Sears CEO steps in for bankruptcy financing

Sears CEO steps in for bankruptcy financing

It began opening retail locations in 1925 and expanded swiftly in suburban malls from the 1950s to 1970s.

The company listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the U.S. Bankruptcy Court in the Southern District of NY.

Sears and Kmart stores and their online and mobile platforms will remain open for business, according to a company statement. "Hopefully, a smaller new Sears will be healthier". But with its sheer colossal size, Sears' reorganisation in court will have even wider ripple effects. It has been run over that period by the hedge fund manager Eddie Lampert, who sold off numerous firm's brands and properties but failed to win customers back, many of whom now prefer to shop online.

Sears' shares, which were over $100 each year after billionaire hedge fund manager Edward Lampert took over in 2004, closed at about 41 cents on Friday.

Previously, Sears has secured cash by selling stores to Seritage Growth Properties, a real estate investment trust which the retailer formed in 2015 to convert Sears and Kmart stores into different properties, such as offices, high-end retail and residential complexes.

Having so little cash available would make it very hard for Sears to pay back $134 million in debt due on Monday. Lampert also became Land's End Inc's biggest shareholder when the clothing manufacturer was spun out of Sears in 2014. His hedge fund has an 18.5% stake, according to FactSet.

The handwriting is on the wall: Sears appears to be nearing bankruptcy. In April 2007, shares were trading at around $141. The company, which once had 350,000 workers, has seen its workforce shrink to fewer than 90,000 people as of earlier this year.

But it has struggled to reinvent itself in the face of online competition from companies such as Amazon.com Inc, as well as other brick-and-mortar retailers, including Walmart Inc. It has had 11 years of straight annual drops in revenue. In its last fiscal year, it generated $16.7 billion in sales, down from more than $50 billion in 2008.

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The department-store chain has been losing money and closing stores for years. In the fiscal second quarter ended August 4, net losses in the quarter swelled to $508 million, or $4.68 per share, compared with a loss of $250 million, or $2.33 cents per share in the same quarter a year ago.

As part of a restructuring plan, Lampert offered to purchase Kenmore and the home division for $480 million, which would allow Sears to pay its debt obligation and to stock up on merchandise for the holidays.

Sales at the companys established locations tumbled almost 4 percent during its fiscal second quarter. That's in contrast with chains like Walmart, Target, Best Buy and Macy's, which have been enjoying stronger sales as they benefit from a robust economy and efforts to make the shopping experience more inviting by investing heavily in remodeling and de-cluttering their stores.

Since 2012, losses at Sears have piled up, and multiple efforts to steady the company by Chief Executive Officer Eddie Lampert - sometimes with his own money - have failed to restore its fortunes.

"Were doing the job of two to three people". "We're lifting treadmills and refrigerators".

A key unresolved aspect of Sears' negotiations with lenders involves setting deadlines for Sears to achieve specific business goals while under bankruptcy protections, the sources said.

"The problem in Sears' case is that it is a poor retailer", Saunders wrote in his analyst note.

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