Monday, October 15, 2018

Sears Succumbs to its Sluggish Sales, Files For Chapter 11 Bankruptcy

Sears, seen by many as the granddaddy of American retail, has filed for Chapter 11 bankruptcy.  The 132 year old company has been struggling for well over a decade and its bankruptcy filing, while sad, is not all that surprising.  The company is drowning in debt and is unable to afford a $134 million debt payment due Monday. Sears Holdings, the parent company of Sears and Kmart, is among dozens of prominent retailers to declare bankruptcy in the era of Amazon.

The filing in federal bankruptcy court in New York came just after midnight, Monday morning. The company issued a statement saying it intends to stay in business, keeping open stores that are profitable, along with the Sears and Kmart websites. Sears and Kmart merged to form Sears Holdings in 2005.  Sears said, however, that it's looking for a buyer for a large number of its remaining stores, and it will close at least another 142 stores by the end of 2018.  That's in addition to the 46 store closings the retailer announced in August.   Some of those stores have already closed, but all of the previously announced stores are slated to close by the end of November.

The kmart in Guam is the chain's most productive, ringing in annual sales of some $100 million. A typical kmart does about $9 million in sales annually.   

In Georgia, the company's previous closure list included the Sears at Oglethorpe Mall in Savannah which closed in August as well as stores in Cumberland Mall in Smyrna and in Glynn Mall in Brunswick, both of which are expected to close by the end of October.

In Georgia, the latest round of closures will mean the end of the kmart brand in the state.  The approximately 86,500 square foot "Big" kmart in Covington Gallery in Covington will close, as will the similarly sized kmart in Braelinn Village in Peachtree City.

In metro Atlanta, some former kmart sites have found new life as new retailers.  A portion of the current Lindbergh Plaza shopping center (fka Broadview Shopping Center) was once home to a two-level kmart (with an escalator!), as was the property off Clairmont Road where Sam's Club currently operates.  A number of retailers occupy portions of a former kmart at Akers Mill Square near Smyrna.  Plans were announced in 2015 to redevelop the former Doraville kmart into a mixed-use development called "Nexus," but the project has yet to move forward.

Ponce City Market is one of the most prominent former Sears stores.  From 1926 to 1979, it was a Sears, Roebuck and Co. retail store, warehouse and regional office.  It later served as City Hall East for the City of Atlanta before being given a new lease on life as Ponce City Market in 2014.  

The land on which the St. Regis Atlanta, Buckhead Plaza, 92 West Paces and assorted other properties are situated was home to a freestanding Sears store from the late 1950s until the late 1980s.  
The large white building at left-center was for decades home to Sears Buckhead

Sears stores at Northlake Mall, North Point Mall, Cumberland Mall and Gwinnett Place Mall which have either closed or are actively closing, are all slated to be redeveloped as mixed use and/or multi-family developments in the coming years.  

It will surely be more difficult to fill the large vacancies that kmart will be leaving in smaller markets like Peachtree City and Covington than that it was to backfill stores in metro Atlanta.

After the three previously announced rounds of closures in Georgia, Sears will have no stores inside the perimeter (ITP).  The company will continue to operate just five full-service Sears stores in Georgia, including those in Town Center at Cobb in Kennesaw, Arbor Place in Douglasville, Augusta Mall in Augusta, Georgia Square Mall in Athens, and Lakeshore Mall in Gainesville.

Eddie Lampert, the company's chairman and largest shareholder, gave up the title of CEO. The company will now be run by a trio of the company's top executives.

For years, Eddie Lampert, Sears Holdings's CEO has claimed the company was making progress to end its years of ongoing losses. "While we have made progress, the plan has yet to deliver the results we have desired," Lampert said in a statement Monday.  He said the bankruptcy process would allow the company to shed debt and costs and "become a profitable and more competitive retailer." Lambert announced Monday he is stepping down as the company's CEO and would be replaced by a trio of current executives.  

Although retailers typically file for bankruptcy with the intention of staying in business, many end up going bust after filing. In recent years, Toys "R" Us, RadioShack and Sports Authority, among others, have followed that path to the retail graveyard. 

Sears stock, which today trades at just 31 cents per share, closed at $134.51 on April 27, 2007.  Its market capitalization today is a mere $33.79 million while Amazon trades at nearly $1,800 per share with a market capitalization of nearly $860 billion.   

Are you sad to see Sears and Kmart suffer as they have?  What is your favorite Sears or kmart purchase or memory  What would you like to see open in the closed or soon to close Sears and kmart stores in Georgia?

Please share your thoughts below  


Anonymous said...

Correction - "Age of vulture capital stripping assets from retail to build personal wealth"

Unknown said...

With its background in catalog merchandising, Sears should have owned online retailing business as it was developing, but poor and unattached management spelled its doom. Here's a good article on that subject:

Unknown said...

I find the history of the Sears distribution centers around the US fascinating. Here is a podcast on the Atlanta location. Was just at PCM this weekend sharing some history, but need to listen again to remember more the details

Anonymous said...

"With its background in catalog merchandising, Sears should have owned online retailing business as it was developing"

I have had that same thought for years!

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