US retail giant Sears seeks liquidation: Reports
NEW YORK (BBC News): Sears, the US department store chain that once dominated US shopping malls, is reported to be seeking liquidation. After failing to reach a deal with chairman Edward Lampert over a $4.4bn (£3.5bn) takeover, the retailer is now poised to ask a court for permission to liquidate.
Sears Holdings – which also owns Kmart – first filed for Chapter 11 bankruptcy protection in October. The 126-year-old firm had 68,000 employees when it filed for bankruptcy. Should liquidation go ahead, many of those could now lose their jobs.
However, some parts of the business could be salvaged from any liquidation, such as its home services unit, retail analysts say.
The company has suffered, along with many other traditional retailers, from rising online competition from firms such as Amazon.
The company has not yet officially commented on the liquidation reports.
However, Sears’s social media team said in a tweet on Monday: “We may be slowing down, but we are not out of the race just yet. Don’t count us completely out. Happy Shopping!”
When it announced its bankruptcy filing last autumn, Sears also said it would close 142 unprofitable stores, on top of the previously announced closure of 46 stores. Chapter 11 protection postpones a US company’s obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.
Mr Lampert is the company’s chief executive, biggest investor and landlord. His hedge fund, ESL Investments, took a stake in Sears in 2004, later combining it with Kmart with the aim of restoring its profitability.
Sears was founded by Richard Warren Sears and Alvah Curtis Roebuck in 1886 as a mail order catalogue company. It opened its first retail locations in 1925 and eventually became a fixture in shopping malls across the US. It was America’s largest retailer by revenue until 1989, when Walmart overtook it,
Neil Saunders, managing director of GlobalData Retail, said: “Reports of Sears headed to liquidation suggest that the much-storied retailer is now at the end of its long road to collapse.
“Its recent journey to this point has been characterised by incredibly poor strategic decisions, chronic underinvestment and continuous financial machinations designed to keep the company afloat.
“All of this impacted trading, which has remained dire, making Sears more like a patient in a coma than a fully functioning retailer.”