Sears Files for Bankruptcy, Lampert Steps Down as CEO

Sears Holdings filed for bankruptcy protection early Monday after years of staying afloat through financial maneuvering and relying on billions of CEO Eddie Lampert's own money. Lampert, who has served as CEO for the past five years, will step down from that post, effective immediately, but remain chairman. As part of the bankruptcy, Sears will shutter 142 stores toward the end of the year. It expects to begin liquidation sales shortly. The locations of these stores wasn't immediately known. Sears' last profitable year was in 2010. A thinning cash flow has left little money to put back into the company itself, letting it become more irrelevant.

Total Retail's Take: The inevitable has finally happened. The question now becomes if Sears will emerge from bankruptcy protection or will it opt for liquidation. The once iconic retailer has been in survival mode for some time, relying on the sale of its real estate and brands (e.g., Craftsman Tools) as well as investments from Lampert's hedge fund, ESL Investments, to remain in operation. Sears failed to evolve as more competition entered the big-box retail space (Walmart, Target, Home Depot), and was unprepared when more consumers began to shop online, leaving it in a precarious state as foot traffic at its retail locations fell precipitously. What resulted was years of sales and profit declines, closed stores and constant questions on Sears future. Despite the bleak outlook, Lampert hasn't completely given up on Sears. ESL is negotiating a $300 million debtor-in-possession loan to support the retailer through its bankruptcy. That loan comes on top of an additional $300 million it has secured from investment banks. At this point, I'm not sure it makes sense to throw good money after bad.