Sears files for bankruptcy, deserted by shoppers and mired in debt

One of Sears' major shareholders just dumped a chunk of his stock for pennies on his original investment

The company filed for Chapter 11 protection from creditors with the US Bankruptcy Court in White Plains, New York, listing more than US$10 billion in debts and more than US$1 billion in assets. In the fiscal second quarter ended August 4, net losses in the quarter swelled to $508 million, or $4.68 per share, compared with a loss of $250 million, or $2.33 cents per share in the same quarter a year ago.

Sears' shares, which were over $100 each year after billionaire hedge fund manager Edward Lampert took over in 2004, closed at about 41 cents on Friday. Sears Holdings' loyalty programs, including the Shop Your Way membership program, and the Sears and private-label credit card rewards programs will continue.

The company has struggled with outdated stores and complaints about customer service even for its once crown jewels: major appliances like washers and dryers.

Analysts have speculated for years that Sears was a sinking ship.

"If they don't value a customer, then they don't need my money", said Roberts, who voiced her complaints on Sears' Facebook page. Lampert partially spun off the company from its parent in 2012 and was Sears Canada's biggest shareholder. But the onset of discounters like Walmart created challenges for Sears that have only grown.

Lampert's efforts to keep Sears out of bankruptcy have included shedding hundreds of unprofitable stores. Its stores became an albatross. The holding company has closed almost 3,000 Sears and K-Mart locations over the past decade and are now down to fewer than 1,000 retail locations.

There will be a lot of people who won't have jobs on the back end of this move, as necessary as it might be, and a lot more who have to look at management's track record and assume the rest might be gone in the near future, too. "It's not safe", he said.

Parts of Sears have already been through bankruptcy.

"The problem in Sears case is that it is a poor retailer", he wrote. "Under benign conditions, this would be problematic enough but in today's hyper-competitive retail environment it is a recipe for failure on a grand scale".

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