US retail giant Sears files for bankruptcy

[Berlin Expat]

Source: BBC

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.

Read more: https://www.bbc.com/news/business-45859722

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Looks like the end of the road for what was once a retail giant - it's not unfair to say that Sears changed how Americans did their shopping; via their legendary catalog, they offered everything at one time, from clothes to shoes to actual family homes that you could purchase and assemble yourself.

Eddie Lampert basically ran the company into the ground and asset stripped it. That being said, the problems at Sears started well before Eddie Lampert came on the scene. Previous management failed to recognize and adapt to a changing retail landscape - combined with Lampert's Randian philosophy........and now it's game over. They're doing a Chapter 11, but frankly, it'd be a miracle if they resurrect Sears and make the decisions needed to transform the company into a thriving business that can compete in the modern 21st Century retail environment.

[Sherman A1]

1. Sad, but hardly a surprise

with decades of exceptionally poor management that simply never seemed to grasp the changes in the Retail Sector.

[MFM008]

2. Everytime

We needed something we went to Sears.

[Berlin Expat]

3. Same here when I was growing up

as a kid in the 1970's. Fridge, washer, dryer, lawnmower, power tools and hand tools. Hell, I think my first tie as a little kid came from Sears.

But times change, of course. And sadly Sears management - both past and present - failed to take heed of changes in consumer behavior over the decades. The rise of internet shopping certainly has a part to play, but Americans aren't going to suburban shopping malls like they used to in their heyday of the 1980's.

There's a series on YouTube, "Dead Malls", they I view from time to time; as a TEFL teacher, I also use that series with a group of students I have that are shopping center managers.....specifically, what not to do. Shopping malls are still thriving here in Czech Republic - it's almost like the 1980's or early 90s in terms of people going to the mall to shop and socialize - but online shopping is slowly increasing here too. And that sort of tells me that what we're seeing with the "retail apocalypse" in the US will almost certainly and inevitably make its way here.

[Mr. Big]

6. I saw two malls die In my lifetime

Cinderella City mall and Buckingham Square In Denver metro area.

Both redeveloped.

[wishstar]

4. No way they could survive with all the old rundown stores, despite some good products and deals

Sad how their managers ran it into the ground. Our local Sears (in top 5 of nationwide sales volume) was secretly sold off keeping their employees in the dark about the sale and imminent closure. But management never bothered to get the escalator running through the holiday season last year, so I knew it was on chopping block if management didn't care enough about customers to even keep escalator working.

Our local Kmart is also shockingly rundown with low inventory so I expect it will be on the next list of closures. They have some good quality clothing items made exclusively for Kmart that I will miss. I just went online this morning to order a couple of things my spouse and I can't find anywhere else that were in stock to pick up at our local store today using their discount points. I feel bad for the local employees, some who transferred over to Kmart from the closed Sears.


I hope that at least the Kenmore appliance line can be preserved and carried over to some other retailer as it has provided good quality affordable items.

[Berlin Expat]

5. I've seen speculation -

and it is just speculation - that Kenmore could end up on Amazon like that. Or who knows, maybe spun off into a separate company or something.

[The Conductor]

8. Sadly...

Unfortunately, Kenmore is mostly just re-branded Whirlpool or Frigidaire models. They had long-term contracts, but with Sears gone, they sure wouldn't offer such a deal to anyone else in a very competitive market. Craftsman escaped, but Kenmore is likely dead.

[JI7]

10. how about jc penney ?

[LovingA2andMI]

17. The Managers....

Could fix NOTHING in the store without the approval of Corporate. Blame Eddie Lampert for running your local Sears store into the ground and not On-The-Ground, Management.

[duforsure]

7. Were they also being hurt , or about to be severely hurt from tariffs?

By trump .

[JI7]

9. neither. bad decisions from years ago which just kept getting worse

[Locrian]

11. crazy Eddie Lampert

https://www.businessinsider.com/how-eddie-lampert-set-sears-up-to-fail-2017-5
https://www.investopedia.com/news/downfall-of-sears/

Divisions found themselves acting like separate companies, even drawing up contracts with each other. Compensation costs rose as each division hired its own senior management. These executives in turn had to form their own boards, and their pay was determined according to an in-house profit metric that led to cannibalization as some divisions cut jobs, forcing others to step in. The appliances unit found itself being gouged by the Kenmore unit, so it bought wares from LG, a South Korean conglomerate, instead.

