Sears to close stores

The 126-year-old chain will liquidate.

Sears store Source: Bloomberg

It's the end of an era in retail. Sears is closing its doors after 126 years. There are reports that the company is liquidating after rejecting a bid from chief executive officer, (CEO), Eddie Lampert, to purchase the company.

Why Sears is closing

Sears sales has been declining for years since the advent of Amazon and online retail companies, but 2018 was the worst yet, with stocks falling to its lowest levels. Lampert offered to but the chain for $4.4 billion from his ESL hedge fund. However, advisors to the company deemed the offer insufficient.

Many see Sears as a victim of bad management and inability to adapt to changes in shopping habits. As online retail grew, Lampert invested more in brick-and-mortar stores in a move that ultimately backfired.

How liquidation will affect Sears

With the store ready to liquidate, Sears will lose about 68,000 workers and close hundreds of stores. By filing for Chapter 11 bankruptcy, the retailer may have to sell its vast inventory in fire sales. The decision to liquidate can also give Sears time to pay off debtors. Kmart, which is also owned by Sears, will likely close many of its stores as well.

What Sears closing could mean for retail

While Eddie Lampert vows to appeal the decision to reject his purchase of Sears, retail experts like, Neil Saunders, managing director of GlobalData Retail, said that Sears can't recover from this latest chapter in its history.

'Reports of Sears headed to liquidation suggest that the much-storied retailer is now at the end of its long road to collapse. is now at the end of its long road to collapse. Its recent journey to this point has been characterised by incredibly poor strategic decisions, chronic underinvestment and continuous financial machinations designed to keep the company afloat. All of this impacted trading, which has remained dire, making Sears more like a patient in a coma than a fully functioning retailer,' said Saunders.

Sears' reported liquidation could signal trouble for other brick-and-mortar stores if they don't adapt to the new digital age of retail.

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