AM I NEXT? IS SEARS A SINKING SHIP? (06/01/22)

JUNE 1, 2022 — 100+ SEARS HOMETOWN STORES TO CLOSE

Transformco has announced that at least 71 Sears Hometown stores will be offering liquidation sales and permanently closing in the coming weeks.

The stores were independently owned and operated, dealer-managed smaller-format stores selling "a range of home products, including appliances, lawn & garden, tools, and sporting goods."

“Unfortunately we must announce the closing of our Sears Hometown Store. It is not a decision that we have made lightly. We have loved all of our time that we have been able to spend with you over these last 10 years."

MARCH 18, 2021 — SEARS CLOSES SAN ANTONIO, TEXAS CALL CENTER; 67 LAYOFFS

Hoffman Estates, Illinois-based Transformco, the parent company of Sears and Kmart, has announced the closure of its San Antonio call center resulting in 67 layoffs.

This follows the call center located in Round Rock, Texas in October 2021 with 170 layoffs.

NOVEMBER 15, 2019 — BLOODBATH CONTINUES WITH THE CONTINUING CLOSURE OF NON-PERFORMING STORES AND THE LAYOFF OF 200+ EMPLOYEES

The impacted employees are located at the company’s Hoffman Estates, Illinois headquarters, and the company's offices in San Francisco, California.

The company refuses to comment on the exact number of layoffs but claims it is under 300.

According to a company spokesperson, “Since purchasing substantially all the assets of Sears Holdings Corporation in February 2019, Transformco has faced a difficult retail environment. We have been working hard to position Transformco for success by focusing on our competitive strengths and pruning operations that have struggled due to increased competition and other factors. Unfortunately, this process resulted in a number of difficult but necessary decisions, including closing stores and making adjustments at our corporate headquarters and field positions to reflect our new structure. We regret the impact that this has on our associates and their families."

SEPTEMBER 4, 2019 — MASSIVE LAYOFF AT SEARS HQ

Sears management has announced that it is laying off about 250 employees at its Hoffman Estates headquarters starting on October 28, 2019, but the facility will remain open. but there are “no current plans to close the entire facility,” the retailer said in a notice filed with the state.

“Affected employees will be placed on a paid administrative leave effective immediately for the time prior to the employment termination date.”

UPDATE: AUGUST 31, 2019 — RUMOR ABOUT MASSIVE LAYOFF AT SEARS HQ

According to a columnist at Forbes Magazine, “80% of the workforce at Sears Hoffman Estates, IL corporate offices had been laid off last night.”

DECEMBER 27, 2018 — DID LAMPERT THROW SEARS A LEAD LIFE-RING WITH BANKRUPTCY BID FOR ASSETS?

Once again, Eddie Lampert, the investor/executive who is most associated with the destruction of the enterprise, steps up with a $4.4 billion bid for Sears assets and certain liabilities.

While another 80 stores close in the first quarter of 2019, Lampert recently requested that the bankruptcy court authorize $25.3 million in bonuses for key executives and managers to retain their services as the ship continues to sink. The bonuses were approved.

Not only will much of Lampert’s investment and loans come off the top in any liquidation, his investment is still secured by real estate and other assets associated with the Sears brand.

Betting is heavy that Sears will not return to its former glory as one of the top retailers in America, but may become a secondary brand to an electronic retailer who has limited brick and mortar operations.

Already plans are underway to turn the company’s iconic Santa Monica, California location into a mixed-use development. The development is a joint venture between Seritage Growth Properties (another Lampert venture) and outside investors. Many believe that Lampert and Seritage are plundering Sear’s real estate assets for their own benefit and as a way for Lampert to extract further pre-liquidation value from Sears and Kmart.

OCTOBER 15, 2018 - GAME OVER - SEARS FILES FOR BANKRUPTCY

Early this morning Sears filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York. With some debtor-in-possession funding, it appears that Sears will be able to keep some stores open through the holiday season.

Of course, CEO Eddie Lampert blamed shifting customer preferences, the continuing impact of e-commerce, negative stories in the media, and unspecified other causes. Not surprisingly, he did not mention his bad leadership, poor management, and the reluctance to invest in the enterprise as root causes of the retailers dysfunction.

While Lampert has given up his position as the CEO, he is retaining the Chairman’s title and it is too soon to tell whether or not the court will closely monitor transactions between Sears’ Holdings and Lampert’s ESL (Edward S. Lampert) which at times has appeared to be self-serving and advantageous to Lampert and detrimental to Sears and its shareholders.

It is now a game of lawyers fighting over the sale of real estate and iconic brands. There is little or no chance that Sears can emerge from these proceedings as a viable company with manageable debt as long as Lampert is at the controls. ESL is Sear’s largest shareholder and investor.

OCTOBER 10, 2018 — Original post…

It should come as no surprise to anyone who follows the self-serving machinations of Eddie Lampert and his ESL Holdings, that one of his key investments, Sears, is preparing to file for Chapter-11 bankruptcy if the creditors do not restructure Sears massive $134 million debt due in a few days or accede to Lampert’s demands. Of course, Lampert, who is Sears’s Chairman and CEO as well as Sear’s largest shareholder and biggest creditor, could simply make the payment and claim another Sears asset as collateral. Perhaps allowing him to purchase another significant property like Sear’s Kenmore brand at a deeply discounted rate.

