US department store chain Sears secures US$250m loan to fund operations, plans to close 96 more stores to cut costs

UNITED STATES– US department store chain, Sears has secured a US$250 million loan from lenders including billionaire owner Eddie Lampert to enable it to fund its operations.

 The retail store chain that has been accumulating losses for a while now also revealed that it will close 98 additional stores to cut on costs and hopefully steer the company into a trajectory of profitability.

The store closures which are expected to start in December will leave the retailer with only 182 locations out of the 425 which were active when Lampert acquired sears and saved it from Bankruptcy in a $5.2 billion deal earlier this year.

People familiar with the transaction, who were not authorized to discuss publicly some aspects of the deal revealed to Reuters that the new loan that was put together in the first week of November is about US$100 million and brings the total amount of loans advanced to the beleaguered US retail store to US$250 million.

Sources familiar to the transaction also revealed that Billionaire owner Lampert, through his hedge fund ESL Investments Inc, was one of the major contributors of the second loan facility advanced to Sears.

Reuters reports that financing and additional store closures reflect the continued difficulties Lampert has had in his attempt to return Sears to its glory days, when it was among the largest retailers and owned the tallest building in the world.

Lampert combined Sears and rival chain Kmart more than 15 years ago, heralding the formation of a retailer with $55 billion in annual sales.

The company has however been operating in a difficult environment characterized by intense competition from e-commerce giants like Amazon and Alibaba which have increasingly become popular and made shoppers shy away from brick and motor stores.

Sears recently closed on a deal to buy affiliated company Sears Hometown and about 414 of its stores, which sell lawn furniture and appliances.

Following the planned closures, the combined retailer will have roughly 600 locations. Sears also owns Kmart discount stores, 45 of which will shutter during the December closings.

Sears joins an increasing number of retail stores which have either closed some of their stores or shut down completely.

Some of the most popular brands that are struggling to remain profitable in the era of e-commerce include Victoria Secrets, Forever 21, Radio Shark, and J.C Penny among others.

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