Sears has gone through another holiday shopping season. Barely.
Once the leading national retailer until the 1980s, the company that today owns the Sears and Kmart chains emerged from bankruptcy less than two years ago. He avoided another visit to bankruptcy court this year because the Covid-19 pandemic sent department store chains such as JCPenney and Neiman Marcus through their own bankruptcies, while others like Lord and Taylor and 21st century announced that they would go bankrupt.
But the fact that Sears is not bankruptcy is not a sign of good health, experts say. The company has done little to reinvigorate stores, increase sales or turn around its failing business. Sears may have already gone out of business this year, except that the commercial real estate sector went bankrupt, and Sears would likely find few – if any – suitable offers for its assets.
“Everything is up for grabs. But of course there is no market for department stores,” said Mark Cohen, director of retail studies at Columbia University, himself a former Sears executive. “They are, for all intents and purposes, over.”
Without a viable exit strategy, Sears and Kmart are slowly and quietly dying. They are closing stores where possible and listing virtually every other location with commercial real estate brokers.
There is little advantage for Sears to file for bankruptcy, despite all the losses, the now-private company is surely running (Sears’ finances are not public). Bankruptcy is useful for getting rid of debt or other debts, but it is unlikely that any financial institution or supplier has extended credit to Sears and Kmart since they completed their previous reorganization in early 2019. , said Reshmi Basu, retail bankruptcy expert at Debtwire.
“It’s been a slow sell-off,” she said.
So the Sears and Kmart brands are on life support because there is so little to be gained by shutting them down completely. Once the commercial real estate market improves and new tenants can be found for their remaining stores, Sears will come under more pressure to close the chains, experts say.
“Sears is biding its time until the market is more conducive,” said Neil Saunders, managing director and retail analyst at research firm GlobalData.
The company continued to sell its brands which still have some value. A year ago, he struck a deal to sell his DieHard car brand to Advance Auto Parts for $200 million. It sold Innovel Solutions, its product delivery and installation business, to Costco for $1 billion in a deal announced in March. Stanley Black and Decker bought Sears Craftsman tools brand in 2017, and the company was looking for a buyer for his Kenmore appliance industry in recent years.
While company spokespersons wouldn’t answer questions about its financial situation, plans, or number of stores remaining, Sears and Kmart store locators on their websites show only 74 major Sears stores still open and 48 Kmarts.
Those 122 locations represent 60 fewer Sears stores than there were in May, when malls began to reopen after “non-essential” retailers were previously ordered to close to fight the pandemic. And that’s down from around 400 stores since emerging from bankruptcy and nearly 1,000 stores in February 2018, less than three years ago.