Sears, an American retail staple for more than 100 years, filed for Chapter 11 bankruptcy on Monday morning after failing to meet a $134 million debt payment.
The filing, made in federal bankruptcy court in New York, comes as Sears has shuttered hundreds of stores in the last year. Sears Holdings, the company that operates both Sears and Kmart, had 700 stores open and 68,000 employees on Monday — dropping from 1,000 stores and nearly 90,000 workers in February.
Sears plans to shutter another 188 stores by the end of the year, and said it’s looking for a buyer for the remaining stores. Chief executive Eddie Lampert gave up his title, but will remain chairman of the company.
Declaring bankruptcy didn’t come out of the blue; Sears has struggled to adjust in recent years, slow to adjust at a time when Amazon has started to eat away at classic retailers. Sears said it had “serious doubt” it could remain a viable company last year, after its annual revenue had cratered 40 percent from 2013 to 2016, hitting $22 billion.
The 132-year-old company reached a deal with lenders over the weekend to stay open through the holidays, the Wall Street Journal reported. It remains unclear if the company will work its way through Chapter 11, or if it presages a final liquidation and shuttering of the business.
“Over the last several years, we have worked hard to transform our business and unlock the value of our assets,” Lampert said in a statement. “While we have made progress, the plan has yet to deliver the results we have desired, and addressing the Company’s immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer.
“The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the Company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability.”
Sears shares dropped 23 percent on the news, hitting 31 cents per share on Monday morning.