Sears files for bankruptcy

In 1893, Sears opened its doors for the first time redefining the department store. On Monday, Oct. 15, the store that sells almost everything filed for bankruptcy. For several years now, Sears has been struggling, its stocks and profits spiraling downwards, but the low numbers from the store may reflect an overall change in consumer preferences when it comes to shopping.

The decision to file for bankruptcy was made when Sears could not pay off its $300 million debt by the Monday, Oct. 15, deadline. The bankruptcy is not a complete shutdown of all stores. While the company is closing 142 unprofitable stores this year, 687 stores are still remaining. However, if Sears is unable to reach a restructuring agreement, even more stores are liable to close.

“Of the initial closing stores, 98 were unprofitable in fiscal year 2017 and 44 produced flat or marginal profits in fiscal year 2017 or are trending downwards in 2018 due to local market and competitive factors,” explained the Sears Holdings Corporation during a filing court meeting.

The competition isn’t all to blame for the company’s decline. Many of the issues come from the management of the company in the last decade. Sears bought Lands’ End, a clothing brand, and the retailer store K-Mart, but neither resulted in the profits that Sears was hoping for. Additionally, Sears sold off some of its most valuable assets to pay off some extra costs then which could have benefited them now. Eddie Lampert, the former CEO, current chairman and largest holder of Sears, made many of these decisions. He believes that the bankruptcy will help pay off debts and make a return if stockholders continue to invest.

“”We continue to believe that it is in the best interests of all our stakeholders to accomplish this as a going concern, rather than alternatives that could result in significant reductions in value,” said Lampert in a blog post.

Sears does indeed have tough competition with both Walmart and Amazon offering lower prices, convenience and more modern approaches to advertising and selling. On the other hand, Sears has been slowly losing ground and is unable to adapt to the changing market which is now, more than ever, turning toward shopping.

“In a way, the rise of Amazon is doing to Sears the exact thing Sears did to the market when it first arrived.” said Early College student Teddy Hamatkiewicz. “Bringing a more innovative, convenient, and broad shopping experience, both stores have destroyed competition within their respective eras.”

The Guilfordian asked several students how often they shopped at Sears.

“(I don’t shop at Sears much), maybe one time every 3 years for something,” said first-year Brandon Sams.

This has led to a decline in retailer’s profits, and many stores like Sears are facing the consequences.

“Institutions have trouble keeping up with the times,” said Professor of Economics Bob Williams. “And in 50 to 100 years people will be talking about Amazon (not keeping up with the times). That’s the history of capitalism, that firms are constantly being birthed and then dying.”

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