Sears, purveyor of the iconic Sears catalog, the original wish list, finally filed bankruptcy today, fulfilling speculation that had raged for years about its fate. Sears had been described as circling the drain for the better part of a decade. It finally got sucked down.
The filing is a Chapter 11, meaning Sears intends to reorganize, hopefully emerging from bankruptcy as a leaner, meaner, more agile version of itself, and move forward as a force in American industry. That remains to be seen. The track record for retailers who initially file Chapter 11 with those kinds of hopes is poor, to say the least. Only Payless Shoe Source readily comes to mind as a company that beat the odds. Toys R Us, Bon Ton, Radio Shack and Sports Authority are one-time retail giants that no longer exist.
Sears hasn’t posted a profit since 2010, racking up $6.26 billion in debt since then. In March 2017 in a filing with the Securities Exchange Commission, Sears disclosed that there was doubt it could survive as it then existed, but it was undertaking loss mitigation steps. Those steps have apparently reached the end of the road.
Sears began in 1880 as a mail order catalog offering everything from bicycles to sewing machines and even houses. The arrival of the Sears catalog was eagerly anticipated by everyone in the house. Sears began opening retail stores in 1925 and between the 1950s and the 1970s dominated the retail world in ways that Amazon can only dream. Sears played a major role in the proliferation of malls across the United States. Sears was a sought-after anchor tenant, one around which a developer could build a mall and attract dozens of smaller retailers who rode on Sears’s coattails.
The onset of discount stores like Walmart and K-Mart challenged that dominance. Lowe’s and Home Depot attacked Sears’s appliance and tool sales. Sears tried to respond by acquiring K-Mart but by that time K-Mart itself was in financial distress. In recent years Sears sold some of its core brands, such as Craftsman tools and Lands’ End (which it acquired to combat growing online merchants). Recently Sears tried to sell its Kenmore brand of appliances, but didn’t receive any offers that enticed the board of directors.
Many analysts believe Sears’s problems were largely self-inflicted. It tried to cut costs by closing stores and cutting advertising. It failed to update and modernize outlets. By the end, Sears and K-Mart stores were desolate places of confusion, unkempt shelves and absent sales people.
As part of its bankruptcy filing, Sears announced it will close 142 stores in addition to the 46 closures that are expected to be completed by November, just before black Friday. With Toys R Us gone and Sears wobbling, the 2018 holiday shopping season could look much different from years before.