US department store chain Sears has officially filed for bankruptcy placing 90,000 jobs at risk.
Sears, which has been trading since 1880, has filed for Chapter 11 bankruptcy protection in a last-ditch effort to continue trading over the vital Thanksgiving and Christmas period.
The measure, which allows companies to restructure their debts in an effort to avoid total collapse, will see 142 of its 886 stores close as it seeks to shrink its operations and reduce its costs.
It is understood that the retail giant, which was once America’s largest retailer, filed for bankruptcy protection after it was unable to pay a $134 million (£102 million) debt repayment due today.
This follows a monumental fall from grace for Sears, which also owns the Kmart fascia, closing over 1000 stores over the last decade and reporting losses of around $5.8 billion (£4.42 billion) in the last five years.
Having once accounted for roughly one per cent of the US’s entire gross national product at its peak, sales in it last fiscal year fell to $16.7 billion (£12.2 billion), down from $50 billion (£38.1 billion) in 2008, while its stock market valuation dropped from $37 billion (£28.1 billion) in 2004 when it acquired Kmart to just $11 billion (£8.3 billion).
“Today is a day that will live in retail infamy,” GlobalData’s managing director Neil Saunders said.
“That a storied retailer, once at the pinnacle of the industry, should collapse in such a shabby state of disarray is both terrible and scandalous in equal measure. However, it is not surprising because this is a destination that Sears has been headed towards for many years, with virtually no serious attempt having ever been made to change the trajectory.
“In our view there are a multitude of factors that have contributed to Sears’ demise, but foremost among them is management’s failure to understand retail and evolve Sears in a way that would have given the chain a fair chance of survival.
“Although the present leadership team needs to shoulder much of the responsibility, the missteps arguably go back to the 1980s when Sears became too diversified and lost the deftness that had once made it the world’s largest and most innovative retailer.
“As much as today is a conclusion of sorts, it is not the end of the story. Chapter 11 means that Sears will continue on, at least for the foreseeable future, as it tries to find a solution to its financial woes and attempts to carve out a place for itself in the retail market.
“Neither of these things will be easy to accomplish. In our view, too much rot has set in at Sears to make it viable business. The brand is now tarnished just as the economics of its model are firmly stacked against its future success.”