Sears Canada Files for Bankruptcy
One of America’s once-dominant department store chains, Sears Holdings Corp, is now teetering on the brink of bankruptcy. The company’s Canadian spin-off, Sears Canada Inc, has announced that it is filing for bankruptcy protection in Canadian courts.
Sears Canada has confirmed in its bankruptcy filing that it will be closing down 59 of its 255 stores across Canada and, in the process, will be letting go 2,900 of its 17,000 employees.
The bankruptcy announcement by the Toronto-based company follows the company officially declaring that it had “significant doubts” about its future, after having experienced seven straight years of financial losses. Sears Canada has particularly faced stiff competition from Canada’s biggest department store chain, Hudson’s Bay Co.
Sears Canada was spun off from Sears Holdings by Sears Holdings CEO Eddie Lampert in 2012. Lampert is currently the largest shareholder of both of the publicly traded companies, and he has been striving to turn around their fates.
Sears Holdings recently announced that it would be laying off about 400 full-time employees in the U.S., primarily at its corporate headquarters in Illinois. At the same time, the company has been closing more and more of its stores across the country.
The retail sector has become increasingly competitive. With the rise of e-commerce giant Amazon.com, Inc., the American consumer is now shifting toward online shopping. The brick-and-mortar retail industry is facing a broader decline as department stores, including Macy’s Inc, J C Penney Company Inc, and Nordstrom, Inc., face falling foot traffic to their stores.
The downfall of Sears was anticipated and accurately predicted by ratings agency Fitch Ratings last year. According to a Fitch report from December 2016, Sears was one of the most likely candidates to go bankrupt in the next two years. The report said that the retailer would likely fail to survive restructuring, and would end up in liquidation.
“Sears Canada to close 59 stores, cut 2,900 jobs,” The Globe and Mail, June 22, 2017.
“Sears Canada Preparing to File for Bankruptcy Protection,” The Wall Street Journal, June 21, 2017.
“7 once dominant retailers that are now on the verge of bankruptcy,” Business Insider, October 3, 2016.