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A week ago, Sears celebrated the grand reopening of its Oakbrook Center store after a remodel that halved the size of its store, as part of a plan to make the retailer a smaller company but profitable.
Now, with the payment of a $ 134 million debt expected on Monday, it's unclear whether Sears Holdings Corp., of Hoffman Estates, will be able to avoid a trip to a bankruptcy court.
Quoting people familiar with the situation, The Wall Street Journal reported Tuesday night that employees of M-III Partners, a New York-based consulting firm, had been working for weeks on a possible bankruptcy filing likely to occur as soon as week, although Sears is considering other options and could decide not to seek bankruptcy protection. Earlier Tuesday, Sears, which has lost $ 11 billion since 2011, announced the addition of a restructuring expert to its board of directors. Sears and M-III Partners did not respond to requests for comment on Wednesday.
Sears stock price fell 17% on Wednesday to close at less than 49 cents a share.
Just three weeks ago, Sears President and CEO Edward Lampert put forward a plan to avoid bankruptcy, calling for the restructuring of a billion dollars of debt and the sale of About $ 1.5 billion in real estate and $ 1.75 billion in other assets. The proposal from the Lampert speculative fund warned that the retailer, who also owns Kmart, had to act "immediately" to save time for its recovery.
But efforts to redress the account of the losing money retailer have been going on for years. The company's efforts to win back shoppers included new types of stores, such as small appliance and mattress stores, a renovated Millennium-style Desplanar Kmart store, and the refined Sears store. and modernized Oakbrook Center.
Sears declined to say last week whether changes to the Oakbrook Center would be visible in other stores. But the makeover gives a glimpse of what Sears thinks today's buyers want from the historic chain.
The 62,000-square-foot store occupies less than a quarter of the three-story building it occupied before being closed for renovation and rationalization in September 2017. Future tenants located in the upper floors of the building include KidZania children's entertainment business, the LL Bean outdoor clothing brand and Ballard Designs furniture store.
Despite its small size, Sears still offers most of the same merchandise categories as the largest store, including clothing, appliances, mattresses and sporting goods, but with a smaller choice. Customers will not find consumer electronics, children's clothing or bedding, but a section is dedicated to smart home products, where they can also install for the home.
If consumers do not see a product in the store, they can place an order online at the Shop Your Way Welcome Center located at the entrance, which also offers coffee, phone chargers and a place for children. said general manager Matthew Polich.
"We still want to be this one-stop retailer," he said.
At an official opening ceremony last week, a series of buyers eager to meet Jaclyn Smith, a star of the TV movie "Charlie's Angels", whose clothing collections are sold at Sears and Kmart, extends halfway into the store.
Others gathered around a woman demonstrating a new Kenmore stand mixer, while a group was playing on the parking lot.
Most of the customers did not focus on the size of the store, they said they were happy – and a little surprised – to see him again.
"I thought it was going away," said Peggy Falduto, 51, of Westchester. "He seemed so stuck and abandoned."
Sears had always said that the store would be back. But Sears anchoring Orland Square Mall in Orland Park, which was originally scheduled to reopen in a narrower space after narrowing to make room for a movie theater, ended up closing earlier this year.
The company had 866 Sears and Kmart stores in the US in August, but since June it has announced its intention to close more than 100 additional stores by the end of the year. At this point, it will have about half the number of stores it had at the end of 2016.
Laura Andrew, 58, from Addison, thought the renovated Oakbrook Center store looked brighter and more open.
Falduto said that she liked the "trendy" look, music from the 80s in the background and the decision to move clothes to the front of the store, where once were the products Although she missed the popcorn stand at Oakbrook Center. she visited as a child.
She knows the store well – she got her first job as a cashier.
"I just hope it will do it," Falduto said.
The reduced store also has fewer workers – about 55 people, from 125 to 150 during the holidays, and from 150 to 150 before the renovation.
Despite the favorable criticism of buyers, it is not certain that other stores are undergoing a similar transformation. Two years ago, Sears Holdings touted the reopening of a "revitalized" Kmart at Des Plaines, designed to attract Millennials Y. The changes included a fresh grocery section, an area reserved for promotional items, an enhanced customer service area and more space for beauty products and pet products.
The store is brighter, with gay signs marking sections such as a "Dollarpalooza" alley with $ 1 personal care items, cleaning products, pet toys and other products.
Some areas still seem worn, with scuffed floors, but Carolyn Marino, 75, of Elk Grove Village, was impressed during a recent visit.
"It feels light, airy and bright," she said.
Although the radius of fresh groceries is small, she was surprised to find it at Kmart. She added that she could be back if another doctor's visit took her to the area.
Like the Oakbrook Center store, the Des Plaines Kmart has had a much anticipated grand reopening, with a ribbon cutting and a meeting with the former Chicago Bull, Scottie Pippen.
But Sears declined to say how the store has behaved since or if similar changes have been made to other Kmart stores.
Industry observers say there is little evidence that Sears' efforts to bring home buyers are paying off and that talk of bankruptcy or extrajudicial restructuring is not a shock, even if they had not predicted the moment chosen.
Lampert, whose hedge fund has lent $ 1.6 billion to Sears over the last two years, "has been very very effective for the survival of the company," said James Schrager, clinical professor of 39, business spirit and strategy at the Booth School of the University of Chicago. work. "At some point, when you lose the kind of money they lost, you can not keep it anymore."
Although Sears finds the funds to pay off Monday's debt, "I think it's just a matter of time" before the company is forced to restructure, said Matt Kopsky, an analyst at Edward Jones.
Lampert said he thought Sears shareholders, employees and customers would be better off if the company could succeed in a turnaround while continuing operations. Retailers who enter a bankruptcy court with the intent to restructure and stay in business – as Carson's parent company, Bon-Ton Stores did in February – risk liquidating if they fail to find an investor or buyer to continue their activities.
As long as the company remains in business, it will likely continue to contract, restructure itself in bankruptcy court or outside a court.
Department stores like Sears often already have low rents, which means there are not many opportunities to save money while keeping stores open by negotiating with homeowners, explained Kopsky.
"They are becoming less and less relevant to the consumer, and I do not see this trend changing," he said.
Twitter @laurenzumbach
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