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story.lead_photo.caption FILE - In this March 24, 2005, file photo Kenmore refrigerators are wheeled into the existing K-Mart in Nashua, N.H., to become a "Sears Essentials" store. Sears has filed for Chapter 11 bankruptcy protection Monday, Oct. 15, 2018, buckling under its massive debt load and staggering losses. The company once dominated the American landscape, but whether a smaller Sears can be viable remains in question. (AP Photo/Jim Cole, File)

NEW YORK -- Sears filed for Chapter 11 bankruptcy protection Monday, with plans to shutter 142 unprofitable stores, including the Kmart in Russellville, in the hopes that it can stay in business.

The question now is whether a smaller version of the company that once towered over the American retail landscape can be viable. Sears, which started as a mail-order catalog in the 1880s, has been on a slow march toward extinction as it lagged far behind its peers and incurred huge losses over the years.

The operator of Sears and Kmart had 4,000 stores in 2012 but will now be left with a little more than 500.

Sears Holdings will close 77 Sears stores and 65 Kmart stores near the end of the year, and liquidation sales are expected to begin shortly. That's in addition to the closure of 46 unprofitable stores that had already been announced.

"This is a company that in the 1950s stood like a colossus over the American retail landscape," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "Hopefully, a smaller new Sears will be healthier."

Others don't share Johnson's optimism.

"That a storied retailer, once at the pinnacle of the industry, should collapse in such a shabby state of disarray is both terrible and scandalous in equal measure," said Neil Saunders, managing director of GlobalData Retail, in a note published Monday. "In our view, too much rot has set in at Sears to make it viable business."

Even President Donald Trump weighed in on Sears' collapse, calling it "a shame."

"Sears, Roebuck, when I was growing up, was the big deal. And it's very sad what happened, very, very sad," he said to reporters Monday outside of the White House. But Trump added that many of the Sears sites will be put to "good use" and mean a lot of jobs.

The company has struggled with outdated stores and complaints about customer service even for its once crown jewels: major appliances like washers and dryers. That's in contrast with chains like Walmart, Target, Best Buy and Macy's, which have been enjoying stronger sales as they benefit from a robust economy and efforts to make the shopping experience more inviting by investing heavily in remodeling and de-cluttering their stores.

Edward Lampert, the company's largest shareholder, has stepped down as chief executive officer but will remain chairman of the board. A new office of the CEO will be responsible for managing day-to-day operations.

The company said Monday that it has secured $300 million in financing from banks to keep the operations going through bankruptcy. It's negotiating an additional $300 million loan from Lampert's ESL Hedge fund.

The filing listed between $1 billion and $10 billion in assets while liabilities range between $10 billion to $50 billion. It listed the Pension Benefit Guarantee Corp., the federal agency that insures pensions, as Sears' biggest unsecured creditor, but noted the amount it owed as "unknown," according to court documents.

Sears joins a growing list of retailers that have filed for bankruptcy or liquidated in the past few years amid a fiercely competitive climate. Some, such as Payless ShoeSource, successfully emerged from reorganization in bankruptcy court. But plenty of others, like Toys R Us and Bon-Ton Stores Inc., haven't. Both retailers were forced to shutter their operations this year soon after Chapter 11 filings.

Given its sheer size, Sears' bankruptcy filing will have wide ripple effects on everything from already ailing mall landlords to its tens of thousands of workers. But unlike other retailers that have gone bankrupt, there are not a lot of spoils for rivals to pick up. The company, once a big seller of toys, now has a tiny 2 percent market share in that area, according to investment research firm Jefferies. And its market share in major appliances has shrunk to just under 10 percent from 41 percent in 2001, according to Johnson of Customer Growth Partners.

Lampert has been lending his own money for years and has put together deals to prop up the company, which in turn has benefited his own ESL hedge fund.

Last year, Sears sold its famous Craftsman brand to Stanley Black & Decker Inc., after earlier moves to spin off pieces of its Sears Hometown and Outlet division and Lands' End.

In recent weeks, Lampert has been pushing for a debt restructuring and offering to buy some of Sears' key assets, like Kenmore, through his hedge fund as a $134 million debt repayment came due on Monday. Lampert personally owns 31 percent of the company's shares, while his hedge fund has an 18.5 percent stake, according to FactSet.

Sears' stock has fallen from about $6 over the past year to below the minimum $1 level that Nasdaq stocks are required to trade in order to remain on the stock index. In April 2007, shares were trading at around $141. Shares fell 23.83 percent Monday to 31 cents.

The company, which once had 350,000 workers, has shrunk to 68,000 workers as of Monday's court filing. It had fewer than 900 stores as of May.

The department-store chain posted 75 new positions to its career page Monday. Many of the postings are for seasonal, part-time work at either Sears or Kmart stores, including cashiers, sales associates and customer service representatives -- the critical roles that traditionally carry the holiday season.

The new listings bring the total number of open jobs on Sears' website to 4,788. To fill those posts, the company was planning a national hiring day on Saturday at all stores, according to a flier distributed at the Oak Brook, Ill., location last week. Sears already held a similar event on Oct. 9 at all of its locations.

The company did not immediately respond to a query on whether the hiring day was still scheduled after the bankruptcy filing. The event was listed on its careers website as of Monday morning.

In a March 2017 government filing, Sears said there was "substantial doubt" it would be able to keep its doors open but insisted its turnaround efforts would mitigate that risk.

"Sears has been dying for many years," Trump told reporters as he departed the White House on Monday to inspect hurricane damage in Florida. "It's been obviously improperly run for many years and it's a shame."

Treasury Secretary Steve Mnuchin was a member of Sears' board from 2005 until December 2016, and before that was a director for Kmart Corp., which was acquired by Sears in 2005.

The Treasury Department didn't immediately respond to questions about Mnuchin's service on the company's board.

Lampert pledged to return Sears to greatness by leveraging its best-known brands and its vast holdings of land, and more recently planned to entice customers with a loyalty program. But losses continued and the company struggled to get more people through the doors or to shop online.

Jennifer Roberts, 36, of Dayton, Ohio, was a longtime fan of Sears and has fond memories of shopping there for clothes as a child. But in recent years, she's been disappointed by the lack of customer service and outdated stores.

"My mom had always bought her appliances from Sears. That's where my dad got his tools," she said. "But they don't care about their customers anymore."

She said a refrigerator her mother bought at Sears broke after two years and still hasn't been fixed.

"If they don't value a customer, then they don't need my money," Roberts said.

Gift cards will continue to be accepted and nothing will change about its credit cards. the company said.

The return policy isn't being changed for stores that will remain open. But if customers buy items from a closing store, all sales are final and can't be returned unless the items are defective. Shoppers have seven days to return defective items to the closing store.

For decades, Sears was king of the American shopping landscape. Sears, Roebuck and Co.'s iconic catalog featured items from bicycles to sewing machines to houses, and could generate excitement throughout a household when it arrived.

The company began opening retail locations in 1925 and expanded swiftly in suburban malls from the 1950s to 1970s. But the onset of discounters like Walmart created challenges for Sears that have only grown. Sears faced even more competition from online sellers and appliance retailers like Lowe's and Home Depot.

Information for this article was contributed by Anne D'Innocenzio of The Associated Press and by Anne Riley Moffat, Leslie Patton, Alex Wayne and Saleha Mohsin of Bloomberg News.

A Section on 10/16/2018

Print Headline: Struggling Sears files for bankruptcy; Arkansas Kmart among 142 closures

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