Monday 15 October 2018
Sears, the US retailer that that once dominated America's shopping malls, has filed for bankruptcy.
Sears Holdings - which also owns Kmart - filed for Chapter 11 bankruptcy protection on Monday.
The company has suffered, along with many other traditional retailers, from rising online competition from firms such as Amazon.
Sears has been closing stores and selling properties as it grapples with debts of more than $5bn.
The company employs nearly 90,000 people in the US, although that is down from 246,000 five years ago, and in its heyday it had more than 3,000 stores.
It became America's largest retailer before being overtaken by Walmart in the 1980s.
The firm filed for bankruptcy petition after it reportedly could not meet a $134m repayment due on Monday.
Chapter 11 protection postpones a US company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.
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From boom to (nearly) bust: Sears struggles for shopping relevancy
Media captionSears struggles for shopping relevancy
Eddie Lampert - who is the company's chief executive, biggest investor and landlord - had attempted to restructure its debts to avoid bankruptcy.
In a statement, he said: "Over the last several years, we have worked hard to transform our business and unlock the value of our assets.
"While we have made progress, the plan has yet to deliver the results we have desired."
Announcing its bankruptcy filing, Sears also said it would close 142 unprofitable stores by the end of the year, on top of the previously announced closure of 46 stores by November.
Some analysts say Sears' problems were exacerbated by a lack of investment in stores.
Neil Saunders of GlobalData Retail said Sears' troubles began in the 1980s when it became "too diversified and lost the deftness that had once made it the world's largest and most innovative retailer".
"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," he said.
"The brand is now tarnished just as the economics of its model are firmly stacked against its future success."
Sears was founded in 1886 as a mail order catalogue business and later expanded into bricks-and-mortar stores to become a fixture in shopping malls across the US.
But its fortunes took a turn for the worse in the 1990s amid competition from low-cost chains such as Walmart.
Mr Lampert's hedge fund, ESL Investments, took a stake in Sears in 2004, later combining it with Kmart with the aim of restoring its profitability.
He and his affiliates now own about 49% of Sears.
Despite the investment, Sears never regained its footing. It wracked up more than $6bn in losses between 2013 and 2017, while annual revenues more than halved.
As of August, the retailer had more than 860 stores in the US, down from 1,700 at the end of 2014.
Sears Canada, which was spun-off from the main company in 2012, filed for bankruptcy last year, with the loss of thousands of jobs.
Source: BBC News
Date: 15th October 2018