Lampert appears to have engaged a number of restructuring experts, financial advisors, attorneys, and others familiar with bankruptcy, workouts, and restructuring. And while Sears investors, creditors, and employees have been significantly affected by Lampert’s mismanagement of Sears, Lampert appears to be continuing to strip Sears real estate and brands on a favored basis.

According to published reports, Sears Holdings has engaged M-III Partners to prepare a contingent bankruptcy filing should creditors suggest filing papers for an involuntary bankruptcy to preserve assets.

One wonders how Sears is going to survive the 2018 holiday season when so many of its vendors are demanding either upfront payments or cash on delivery. Or, how you run a store operation with a skeleton crew and a lack of experienced managers and supervisors. In what universe can the cash-hemorrhaging former retail giant generate enough money to service $5.5 billion in debt without a court-ordered haircut for secured bondholders and creditors.

With Sears becoming a penny stock, it is time for employees to consider taking to their personal lifeboats because this latest storm surge may swamp the ship.

Are you wondering, Am I Next?

AM I NEXT? NO LOVE AT PRODUCT QUEST & EI SOLUTIONWORKS

Charlotte, North Carolina-based Ei SolutionWorks, a division of Daytona Beach, Florida-based Product Quest LLC, abruptly shut down their Kannapolis, North Carolina facility and laying off 296 employees. The company which develops, manufactures, and packages topical medicines, skincare products and other topical liquid, semi-solid, and loose powder products for the healthcare and other industries has ceased operations. The parent corporation, Product Quest, has also announced the layoff of 300 employees in their Holly Hill, Florida facilities.

Both facilities appear to have cross-contamination problems that resulting in the U.S. Food and Drug Administration warnings and the voluntary recall of some products.

The FDA noted that “machines used to manufacture pesticides were also used to manufacture medications and were not properly or thoroughly cleaned between batches.” In response to the company’s reply, the FDA wrote, “Your response is inadequate because it only addressed the potential for contamination of your drugs by the pesticides you were manufacturing in the same facility. You did not evaluate the potential cross-contamination of your human drugs with other human drugs you manufacture and have not demonstrated that your cleaning procedures ensure that your drugs are not cross-contaminated with other human drugs,” the notice said. “… Your response did not fully assess the effect of your failure to adequately investigate contamination on the quality and safety of your drugs on the market within expiry.”

The parent corporation, Product Quest, has filed for Chapter 11 Bankruptcy relief. A court filing by employees (Case 18-50946 Doc 36 Filed 09/12/18) alleges violation of the federal WARN act relating to mass layoffs and additional state violations.

Among the allegations, “Defendants’ business failures were caused by ineffective senior leadership, employee turnover, extensive product quality issues, the recall of products manufactured at the Daytona Facility, as well as stability, contamination, and regulatory compliance issues at the Kannapolis Facility. In the fall of 2017, Defendants suffered from severe financial and operational difficulties, including key vendors placing the company on credit hold. These issues were caused by poorly executed growth plans, which led to extensive inventory issues and significant subsequent write-offs. Additionally, Defendants suffered from operational cost overruns, ineffective production standards and poor pricing practices leading to significant margin erosion. Upon information and belief, as far back as September 2016, Defendants were in default under the terms of its senior secured credit facilities. Upon information and belief, at all relevant times, the Daytona Facility had consistent problems with quality control of the products manufactured there, no effective system in place for addressing these issues, and old equipment that did not comply with cGMP manufacturing practices.”

Clearly the handwriting was on the wall, if not for manufacturing process failures then from financial difficulties.

Are you wondering, Am I Next?

AM I NEXT? NO LOVE AT BROOKSTONE

Merrimack, New Hampshire-based Brookstone, a technology and travel gadget company owned by the Chinese conglomerate Sanpower Group, has filed for Chapter 11 bankruptcy and will be using liquidators to assist in the closing of its 101 mall stores, noting the severe decline in mall traffic and the purchase of specialty items such as those carried by Brookstone from online retailers. There will be a mass layoff of store personnel as well as employees deeper in the management and supply chain. 

The company will attempt the Chapter 11 restructuring to keep their airport, e-commerce, and wholesale channels as viable assets to be sold to an investor group. Some business analysts are also blaming management errors, logistics, and quality and technical problems. The management apparently lost some of its vendors by attempting to persuade them to transact business using the Yuan as a primary payment. 

It appears that the bankruptcy is to reduce costs to assist in the sale of the company that would now be unencumbered by claims relating to store leases and vendor obligations. This will be the second bankruptcy for Brookstone which wags are calling a Chapter 22 filing (A Chapter 11 Reorganization done twice.) The Sanpower Group bought Brookstone out of its 2014 bankruptcy. 

Brookstone CEO Piau Phang Foo applied the corporate spin noting, “Today we have taken several important steps to restructure the business and ensure that Brookstone will be well-positioned to succeed for years to come. The decision to close our mall stores was difficult, but ultimately provides an opportunity to maintain our well-respected brand and award-winning products while operating with a smaller physical footprint.” 

Are you wondering, Am I Next?