The combined company's profits peaked at $1.5 billion in 2006, then dwindled to nearly nothing by 2010. From 2011 to 2016 the company lost $10.4 billion. In 2014 its total debt surpassed its market cap.

In November 2016, 24/7 Wall Street reported that Lampert was "the most hated CEO in America" based on their review of Glassdoor ratings.


And finally, when there's nothing left, when you can't borrow another buck from the bank, you bust the joint out....

[IronLionZion]

16. Did he go to Trump University?

Looks like every decision he made was the opposite of what they teach in any normal business school.

Unless he's "thinking outside the box" to the extreme.

[durablend]

41. He's buddies with Mnunchkin (sp?)

Take what you want from that.

[Berlin Expat]

12. The downfall of Sears

started in the 1990's; first of all, they failed to recognize the threat that Wal-Mart posed until it was far too late and Wal-Mart had seriously chipped away at Sears' consumer base. They compounded this by:

1) eliminating the catalog and

2) simultaneously failing to recognize the potential of internet e-commerce

And when they finally did act, it was too little too late; by that point, Wal-Mart and Amazon had become dominant players in the retail game.

[zipplewrath]

21. Seen this too many times

Montgomery Wards, and Zayers come to mind. I could probably think of others given time. That class of merchant seems to rise, and then slowly fall off over time. The competition is stiff in that market. Sears lasted way longer than most. It was kinda sad that a company that was built on catalog sales didn't see the looming power of internet sales. I suspect JC Pennys will be joining them soon. Truth is, Best Buy is not looking so good, and I'm seeing the early signs in Target as well.

[Berlin Expat]

22. I have to agree

that JC Pennys is probably the next to go; they've been struggling for quite awhile now.

I thought Target was doing pretty well, to be honest.

A lot of this seems to be part and parcel of the retail apocalypse, which began around 2010 or thereabouts - seems like suburban shopping malls are becoming dinosaurs, victims of the Great Recession, the middle class squeeze, the rise of internet shopping and finally, changes in consumer spending habits.

I currently live in Czech Republic - and I have to say, the shopping malls here are thriving; it's like the 1980's/early 90's in the USA, where everyone went to the mall. Of course, I'm seeing the rise here of internet shopping as well, but right now at least, the economy is booming and people have a good deal of disposable income to spend at shopping centers (Czech Republic has the lowest unemployment rate in the EU 27, so much so that there's actually a labor shortage here) but as always, it's boom and bust.

Good times don't last forever.

[rsdsharp]

38. I've seen TV ads in the last week for JC Pennys.

They were offering 50% off merchandise that was already 80% off. That would mean they're selling stuff (selected to be sure) for 10% of what they claim full retail price is.

[bearsfootball516]

13. Not really. It started well before him.

[Mr.Bill]

14. Chapter 11 bankrupcy does not necessarily

mean going out of business. It's just a financial restructuring. It may be a way of getting rid of the small franchise stores, or just the opposite, keeping the franchise stores and getting rid of the big company owned stores.

The KMart near me is currently building a larrge automotive center.

[LovingA2andMI]

18. Sears Holding Company.....

Owns Kmart. By Sears declaring Chapter 11 Bankruptcy, Kmart's is equally bankrupt.

[Mr.Bill]

19. That was my point.

If they were going out of business why would they be building a new automotive center at the KMart store near me?

[BumRushDaShow]

25. In this case, it's not a Chapter 7 liquidation

With the Chapter 11 reorg, they figure they could maybe have room to shed more assets, which they have already been doing for awhile (and that goes for K-Mart too).

The bigger issue after this however, is the pension fund for all those employees over the years and the hope is that they don't do a "Bethlehem Steel" thing on that!

[IronLionZion]

15. Yet Trump won't be blamed for the retail apocalypse

and the jobs being lost from all sorts of stores closing all across America.

[FakeNoose]

35. This one has nothing to do with Trump or his policies

Sears and KMart have been on a slow downhill roll for over 30 years. Disastrous decisions by the executives, combined with competition from Walmart and Amazon.com, yadda yadda yadda.

There are a lot of retail stores on life-support now, and we all knew that Sears would be one of the first to go down. On the other hand, Trump has done *nothing* to help these American companies either. A lot of jobs will disappear overnight, probably as soon as the holiday shopping season is over.

