Sears Canada has filed for bankruptcy after years of financial struggle and underperformance.
The iconic store is the latest casualty among traditional brick-and-mortar retailers as the whirlwind success of e-commerce continues to grow.
News of the bankruptcy filing was not a surprise, according to a CNN Money report. Last week Sears Canada announced its funds were dangerously low. Earlier this year, vendors started to increase defensive measures against the company after insurers started to retract policies against non-payment of goods.
Doug Collins, regional director for risk services at Atradius Trade Credit Insurance, said his firm stopped providing insurance to Sears vendors. “We tried to hang in as long as we could,” he told Reuters in March.
In the build-up to the bankruptcy, many Sears vendors declined to sell their products because of concerns around billing, payments and deductions.
Sears Canada spun off as an independent company in 2012. It has more than 200 stores and about 17,000 employees. The filing is not good news for Sears Holdings (SHLD), which holds 12% of the company’s shares. SHLD CEO Eddie Lampert owns a total of 45% of Sears Canada through his hedge fund.
The company said new changes in its stores are starting to attract consumers and could result in some mitigation. It filed for bankruptcy to buy more time for those changes to take hold.
Sears Canada said it hopes to emerge from bankruptcy later this year – but the company will have some work to do to rebuild relationships with vendors and insurers in order to run a smooth operation.
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