Sears Holdings Corp. (NASDAQ: SHLD)
Shares in Sears Holding Corp sank. more than 35% in early hours of regular trading Wednesday after a report by The Wall Street Journal saying the cash-strapped retailer has hired an advisory firm to prepare a bankruptcy filing.
According to the report, the company has hired M-III Partners LLC, a boutique advisory firm to prepare a filing that is likely to come as early as Friday. Sources familiar with the matter told the WSJ that Sears is still considering other options.
Sears was the largest retailer in the U.S. in the 1960s but has struggled in recent decades as foot traffic continues to deteriorate in its brick-and-mortar chains. The Illinois-based company currently has a debt of $134 million, which it is expected to pay by Monday.
Neither the 125-year-old retailer nor M-III Partners immediately returned WSJ’s requests for comment. The retailer has, however, brought in restructuring expert Alan Carr as a company director to provide further guidance on how to steer it through a bankruptcy filing.
Eddie Lampert, the Chief Executive Officer of Sears believes a bankruptcy filing could be the reputational death knell of the company. Lampert, who is also the largest creditor and shareholder of the iconic department store chain, has laid out a robust slim-down plan that is likely to include divestitures of Kenmore brand and real estate, the former of which he offered to acquire for $400 million.
Neil Saunders, the GlobalData Retail managing director who has tracked Sears’ fall says, “This is the inevitable end game of an effective liquidation process that has been going on for many years. Throughout that time the sale of various assets along with injections of cash from Eddie Lampert have kept the ailing retailer from going under. However, the activity is akin to bailing out water from a holed ship: It keeps the vessel afloat for longer but does nothing to sort out the underlying problem”
Analysts say the company needs to generate annual revenues of more than $1 billion to keep running. Sears last reported a profit eight years ago and has been on a survival mode since then. Its shares have lost nearly 89% since the beginning of the year through Wednesday.
Sears Holdings Corp. Company Profile
Sears Holdings Corp. engages in the provision of retail stores, through its subsidiaries. It operates through two segments: Kmart and Sears Domestic. The Kmart segment offers consumer electronics, seasonal merchandise, outdoor living, toys, lawn and garden equipment, food and consumables, and apparel.
The Sears Domestic segment involves in line stores specialty stores, commercial sales, and home services. The company was founded in 2004 and is headquartered in Hoffman Estates, IL. – CNN Money