Once mighty US retailer Sears files for bankruptcy

Sears has closed hundreds of outlets in recent years amid increasing prominence of online shopping. (File/AP)
Updated 15 October 2018
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Once mighty US retailer Sears files for bankruptcy

  • Sears had been drowning in debt and reportedly could not afford a $134 million repayment
  • Started in 1886, the company was a pioneer of departmental stores that catered to everyone

WASHINGTON: Sears, an anchor of retail life for generations of Americans, filed for bankruptcy on Monday and said it was closing almost 150 stores, the latest marquee victim of the online era.
Founded in 1886 as a mail order catalog company, it went on to pioneer the department store industry, selling all things to all people, and by the mid-20th century had built a vast empire that stretched across North America.
But in recent decades the company struggled in a quickly shifting retail environment, battered by competition from big-box stores and then by the meteoric rise of Amazon and other e-commerce players.
Sears Holdings Corporation, also the parent company for Kmart, which merged with Sears in 2005, said in a statement it had filed for bankruptcy protection in Manhattan.
The company been drowning in debt exceeding $5 billion and reportedly could not make a $134 million payment that had been due on Monday.
S&P Global Ratings on Monday downgraded the company’s debt to ‘D,’ calling the company’s capital structure “unsustainable.” Meanwhile shares in the company had plunged 24 percent just before 1500 GMT.
Edward Lampert, chairman of Sears Holdings, said the insolvency filing would give the company the “flexibility to strengthen its balance sheet” and enable it to accelerate a strategic transformation.
Sears said it intended to reorganize around a smaller store platform, a strategy it said would help save tens of thousands of jobs.
But outside the company, its insolvency was greeted as an ignominious shipwreck.
“Today is a day that will live in retail infamy,” Neil Saunders, managing director at GlobalData Retail, said in a statement.
“That a storied retailer, once at the pinnacle of the industry, should collapse in such a shabby state of disarray is both terrible and scandalous in equal measure.”
Saunders said company leadership had failed to change with the times and that its future was very much in doubt.
“In our view, too much rot has set in at Sears to make it viable business,” he said.
“The brand is now tarnished just as the economics of its model are firmly stacked against its future success.”
Sears Holdings had 89,000 employees as of February, according to a filing with the Securities and Exchange Commission — down from almost 350,000 a decade ago — as well as 547 Sears and 432 Kmart stores.
It announced Monday it would close 142 unprofitable stores near the end of the year, in addition to the previously announced closure of 46 stores by November.
While retaining his chairmanship, Lampert will step down as CEO, with the role handled by other senior executives as part of a new “Office of the CEO.”
Sears added it had received commitments for $300 million in debtor-in-possession financing and was negotiating for an additional $300 million.
Jerry Hancock, a self-described Sears scholar and historian, told NPR the outlet was an “American institution.”
“For the older generation, it’s the changing of the times. Sears was just such an integral part of their childhood, building that American family.”
In the 1890s, the Sears catalog “completely changed American life,” said Hancock, offering consumers exotic items they had seen at the World’s Fair or had read about, like cream separators and Singer sewing machines.
Sears is far from the only iconic retailer to fall by the wayside as more consumers switch to shopping online.
In March, Toys R Us announced it was shuttering all of its US stores while other big names such as Macy’s and JC Penney have also been forced to close numerous locations and lay off workers.
American shopping malls in turn have pivoted toward a new generation of stores, food and entertainment, including players that began online before graduating to bricks and mortar.
Other additions include trendy gym chains, and Dave & Buster’s, whose video game and pro-sports viewing restaurants are emblematic of the “experiences, not stuff” mantra now resonant among consumers.


At least 13 undeclared missile bases identified in North Korea — US think tank

Updated 8 min 3 sec ago
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At least 13 undeclared missile bases identified in North Korea — US think tank

  • North Korea’s Kim Jong Un and US President Donald Trump pledged to work toward denuclearization at their landmark June summit in Singapore
  • ‘North Korea has never promised to shut down this missile base’
SEOUL: A US think tank said on Monday it had identified at least 13 of an estimated 20 undeclared missile bases inside North Korea, underscoring the challenge for American negotiators hoping to persuade Pyongyang to give up its nuclear weapons and long-range missiles.
In reports released by the Washington, D.C.-based Center for Strategic and International Studies (CSIS), researchers said maintenance and minor infrastructure improvements had been observed at some of the sites despite the negotiations.
North Korean leader Kim Jong Un and US President Donald Trump pledged to work toward denuclearization at their landmark June summit in Singapore but the agreement was short on specifics and negotiations have made little headway.
Trump said on Twitter shortly after that summit “there is no longer a Nuclear Threat from North Korea.”
North Korea declared its nuclear force “complete” and halted missile and nuclear bomb testing earlier this year but US and South Korean negotiators have yet to elicit from Pyongyang a concrete declaration of the size or scope of the weapons programs, or a promise to stop deploying its existing arsenal.
North Korea has said it closed its Punggye-ri nuclear testing site and the Sohae missile engine test facility. It also raised the possibility of shutting more sites and allowing international inspections if Washington took “corresponding measures,” of which there has so far been no sign.
A State Department official, asked whether those hidden sites went against the spirit of the summit and whether North Korea must give them up, said Trump had made clear that “should Chairman Kim follow through on his commitments — including complete denuclearization and the elimination of ballistic missile programs — a much brighter future lies ahead for North Korea and its people.”
Kim Eui-kyeom, a spokesman for the presidential Blue House in Seoul, said South Korean and US intelligence officials had been “closely watching” the sites using military satellites and that the CSIS report contained “nothing new.”
He specifically criticized any suggestion that the bases constituted a “deception” by the North Koreans, or that there was any agreement that required Pyongyang to declare the existence of the bases.
“North Korea has never promised to shut down this missile base,” Kim Eui-kyeom said in a statement, citing one base described in detail by the CSIS researchers. “It has never signed any agreement, any negotiation that makes shutting down missile bases mandatory.”
An official with South Korea’s Joint Chiefs of Staff also told reporters that Seoul is “familiar” with the sites identified in the report but declined to confirm whether intelligence had indicated any recent changes at the bases.
North Korea called off a meeting with US Secretary of State Mike Pompeo in New York last week. State media said on Monday the resumption of some small-scale military drills by South Korea and the United States violated a recent agreement aimed at lowering tensions on the Korean peninsula.
The sites identified in the CSIS report are scattered in remote, mountainous areas across North Korea and could be used to house ballistic missiles of various ranges, the largest of which is believed to be capable of striking anywhere in the United States.
“Missile operating bases are not launch facilities,” the report said. “While missiles could be launched from within them in an emergency, Korean People’s Army operational procedures call for missile launchers to disperse from the bases to pre-surveyed or semi-prepared launch sites for operations.”
None of the missile bases has been acknowledged by North Korea and analysts say an accurate disclosure of nuclear weapons and missile capabilities would be an important part of any denuclearization deal.
Sakkanmol, the site closest to the border with South Korea and its capital, Seoul, appears to be “active and being reasonably well maintained,” the report found.
“North Korea’s decommissioning of the Sohae satellite launch facility, while gaining much media attention, obscures the military threat to US forces and South Korea from this and other undeclared ballistic missile bases,” it said.