Connect
To Top

Sears to File Bankruptcy This Weekend to Keep Their Stores Open for The Christmas Season

As we enter the end of the year, another struggling giant retailer is set to file an imminent bankruptcy to keep their stores open during the Christmas Season.

The Deal

Sears Holdings revealed the company is set to file a bankruptcy this weekend as they seal a deal with the lenders to keep their stores alive just until the Holiday Season as they hope to find a buyer for Sears, according to their spokesperson. Sears would also shutter some of its stores as part of the deal. According to reliable sources, around 150 out of its 900 department and discount stores are set to close first.

Around 90,000 employees and workers of Sears are at risk due to the closure orders.

As of this writing, the Sears spokesperson says the company hasn’t found a buyer for their business yet. However, they’ll likely find one after Sears has filed for bankruptcy. The retailer is currently in negotiation with the lenders to raise their initial $300 million budget to $500 million to support their holiday operations.

Although the company disclosed the amount may change and increase over time. The company reiterates though that the negotiation is still on-going and no deal has been formalized yet.

The Challenges

While the business experts lauded Sears’ strategy to keep their stores alive and make it through the Holiday Season, they claim the company still has to face challenges. According to them, Sears only had one positive same-store sale.

Most of the time, the company has sold or spun off its valuable real estate and most-prized brands. Their thinning cash flow and sales have left them with little to no money to reinvest the company itself. Sears’ stores are becoming more irrelevant compared to new and emerging competitors like Amazon according to business experts.

According to the business experts, most companies who filed for bankruptcy in hopes to keep their stores open until the Holiday Season end up not meeting their business sales expectations.

Aside from that, the business experts reiterate it’ll be difficult for the company to implement changes like rebranding and investing in e-commerce with limited resources, while catering to their creditors’ demands.

Despite these challenges, Sears countered they still had valuable businesses like their home improvement division and Kenmore appliance brand. Meanwhile, Eddie Lampert of ESL Investments made a bid to Sears and their brands. But as of this writing, the deal hasn’t granted an approval from the special committee yet. However, the company clarified they have not formally rejected Lampert’s offer yet, so the possibility of acquisition is still open as of this moment.

The Loss

The business experts add Sears has put itself in an awkward position. According to them, Sears has been forced to choose between exposing itself to possible litigation and approving a deal to save the company from bankruptcy.

The industry experts also suggested how Sears put itself vulnerable to lawsuits by selling its valuable real-estate assets to pay off their debts. According to experts, it would’ve been better if Sears put their money in paying down their pension or rehabilitating the company.

Sears lost an astounding $508 million in the second quarter of the year as their sales tumbled.

The projected lost amount above didn’t include the amortization, interest rates, and tax depreciation yet. Their total losses increased up to $112 million compared to their $66 million loss of the same quarter in 2016.

Their sales at stores which just opened a year ago also fell down to 3.9%. This prompted Sears to close down some of their sales and discount stores last August 4 Overall, Sears has an astounding $134 million debt due Monday, which prompted the company to file bankruptcy this weekend to cover the costs to pay. Sears has declined to comment or give details in their bankruptcy filing.

More in Business

Leave a Reply

Your email address will not be published. Required fields are marked *