It was not a good year for Sears in 2018. Faced with declining sales and other clear signs of financial peril, the company was forced to declare bankruptcy. Its future now hangs in the balance, and now according to CNN Business, it might be up to this year’s holiday season to make or break the company. The retailer is fighting for its survival, hoping it will find a buyer to acquire its remaining assets, and it needs a strong final report on the Christmas shopping season to ensure that that happens.
Sears has been on a downward spiral throughout the end of the year. In October, the company filed for bankruptcy, and it put out a budget that forecast sales of $1.7 billion in the seven-week period at the end of the holiday shopping season. By the end of November, they’d been forced to slash those estimates by $225 million. Even if Sears hits its reduced goal, investor confidence has taken a big hit.
Company leaders are hopeful that despite going bankrupt, they can salvage bits and pieces of their company by selling off assets. For instance, a federal judge has given initial approval for Sears to sell its home improvement business to Service.com for $60 million. CNN reported the company was still considering multiple potential offers for its main operating assets. Among them are 500 stores that are still profitable as well as its Kenmore appliance brand.
Even if the company manages to sell off everything, the Sears brand is still not out of the woods completely. It’s important to note that retail history is littered with companies that have emerged from bankruptcy but ultimately gone out of business anyway. RadioShack and Toys ‘R’ Us—the latter of which shuttered its remaining U.S. stores in 2018—are prime examples.
What will happen to the employees if Sears liquidates its assets as a result of the bankruptcy? They’ll lose their jobs and probably not get any severance pay—severance pay was suspended at the time of the bankruptcy filing. Executives, however, will be sitting pretty, as the bankruptcy court has agreed that executives would get bonuses if they remain with the company to the end. They won’t get their full multi-million-dollar bonuses if they’re unable to hit “specific financial targets.” Hitting those targets is unlikely if the chain shuts down altogether.
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