American Icon Sears Files for Bankruptcy

American Icon Sears Files for Bankruptcy

Sears, the iconic American department store, filed for Chapter 11 bankruptcy this morning. The New York Times reported that court papers show that Sears has amassed liabilities of $11.3 billion compared with $7 billion in assets.. The retailer, which employees 68,000 employees, will close 142 stores immediately.

In a court affidavit, Chief Financial Officer Robert Riecker said: “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, enduring yet another shift in the retail landscape?,” detailed Bloomberg.

The Changing Retail Landscape 

The rise of Amazon and other big-box stores Wal-Mart and Home Depot, contributed to Sears struggles to maintain its footing in the marketplace. The store reached its heyday after WW2 with the rise of the middle-class. Sears was the one-stop shop for clothing, appliances, tools, and everything the American family needed. In the 1980’s a foray into the financial sector proved unfruitful and spread the company thin. By the 90’s Wal-Mart had surpassed Sears as the biggest retailer. The nail in the coffin was the lack of a strong online presence as shopping went digital.

As of now, Sears is aiming to reorganize, not turns the lights off on all its stores. But, they are at risk of liquidating. They’ve already liquidated over 800 stores in the past 16 years, and more will close after an adequate “analysis of profitability.”

New Investments Could Spark Reinvention 

With former CEO Edward Lampert, efforts to salvage the brand has led to the closing of hundreds of underperforming stores and slashing over one billion dollars in annual operating costs. Now as chairman, Mr. Lampert is looking to loan Sears $300 million from his hedge fund EHL Investments. EHL owns 40% of their debt, according to The New York Times. Critics and Sears employees are skeptical, due to past financial strategizing that has benefitted him and EHL, but Sears.

Bringing the customer back to the chain will be crucial during this process, as many of their spending patterns have changed. They must convince the consumer that they will even survive the bankruptcy. Even before that, they must prove to other potential creditors that they can reinvent and more importantly, turn a profit.

Author:  Christine Duff

Christine wants to live in a world filled with cutting edge fashion, beautiful words and and an endless supply of leather jackets and boots. A product development grad of FIDM, she was the Editor-in-Chief of MODE Magazine where she reignited her love of storytelling. She has diverse experience within the industry with trend research, art direction and styling editorial spreads. She gained her most notable experience working in Los Angeles at the satellite operation for GQ and Vogue Thailand. Christine is passionate about social science and the role it plays in the consumer goods industry and apparel in particular.

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