Sears - The Curtain Is Closing

Sears Holdings Corp., the 125-year-old retailer that became an icon for generations of American shoppers, filed for bankruptcy, saddled with billions of dollars of debt racked up as it struggled to adjust to the rapid shift toward online consumption.

The company filed for Chapter 11 protection from creditors with the U.S. Bankruptcy Court in White Plains, New York, early Monday and said Eddie Lampert is stepping down immediately as chief executive officer. At the same time, Lampert’s ESL Investments Inc. is negotiating a financing deal while also discussing buying “a large portion of the company’s store base,” Sears said in a statement.

The retailer, for years called Sears, Roebuck & Co. and famous for its massive catalog, boomed in the decades after World War II along with a growing middle class. But it wasn’t able to keep up with shifting consumer habits as online rivals including Amazon.com Inc. siphoned off shoppers, while turnaround efforts were hobbled by mountains of debt.

Sears, which sold everything from Craftsman tools to Kenmore appliances, lost its footing in the 1980s with expansions into financial products such as banking, mortgages, insurance and credit cards. Walmart Inc. supplanted Sears as the biggest retailer in the early 1990s.

The retailer listed more than $10 billion in debts and more than $1 billion in assets in its filing, and said it is seeking to reorganize around a smaller base of profitable stores. Sears and Kmart stores will remain open with help from $600 million in new loans, but the company will shut 142 unprofitable outlets near the end of the year, on top of 46 unprofitable stores already slated for closure by November.

For now, Sears will be run by an Office of the CEO, and independent directors will oversee the restructuring. Lampert, who is Sears’s biggest shareholder and will remain as chairman, acknowledged in the statement that turnaround efforts so far have fallen short.

”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,” Lampert said.