Published: Tue, October 16, 2018
Markets | By Erika Turner

Bay Area Sears Stores To Close After Retailer Files For Bankruptcy

Bay Area Sears Stores To Close After Retailer Files For Bankruptcy

Sears Holdings Corp is planning to close up to 150 of its department and discount stores and keep at least another 300 open as part of a plan to restructure under USA bankruptcy protection, people familiar with the matter said Friday. Sears said it plans to "liquidate" the merchandise in the closings stores which often means deeply-discounted sales for consumers.

The retailer said that it would close 142 Sears and Kmart stores across the country, locations it considers among its worst performing. He's shuttered hundreds of money-losing stores, cut more than US$1 billion in annual expenses, and spun off units such as Lands' End. In May, the company said it had identified 100 more unprofitable stores in the USA and would close 72 of them in the near future.

"Today is a day that will live in retail infamy", Neil Saunders, managing director at GlobalData Retail, said in a statement.

As of May, it had fewer than 900 stores, down from a 2012 peak of 4,000.

After the bankruptcy announcement appliance maker Whirlpool said that it expects a "very limited impact" to its business.

Sears' stock has fallen from about $6 during the past year to below the minimum $1 level that Nasdaq stocks are required to trade in order to remain on the stock index. "But they didn't run it quite well, and that's the effect of not running something right", said 61-year-old retiree Paul Thompson, a Kmart customer at one of its stores in Bridgehampton, New York.

Some retailers beat Sears on price, Walmart in particular, while others beat Sears on quality.

ESL held about US$2.5 billion in Sears debt as of September, the result of multiple attempts to keep the chain afloat.

The company filed for Chapter 11 protection from creditors with the U.S. Bankruptcy Court in White Plains, N.Y., and said Eddie Lampert is stepping down immediately as chief executive officer.

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As of May, it had fewer than 900 stores, down from about 1,000 at the end of previous year.

Chapter 11 bankruptcy is the route often taken by businesses that intend on reorganizing and ultimately surviving, as it gives companies the opportunity to find new ways of becoming profitable and to reduce debt.

Sears is perhaps best known for distributing catalogs and selling products across America using the US Postal Service. There are now five Sears stores in the state; however, three are set to close.

The retailer, for years called Sears, Roebuck & Co. and famous for its massive catalog, boomed in the decades after World War II along with a growing middle class.

Because Seritage collects rent on the properties, and those payments flow to Lampert through dividends, Sears's bankruptcy could raise arguments that some payments should be clawed back by creditors.

Meanwhile, Sears workers are nervous about what kind of severance they'll receive if their store closes.

There will be no immediate impact to merchandise pricing (stores are not now liquidating).

Real estate experts believe that Sears' move to further shutter stores as part of its restructuring would be a mixed blessing for landlords.

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