Sears Holdings Corp is planning to close up to 150 of its department and discount stores and keep at least another 300 open as part of a plan to restructure under US bankruptcy protection, people familiar with the matter said on Friday.
The plans, which remained in flux on Friday afternoon, would leave the fate of Sears’ remaining about 250 stores uncertain, the sources said.
The future of the stores could hinge on Sears’ negotiations with landlords over their leases.
In total, Sears has about 700 stores and 90,000 employees.
The beleaguered 125-year-old retailer, once the largest in the US, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, the sources said.
Sears chief executive Eddie Lampert, also the company’s largest shareholder and creditor, is exploring bidding on the assets as a so-called “stalking horse,” setting a floor with offers that other possible buyers could then attempt to top, the sources said.
Reuters on Thursday first reported that Lampert was exploring bidding for some Sears assets.
Such a plan could potentially keep a slimmer Sears alive as a going concern, the sources said.
Sears was making progress on Friday in its negotiations with banks for financing to keep the company afloat through the end of the year while in bankruptcy court, with lenders expected to provide several hundred million dollars, the sources said.
The bankruptcy loan amount was unlikely to significantly exceed US$400 million, although it could end up being less, they added.
A key unresolved aspect of Sears’ negotiations with lenders involves setting deadlines for the company to achieve specific business goals while under bankruptcy protections, the sources said.
Sears is planning to seek bankruptcy protection in New York as soon as tonight, although the filing with the court might get delayed until tomorrow, the sources added, asking not to be identified as the negotiations are confidential.
Sears did not immediately respond to a request for comment.
Sears shares were trading up 20 percent at US$0.41 in New York trading on Friday, giving the company a market capitalization of US$40 million.
Lampert could help finance his bids for the assets by forgiving some of the money that Sears owes him, as opposed to putting in more cash, Reuters reported on Thursday.
At its peak in the 1960s, Sears sold everything from toys to automotive parts to mail order homes, and was a key tenant in almost every large shopping mall across the US.
However, it has struggled to reinvent itself in the face of competition from companies such as Amazon.com Inc, as well as other brick-and-mortar retailers, including Walmart Inc.