US retailer Sears has filed for bankruptcy under Chapter 11 after massive losses in recent years and debts of $5.5bn. This also puts the Sell on Sears marketplace at risk.
Sears announced a series of actions to position the Company to establish a sustainable capital structure, continue streamlining its operating model and grow profitably for the long term. The Chapter 11 bankruptcy gives some protections whilst the restructuring takes place.
The Company expects to move through the restructuring process as expeditiously as possible and is committed to pursuing a plan of reorganization in the very near term as it continues negotiations with major stakeholders started prior to today’s announcement.
Sears and Kmart (acquired in 2004) stores, and its online and mobile platforms, are open and continue to offer a full range of products and services to members and customers.
“Over the last several years, we have worked hard to transform our business and unlock the value of our assets. While we have made progress, the plan has yet to deliver the results we have desired, and addressing the Company’s immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer. The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the Company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability. Our goal is to achieve a comprehensive restructuring as efficiently as possible, working closely with our creditors and other debtholders, and be better positioned to execute on our strategy and key priorities.”
– Edward S. Lampert, Chairman, Sears Holdings
Edward S. Lampert has stepped down from his role as Chief Executive Officer of the Company, effective immediately. He will remain Chairman of the Board.
Whilst the company is looking to restructure and emerge as a slimmer business with few stores (already down to around 900 from 4,000 four years ago), many creditors would prefer to see the company liquidated.
For marketplace sellers, ahead of the key Black Friday and Christmas season, this is terrible news and will impact them as severely as the closure of Tesco marketplace hurt UK sellers. In the UK we know at least one merchant went out of business when Tesco marketplace closed as they were reliant on the marketplace for sales and others had to lay off staff. The impact is still being felt as merchants had ordered stock specifically to appeal to the Tesco audience and doubtless Sell on Sears merchants will find themselves in similar positions.
Marketplace merchants are once again reminded that they operate in precarious circumstances and the need to diversify and spread the risk has never been greater. The issue with retailer marketplaces such as Sell on Sears, Tesco Marketplace and Halfords marketplace which also closed in 2018 is that, whilst they may generate a significant bump in sales, they are relatively new innovations. As this year has already shown, retailer marketplaces may offer highly engaged consumers hungry for your products, but they are symptomatic of the precarious positions bricks and mortar retailers find themselves in and can disappear as quickly as they emerge.
