The 125-year-old U.S. retailer, Sears Holdings has declared bankruptcy on Monday after years of struggling through financial operations and relying on CEO Eddie Lampert’s own money. As a part of bankruptcy, the retailer will shutter its 142 stores by the end of the year while the liquidation sales is set begin shortly.
Lampert will step down from the post of CEO, but remain chairman, and Sears would be appointing Mohsin Meghji as chief restructuring officer. According to CNN news, Sears Holding, parent company of Sears and Kmart, is one among the prominent retailers in the United States to file bankruptcy in the era of e-commerce giant Amazon.
The company intends to stay in business, operate the profitable stores, and the websites of both Sears and Kmart, several news reported, citing a statement issued while filing in federal bankruptcy court in New York on Monday.
A decade ago, Lampert merged Kmart and Sears to create a stronger competitor, but over the years the company struggled to pay down the debt by shedding assets. Currently, Sears holds about 700 stores with 68,000 employees which have been down from 1000 stores and 89,000 workers reported in February. The stores have remained barren and not been stocked by the vendors while many of them have never been visited by younger generation of shoppers.
According to FactSet, Lampert has controlling ownership stake in the company and continues to invest in Sears Holdings even with the filing of bankruptcy. He holds 31% share (largest) in the company and owns about 19% of hedge fund ESL investments.
Sears Holdings, once a retail giant, fell out of customers’ favor over the years as online stores and longtime rivals such as Home Depot and Walmart, beat the company in price and convenience. As reported in CNN Business, many problems of Sears were self-inflicted. Cutting costs, closing stores, reduced spending on advertisement, and failing to invest in the modernization of company’s outlets caused the sales to decline and debt mounted, the news added. In a fight to stay alive, Sears sold most of its valuable assets including the large real estate footprint; it was losing about $125,000 a month, according to bankruptcy filing.