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The ill-fated Sears and Kmart borrows $500M from CEO, sells off stores to stay afloat

(BUSINESS NEWS) Sears and Kmart have flailed for years like a fish out of water, but they’re not giving up quite yet – here’s what they’re doing to survive.

sears

The ebb and flow of big box retailers

Kmart used to be the big box store of choice, and Sears was the go-to for everything from clothes to lawn mowers to dishwashers. But those days are long gone. I struggle to remember the last time I even saw Kmart, much less shopped there.

Sears Holdings, owner of Sears and Kmart, may fancy itself a retailer, but in fact, hasn’t turned a profit from retail sales in years, and has accumulated billions of dollars in short and long term debt.

Between 2012 and 2014, Sears Holdings accumulated no profit whatsoever. It was only in 2015 that the company began to rake in revenue again – not from retail sales, but from selling its real estate.

Another big boy loan

Just last week the company announced that they had secured a letter of credit of between $200 million and $500 million that will allow the company to borrow from their CEO’s hedge fund, and its affiliates.

Now, the company is asking their CEO to front them $500 million to keep them afloat while they sell off even more of their store locations.

They already plan to sell 46 stores for around $321 million. And unless there’s some sort of miraculous jump in retail sales, they’ll probably have to sell even more stores to make up the remaining $179 million.

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Besides selling their stores outright, Sears has also been attempting to fill the empty space where merchandise used to be by renting it to other companies. Sections of Sears stores have been rented to retailers like Dick’s Sporting Goods and Whole Foods.

“…committed to restoring profitability”

While Sears Holdings CEO and chairman Eddie Lampert insists that they “remain fully committed to restoring profitability to our Company,” it is abundantly clear that the only survival strategy the company may have left is to slowly dissolve itself and hope for maximum profits from selling their massive, sprawling stores, which are often located in or adjacent to shopping malls.

#bigboyloan

Ellen Vessels, a Staff Writer at The American Genius, is respected for their wide range of work, with a focus on generational marketing and business trends. Ellen is also a performance artist when not writing, and has a passion for sustainability, social justice, and the arts.

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