After more than 125 years as a classic American retailer, Sears has filed for bankruptcy, signaling that it may have reached the end. The Sears Holdings company filed for Chapter 11 bankruptcy on Monday after failing to make a $134 million debt payment.
The filing comes as the latest development in the company's slow and steady decline and as it drowns in $5.5 billion of outstanding debt.
Hedge fund manager Eddie Lampert, who took over the company in 2013, stepped down as CEO as part of the company's filing on Monday. Lampert, both the company's biggest investors and a major lender, sold off the company's valuable assets like the Lands' End clothing line and legendary Craftsman brand in an attempt to bring in more money. The company has been looking for a buyer for its Kenmore brand of appliances for years.
The Chapter 11 filing in federal bankruptcy court in New York may allow a glimmer of hope for the company, allowing it to reorganize and perhaps emerge with a portion of its business still alive.
"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," Lampert said in a statement.
The company's stock took a hit last year when it acknowledged in an annual filing that its future was uncertain. It closed dozens of stores, citing non-profitability. In August, its stock fell from about $6 to below the minimum $1 level Nasdq stocks must maintain to avoid being delisted.
Founded in North Redwood, Minnesota in 1887 by railroad agent Richard Sears as a watch business, Sears became known as the one-stop shop for all things home-related. Most famous for its Christmas catalog, which once consisted over over 500 pages, the company even sold about 70,000 pre-cut kit houses in the first half of the 20th century.
The company, which also owns discount retailer Kmart, will close 142 stores by the end of the year as part of the bankruptcy — in addition to the 46 store closings already planned for next month. The retailer owns 506 Sears locations and 360 Kmart locations. Sears said it's looking for a buyer for a large number of its remaining stores.
"While we have made progress, the plan has yet to deliver the results we have desired," Lampert said Monday.