The company formerly known as Sears, Roebuck & Company, which almost a century ago was the world's largest retailer, filed for bankruptcy today (Monday) as a prelude to resurrecting itself as a digital retailer in a digital age.
Now known as Sears Holdings Corporation, the retailer also owns Kmart Corporation, the big box department store chain founded in 1899. Sears Holdings will close another 142 stores by the end of the year. It earlier closed 46 stores as part of the bankruptcy.
The company retains 506 locations, including 482 full-line department stores. It also operates 360 Kmart stores.
The much-despised Eddie Lampert has resigned as CEO but remains chairman of Sears Holdings. He remains the company's largest investor.
Chapter 11 bankruptcy will allow Sears to strengthen its balance sheet, enabling the company to accelerate its strategic transformation, continue right-sizing its operating model, and return to profitability, said Lampert.
He said Sears' goal is to achieve a comprehensive restructuring as efficiently as possible. Sears will work closely with its creditors and other debtholders, and be better positioned to execute its strategy and key priorities.
The Board of Directors created an "Office of the CEO" to lead the company in the interim. A chief restructuring officer will help lead the bankruptcy and report to a newly created board committee.
The Amazon of its heyday was widely expected to announce its bankruptcy announcement today (Monday) when it should repay $134 million it owes to its lenders.
Many employees and analysts blame hedge fund magnate and ex CEO Lampert for Sears' doom. The department store chain two weeks ago hired advisors to help it prepare for a possible bankruptcy filing as early as last week. Only an official announcement remains.
Lampert, who is widely loathed by company employees, isn't bailing-out Sears this time like in the past. Instead, Lampert will take bids for some of the company's businesses and real estate once it files for bankruptcy.
Sears has lost over $11.7 billion since 2010, the last year it became profitable. Sales have plummeted 60 percent in that time but Lampert, who is infamous as Wall Street's "Hedge Fund King," insists the company can regain profitability once more. Lampert is the largest shareholder in Sears.
Lampert warns that time is running out for Sears, which must address "significant near-term constraints" in its cash position. The company has to pay $134 million in debt by October 15.
Sears' debt has the lowest possible credit rating from Standard & Poor's, which means it could default on its debt within the next six months. As a solution to Sears' cash crunch, Lampert proposes Sears sell its Kenmore appliance brand, plus real estate and other assets. Lampert said progress must be made in the debt repayment "without delay."
