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Plunging sales, massive debt force Sears to file bankruptcy

Bill Conner of Burghill exits the Eastwood Mall Sears anchor store Monday afternoon. The store will close by the end of the year. Conner said he shopped at the store “quite a bit over the years.” Tribune Chronicle / R. Michael Semple

To see a full list of Sears and Kmart stores that are closing, click here

NILES — Sears — the first store to open at the Eastwood Mall, even before its doors did in 1969 — will be closed by the end of the year.

But news of the closure, which accompanied the announcement Monday that parent company Sears Holdings filed for Chapter 11 bankruptcy, is something the mall’s operator has anticipated and has been proactively working to fill what will be a 119,000-square-foot void.

“Knowing that all of or nearly all of the Sears stores will go away, our people have been talking with a variety of concerns over the years, working to put perhaps some better choices in place of those Sears boxes,” said Joe Bell, spokesman for the Cafaro Company.

“We really see it as an opportunity. Sears is a great, venerable name, but there are more popular choices with our customers,” said Bell, adding Cafaro Company is “not at the point” of signing new lease agreements.

Sears Holdings, which also operates Kmart stores, will close 142 unprofitable stores near the end of the year, with liquidation sales expected to begin shortly.

It’s expected the Sears auto at the mall complex will close, too, Bell said. That building is about 36,000 square feet.

The Sears inside the Southern Park Mall closed in July. The company also closed the Kmart in Austintown in January and the Super Kmart on state Route 46, part of the mall complex, in April.

The number of associates at the Eastwood Mall store was not available Monday.

The fate of the employees at the Kmart distribution center in Bazetta, meanwhile, remains unknown.

“It’s too early to tell exactly how, or if, there will be an impact on those folks,” said Dave Green, president of United Autoworkers Local 1112, which represents about 75 employees at the facility on Perkins Jones Road.

Green said he spoke Monday with the union chair at the facility for his thoughts on the future and offered the Local help if the worst-case scenario comes to pass.

Bell said the Cafaro Company is also losing Sears stores at the Governor’s Square Mall in Clarksville, Tenn., and at South Hill Mall just outside of Seattle.

Sears, which started as a mail order catalog in the 1880s, 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.

The announcement of store closures is in addition to the closure of 46 unprofitable stores that had already been announced. Edward S. Lampert, the company’s largest shareholder, has stepped down as CEO 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 it has secured $300 million in financing from banks to keep the operations going through bankruptcy. In addition, 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.

Sears joins a growing list of retailers that have filed for bankruptcy or liquidated in the last few years amid a fiercely competitive climate. Some, like 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 landlords to its tens of thousands of workers.

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

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.

Store shelves have been left bare as many vendors have demanded more stringent payment terms, says Mark Cohen, a professor of retailing at Columbia University and a former Sears executive.

Meanwhile, Sears workers are nervous about what kind of severance they’ll receive if their stores close.

John Germann, 46, works full time and makes $14 per hour as the lead worker unloading merchandise from trucks at the Chicago Ridge, Illinois, store, which has been drastically reducing its staff since he started nine years ago. Germann now has only 11 people on his team, compared with about 30 a few years ago.

“We’re doing the job of two to three people. It’s not safe,” he said. “We’re lifting treadmills and refrigerators.”

The Associated Press contributed to this report.

rselak@tribtoday.com

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