Why Sears is not going to 'go bankrupt' in Mexico
It can be summed up in two simple, but powerful words: Carlos Slim.
Sears Holdings filed an application for bankruptcy protection in Chapter 11 of the US bankruptcy law on Monday, October 15, 2018. Eddie Lampert, the 125-year-old CEO of the company, will step down from his position but will continue as president. Sears should have paid off $ 134 million in debt this week, but did not have enough capital to cover it, leading to bankruptcy. In a statement, the company said that stores that are profitable will remain open, and the Sears and Kmart websites will remain online.
At the time of the bankruptcy filing, some 700 Sears stores were still open in the United States. The brand had a workforce of 68,000, but it was shrinking over the course of 2018 (the company had 1,000 stores with 89,000 workers in February).
This week the chain announced that it is closing its last store in Illinois, its home state.
- To find out more: The end of an era? Sears Announces Closing of Last Store in Its Home State of Illinois
The store, located in Woodfield Mall, is scheduled to close its doors on November 14, as part of a corporate plan to "remodel and revitalize the property," reports the Daily Herald .
A spokesperson for Sears' parent company Transformco said they will still manage the space and are currently negotiating with retailers to fill the now vacant property.
"This is part of the company's strategy to unlock the value of real estate and seek the highest and best use for the benefit of the local community," Transformco said in the announcement.
Crisis in Mexico? The name that avoids it: Carlos Slim
Although the brand in the United States is on the verge of collapse, in Mexico the chain is very far from the crisis of its American sister because it has been under the control of Grupo Sanborns , Carlos Slim's firm, for 20 years.
Sears first went international in 1947 when it opened its first store outside the United States in Mexico City. Grupo Carso purchased a 99% equity stake in Sears México from Sears Roebuck (the US subsidiary) in 2016.
Since then, Sears Mexico operates independently of the firm led by Eddie Lampert and the capital of Slim, the richest man in Mexico, and his business group have kept the retail giant in Latin America out of the crisis.
The Expansión site exemplifies it this way: while the Sears Roebuck company closed 70% of its stores in the United States in the last 10 years, Sears Mexico went from having 40 stores to 95 in just two decades.
In addition, the Mexican business site notes, while Sears Roebuck has not posted a profit since 2010, Grupo Sanborns' revenues have grown an average of 6% per year.
The store that changed the way of doing retail
Whatever the fate of Sears in the United States with this bankruptcy filing, there is no denying that this brand shaped the way modern retail is done.
Here are 13 facts you may not know about Sears.
1. While technically started under the Sears, Roebuck and Company brand in 1893 in Chicago, Illinois, Sears got its start in 1886 as the RW Sears Watch Company, with founder Richard W. Sears, a former railroad station agent who sold mail-order watches in Minneapolis with watchmaker Alvah Roebuck.
2. Sears catalogs could have such a prodigious reach thanks in part to a US government program called Rural Free Delivery , which brought mail routes to rural parts of the country.
3. Sears hit the Wall Street market in 1906, selling shares at $ 97.50 per share. In today's market, the opening price of the stock would be more than $ 2,500.
4. Sears' first physical store opened in Chicago in 1925 to capitalize on the boom in car use, allowing many customers in rural and suburban areas to shop in metropolitan centers.
5. Initially, the store expansion was led by Robert E. Wood, who had served as a general during World War I.
6. From 1920 to 1943, Sears owned the Encyclopedia Britannica and sold these reference books in catalogs.
7. The iconic Sears catalog had several names, first it was called "The Bargain Book," then "The Great Price Maker," and finally the "Wish Book." Catalogs could sometimes be up to 500 pages long.
8. During the Great Depression, the emphasis on carrying practical and inexpensive items, such as towels and socks, kept the merchant afloat during that period, and by the end of the crisis, the number of Sears stores had doubled.
9. In the 1950s, Sears stores exceeded 700 locations and the company went international, opening first a branch in Mexico in 1947 and then in Canada in 1952.
10. Sears didn't sell everything through catalogs, but had a wide variety of brochures like real manufactured homes .
11. The Sears Tower, opened in 1973 and renamed the Willis Tower in 2009, was the tallest building in the world until 1998.
12. In the 1980s, in partnership with IBM, Sears created Prodigy , one of the first home Internet platforms.
(With information from Nina Zipkin)