Sears files for Chapter 11 amid plunging sales, massive debt

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<pSears filed for Chapter 11 bankruptcy protection Monday, buckling under its massive debt load and staggering losses.

<pThe question now is whether a smaller version of the company that once dominated the American retail landscape can remain viable or whether the iconic brand will be forced out of business.

<pSears, which started as a mail order catalog in the 1880s, has been on a slow march toward extinction as it lagged far behind its peers and incurred massive losses over the years.

<p"This is a company that in the 1950s stood like a colossus over the American retail landscape," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "Hopefully, a smaller new Sears will be healthier."

<pThe company has struggled with outdated stores and complaints about customer service. That's in contrast with chains like Walmart<pSears' 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. In April 2007, shares were trading at around $141. The company, which once had 350,000 workers, has seen its workforce shrink to fewer than 90,000 people as of earlier this year.

<pAs of May, it had fewer than 900 stores, down from a 2012 peak of 4,000.

<pIn a March 2017 government filing, Sears said there was "substantial doubt" it would be able to keep its doors open — but insisted its turnaround efforts would mitigate that risk.

<pLampert pledged to return Sears to greatness by leveraging its best-known brands and its vast holdings of land, and more recently planned to entice customers with a loyalty program. But losses continued and the company struggled to get more people through the doors or to shop online.

<pJennifer Roberts, 36, of Dayton, Ohio, was a long-time fan of Sears and has fond memories of shopping there for clothes as a child. But in recent years, she's been disappointed by the lack of customer service and outdated stores.

<p"My mom had always bought her appliances from Sears. That's where my dad got his tools," she said. "But they don't care about their customers anymore."

<pShe said a refrigerator her mother bought at Sears broke after two years and still hasn't been fixed.

<p"If they don't value a customer, then they don't need my money," Roberts said.

<pSales at the company's established locations tumbled nearly 4 percent during its fiscal second quarter. Still, that was an improvement from the same period a year ago. Total revenue dropped 30 percent in the most recent quarter, hurt by continued store closings.

<p"The problem in Sears' case is that it is a poor retailer," Saunders wrote in his analyst note. "Put bluntly, it has failed on every facet of retailing from assortment to service to merchandise to basic shop keeping standards. 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."

<pFor decades, Sears was king of the American shopping landscape. Sears, Roebuck and Co.'s iconic catalog featured items from bicycles to sewing machines to houses, and could generate excitement throughout a household when it arrived. The company began opening retail locations in 1925 and expanded swiftly in suburban malls from the 1950s to 1970s. But the onset of discounters like Walmart created challenges for Sears that have only grown. Sears faced even more competition from online sellers and appliance retailers like Lowe's and Home Depot.

<pStore shelves have been left bare as many vendors have demanded more stringent payment terms, says Mark Cohen, a professor of retailing at Columbia University and a former Sears executive.

<pMeanwhile, Sears workers are nervous about what kind of severance they'll receive if their stores close.

<pJohn Germann, 46, works full-time and makes $14 per hour as the lead worker unloading merchandise from trucks at the Chicago Ridge, Illinois, store, which has been drastically reducing its staff since he started nine years ago. Germann now has only 11 people on his team, compared with about 30 a few years ago.

<p"We're doing the job of two to three people. It's not safe," he said. "We're lifting treadmills and refrigerators."