Sears, the 132-year-old retail chain that once dominated U.S.malls and changed how Americans shopped and lived, filed for Chapter 11 bankruptcy on Monday after it reportedly could not meet a $134m repayment.
The Illinois-based company listed $6.9 billion in assets and $11.3 billion in liabilities in documents filed in the U.S. Bankruptcy Court in the Southern District of New York.
Sears, which also owns discount retailer Kmart, has not turned a profit since 2011. Its revenues were $16.7bn in fiscal 2017, almost half the $31.2bn posted in 2014 according to FactSet.
As part of the bankruptcy, the once largest retailer in America will close another 142 stores by about the end of the year, on top of a recently announced round of 46 store closures.
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," Eddie Lampert, the company's chairman and largest shareholder who gave up the title of CEO as part of the filing said in a statement.
"Our goal is to achieve a comprehensive restructuring as efficiently as possible, working closely with our creditors and other debtholders, and be better positioned to execute on our strategy and key priorities."
Sears said it intends to stay in business, keeping stores that are profitable open, along with the Sears and Kmart online shopping sites. The holiday season, when traditional retailers enjoy strong sales, will be a particular challenge for the one-time innovator.
Analysts remain sceptical that the company can make a comeback following years of revenue declines, hundreds of store closures, jobs cuts, under-investments in stores and failure to adapt to the digital age.
Lampert who has kept the company alive with a series of debt deals had pledged to restore Sears to its glory days. But his critics said the billionaire lacks a clearcut turnaround strategy and he let the stores deteriorate over the years.
Sears is among dozens of prominent retailers including Toys "R" Us, RadioShack and Sports Authority to declare bankruptcy in the era of online shopping.
Sears was founded by Richard Warren Sears and Alvah Curtis Roebuck in 1886 as a mail order catalogue company. Its first catalogue, which sold watches and jewellry, was printed in 1896. The company began opening retail locations in 1925 but the catalogue remained a staple in American households.
According to the CNN, “Sears' stores helped reshape America, drawing shoppers away from the traditional Main Street merchants. Sears brought people into malls, contributing to the suburbanization of America in the post-World War II era.”
In 1974, Sears completed the 110-story Sears Tower in Chicago, which became the world's tallest building. Until October 1989, Sears was the largest retailer in the United States when low-cost chain Walmart surpassed it.
In 1999, Sears was booted out of the Dow Jones Industrial Average, where it had been for 75 years. Lampert's hedge fund, ESL Investments Inc, took a stake in Sears in 2004, combining it with discount store Kmart in a $11 billion deal in 2005 with the aim of restoring its profitability. Despite the investment, Sears never regained its footing.
Sears' stock has fallen from about $6 over the past year to below the minimum $1 level that Nasdaq stocks are required to trade in order to remain on the stock index.
The retailer employed about 89,000 workers in the United States as of February, compared with 317,000 people in early 2006. In its heyday it had more than 3,000 stores while as of May, it had fewer than 900. In July Sears closed its last store in Chicago, once its hometown.
"Sears was the number one retailer in the world" and "the industry pioneer in catalogue purchases," Sears shopper Robert Moon told Business Insider this week. "They could have been pioneers in online purchasing. It could be Sears instead of Amazon."
"Sears has been dying for years and it's obviously been improperly run for many years and it's a shame," United States President Donald Trump told reporters. "When you look at that whole filing they did to me it's very sad to see," he added.