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Sears aims to close up to 150 stores in bankruptcy, say sources
[NEW YORK] Sears Holdings is planning to close up to 150 of its department and discount stores and keep at least another 300 open as part of a plan to restructure under US bankruptcy protection, people familiar with the matter said on Friday.
The plans, which remained in flux on Friday afternoon, would leave the fate of Sears' remaining roughly 250 stores uncertain, the sources said. The future of the stores could hinge on Sears'negotiations with landlords over their leases.
In total, Sears has about 700 stores and roughly 90,000 employees.
The beleaguered 125-year-old retailer, once the largest in the United States, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, the sources said.
Sears chief executive Eddie Lampert, also the company's largest shareholder and creditor, is exploring bidding on the assets as a so-called stalking horse, setting a floor with offers that other possible buyers could then attempt to top, the sources said.
Reuters first reported on Thursday that Lampert was exploring bidding for some Sears assets. Such a plan could potentially keep a slimmer Sears alive as a going concern, the sources said.
Sears was making progress in its negotiations with banks on Friday for financing to keep it afloat through the holiday season while in bankruptcy court, with lenders expected to provide several hundred million dollars, the sources said. The bankruptcy loan amount is unlikely to significantly exceed US$400 million, though it could end up being less, the sources said.
A key unresolved aspect of Sears' negotiations with lenders involves setting deadlines for Sears to achieve specific business goals while under bankruptcy protections, the sources said.
Sears is planning to seek bankruptcy protection in New York as soon as Sunday night, though a court filing could slip into Monday, the sources added, asking not to be identified because the negotiations are confidential.
Sears did not immediately respond to a request for comment.
Sears shares were trading up 20 per cent at 41 cents on Friday, giving the company a market capitalisation of US$40 million.
Mr Lampert could help finance his bids for the assets by forgiving some of the money Sears owes him, as opposed to putting in more cash, Reuters reported on Thursday.
At its peak in the 1960s, Sears sold everything from toys to auto parts to mail-order homes, and was a key tenant in almost every big mall across the United States.
But it has struggled to reinvent itself in the face of competition from companies such as Amazon.com, as well as other brick-and-mortar retailers, including Walmart.