USA retailer Sears files for bankruptcy

Sears, once the largest retailer in the world, is closing hundreds of stores and reportedly planning to file for bankruptcy. Here's how it got there.

Sears, the venerable USA chain that once dominated the retail sector but had been in decline since the advent of the Amazon era, filed for bankruptcy on Monday, October 15, and announced it was closing nearly 150 stores.

Sears Holdings made it official early Monday morning, announcing the retailer has filed for Chapter 11 bankruptcy protection.

Sears listed assets in the range of US$1 billion (RM4.16 billion) to US$10 billion and liabilities in the range of US$10 billion to US$50 billion, according to a court filing. "Hopefully, a smaller new Sears will be healthier".

The last man standing while storied Chicago competitors like Wieboldt's, Montgomery Ward and Carson Pirie Scott fell by the wayside, Sears survived the Great Depression, adapted as its shoppers traded catalogs for downtown department stores, and followed customers to suburban shopping malls.

Sears is expected to file for bankruptcy imminently. As Seritage is 44-percent owned by entities linked to Sears' CEO and largest shareholder Eddie Lampert - which means he would stand to profit if Sears began liquidating its properties even further - the plan was criticized by creditors.

But Sears' board recently rejected the plan, according to reports. His hedge fund has an 18.5% stake, according to FactSet.

The company has racked up 6.26 billion U.S. dollars in losses, excluding one-time events, since its last annual profit in 2010, according to Ken Perkins, who heads the research firm Retail Metrics LLC. Sears opened its first store in 1925 in Chicago, and the Sears Tower in that city, now known as the Willis Tower, was the world's tallest building when it opened in 1973. It has had 11 years of straight annual drops in revenue. It has lost $11.7 billion since 2010, its last profitable year.

But its losses continued into this year.

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Such financial woes contrast with the promise that Mr Lampert made when he combined Sears and Kmart in 2005, two years after he helped bring Kmart out of bankruptcy. Back then, it operated 2,200 stores in total.

But many of Sears' problems were self-inflicted.

Three companies that sell items at Sears told Reuters this week that Sears had missed payments to them over the past few weeks.

But long before the rise of Amazon and online shopping, Sears was struggling to keep up with changing shopping habits of Americans.

Sales at the company's established locations tumbled almost 4% during its fiscal second quarter - an improvement from the same period a year ago when it fell 11.5%.

Sears, once the largest retailer in the United States, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, sources have previously said.

But while the retailers typically file for bankruptcy with the intention of staying in business, numerous retailers end up going out of business after filing.

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