Saturday, 31 December 2011

Bankruptcy Concerns at Sears

Retailer Sears’ financial woes are not exactly news to California bankruptcy attorneys. After all, the company has been struggling to regain its previous market share for a while now. However, this holiday season seems to have sent the company to the edge of bankruptcy.

Sears and Kmart reported dismal sales this holiday season, typically the busiest and most profitable time of the year for retailers. That shouldn't be a surprise to anybody, least of all shoppers who have been avoiding both Sears and Kmart for a while now. Both store chains have been in a state of decline for a number of years, and this holiday season, the evidence was clear to see.

Sales at Kmart fell by about 4.4% during the 8 weeks ending on December 25. At Sears, there was a 6% percent decline in sales. According to analysts, Sears has been losing more money during the first three quarters of the year than it is able to make back during the typically busy last quarter. There's no doubt that Sears Holding is in deep financial trouble.

In California, at least 3 Sears stores in California have shut down since the holidays. Those are among 79 stores across the country that have closed down, or will soon shut down after reporting dismal holiday sales this year. In all, there are about 41 Sears and 38 Kmart stores that are scheduled for closure. However, none of the Kmart stores in California are scheduled for closure yet.

Sears has been looking at years of continuous sales declines. The company seems to be caught in a no-win situation. It cannot revamp its stores to make them more like Target with its ‘cheap chic’ culture because of little cash flow. It also cannot drop prices to Wal-Mart levels, because the company cannot operate on lower margins than it is now.

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