such a shabby state of disarray is both terrible and scandalous in equal measure,” said Neil Saunders, managing director of GlobalData Retail, in a note published Monday. “In our view, too much rot has set in at Sears to make it viable business.”
The company has struggled with outdated stores and complaints about customer service even for its once crown jewels: major appliances like washers and dryers. 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.
Edward S. Lampert, the company’s largest shareholder, has stepped down as CEO but will remain chairman of the board. A new Office of the CEO will be responsible for managing day-to-day operations.
The company said Monday it has secured $300 million in financing from banks to keep the operations going through bankruptcy. In addition, it’s negotiating an additional $300 million loan from Lampert’s ESL Hedge fund.
The filing listed between $1 billion and $10 billion in assets while liabilities range between $10 billion to $50 billion.