[inwiththenew]

20. Sad to see it happen but it's been a long time coming

I think it was 1990 when Wal Mart passed Sears in revenue. That should have been the wake up call but they didn't do what they needed to. Failed to make the changes they needed to adapt to a changing retail environment and here we are today. The internet and online sales only helped to speed up their demise. Also Lampert didn't help but they were already in such a hole when he took over I don't know if it would have mattered with or without him.

[Berlin Expat]

23. As I recall, it was sometime

around 1991 or 1992 that Wal-Mart overtook Sears. I was working for Sears at the time, and when that happened, we started paying closer attention to matters, at least at my store level. It took another year or so for corporate to do something about that; they did an extensive remodel of the store in 1993.

Ironically, the Sears store I used to work for is slated to close by the end of November of this year. What the mall will do with a now-empty two storey former anchor store is anyone's guess.

[NurseJackie]

24. A Sears bankruptcy could cause one of the biggest pension defaults ever, but the government would pr

A Sears bankruptcy could cause one of the biggest pension defaults ever, but the government would protect 90,000 retirees

http://www.chicagotribune.com/business/ct-biz-sears-bankruptcy-pension-default-20181011-story.html

[Javaman]

26. my dad was a mechanic and we got all our hand tools there...

I did the same, but I started noticing about 7 or 8 years ago, the quality started dropping pretty rapidly.

I needed a new table saw recently, my old one, a craftsman, finally bit the dust. I went to Sears and the quality was shit.

I sucked it up, and bought a DeWalt.

The DeWalt is now how the old craftsman table saw was once made.

one of my very first jobs many many many years ago was the bicycle repair guy at the local Sears in my hometown.

I knew back then, that the mark up on anything bought at sears was astronomical, BUT, the quality was still there.

watching the slow and painful fall of Sears, in someways mimics this nation.

[Berlin Expat]

27. My late father

had a ton of Craftsman hand tools; I think he acquired most of them starting in the 1950's continuing into the 1990's. All of them very high quality.

Sadly, I've read the quality in recent years has declined significantly. It's a shame, really.

[mikeysnot]

30. they used to be made in America

now they are made in china. Glad I bought all mine years ago...

[Javaman]

33. yup, if I'm at an estate sale, it's the first thing I look for; old tools. nt

[mikeysnot]

39. I inherited some more

from my gramps. So I am stocked.

We were walking through an alley, and I found some broken tools and pointed them out to him. I said "too bad they are broken".

We got in the car and drove the Sears outlet, and traded them in for new ones.

[FakeNoose]

36. Sears sold off their Craftsman line a few years ago

... that's when we all knew the end was near. It was obvious they were going belly-up because Craftsman was their last good brand.

It breaks my heart to see this happen because my grandpa was a district manager for Sears during the good years after WWII. My mom always shopped at Sears, and I used to shop there too. But then, the quality just got crappier & the stores were closing everywhere. I couldn't even buy tools at Sears any more.

[mikeysnot]

28. 20 Indian vendors just put production on hold

I have crain's articles from 1993 stating the end was near for Sears....

[gopiscrap]

29. When I first came to the US

Sears was the only store that had an escalator. I used to love going there with my mom

[kimbutgar]

31. I wonder if he is going to take the employees pension plan to pay himself more

I can see the Rapey K Supreme Court ruling he can take the employees pension to cover some of his debts.

[elmac]

32. I'm looking at a copy of their 1909 Fall catalog right now,

they were amazing back than, were the Amazon of the late 19th, early 20th century.

[Berlin Expat]

37. I do English-language teaching

here in Europe, and for some of my students who are themselves retail managers, I've shown them examples of old Sears catalogs. They were flabbergasted at the variety of products available; indeed, more than a few of them have made similar comments to yours.....that Sears was the Amazon of its time.

[elmac]

40. Another interesting lesson, especially taken from early to mid 20th century catalogs

is how much of the high end stuff, appliances, electronics, were made in the USA and were part of the greatest economic expansion this country has ever seen, when we were the leading exporters supplying the world, the opposite of what we are today.

[Adenoid_Hynkel]

34. I'd rather Sears get a bailout than Big Coal

But our Trumpenfuhrer only helps those who destroy the earth

[pstokely]

43. Make Sears Great Again tRump