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Sears files for bankruptcy as the retail apocalypse continues apace

Sears files for bankruptcy as the retail apocalypse continues apace
[Photo: Flickr user Mike Kalasnik]

It’s tough out there for brick-and-mortar stores. We see that today, with news that Sears–the once huge department store leader–is filing for bankruptcy. According to Reuters, the store plans to close 142 stores and reorganize its vast debts.

With this bankruptcy plan, the company’s CEO Eddie Lampert–who bought Sears in 2004–will be replaced by a three-person committee (Lampert will still be chairman of the board). It will try to focus on 700 of its most successful stores, to figure out a path toward success. This will absolutely be a difficult task, given Sears hasn’t turned a profit since 2011.

Over the last decade-plus, Lampert has become Sears’s biggest shareholder and creditor. The company says it has a $300 million financing package to keep it afloat during this bankruptcy filing period.

Sears is just one of many retail stores unable to stay afloat. While the rise of e-commerce–led by the likes of Amazon–certainly has something to do with it, so too do other factors. Numerous large and once-succesful businesses have fallen prey to private equity investments and predatory creditors. These entities have lent these businesses money, but mounting interest payments have dried up hope for profits.

These companies, such as Toys ‘R’ Us, RadioShack, Payless Shoes, etc.–which used to employ millions of Americans–have had to either make significant cuts to appease shareholders, or close up shop entirely. The victims are the thousands of people who lost their jobs.

Sears seems headed in a similar direction, unless it can change things drastically. Last February the retailer employed about 89,000 workers in the U.S. Many of those people will likely be without jobs soon.

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