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Worst Retail Cataclysm Ever: Sears Warns it Is on the Verge of Collapse as Payless Prepares to File for Bankruptcy

Friday, March 24, 2017 16:14
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(Before It's News)

Alarm Clock Abstract - Public Domain

By Michael Synder

More than 3,500 retail stores are going to close all across America over the next few months as the worst retail downturn in U.S. history gets even deeper.  Earlier this week, Sears shocked the world when it announced that there is “substantial doubt” that the company will be able to “continue as a going concern” much longer.  In other words, Sears has announced that it is on the verge of imminent collapse.  Meanwhile, Payless stunned the retail industry when it came out that they are preparing to file for bankruptcy.  The “retail apocalypse” that I have been warning about is greatly accelerating, and many believe that this is one of the early warning signs that the economic collapse that is already going on in other parts of the globe will soon reach U.S. shores.

I have repeatedly warned my readers that “Sears is going to zero“, and now Sears is officially saying that it might actually happen.  When you file official paperwork with the government that says there is “substantial doubt” that the company will survive, that means that the end is very near

The company that operates Sears, the department store chain that dominated retail for decades, warned Tuesday that it faces “substantial doubt” about its ability to stay in business unless it can borrow more and tap cash from more of its assets.

“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” Sears Holdings said in a filing with the Securities and Exchange Commission. Sears Holdings operates both Sears and Kmart stores.

In the wake of that statement, the price of Sears stock dipped 13.69% to $7.85 a share.

Personally, I am going to miss Sears very much.  But of course the truth is that they simply cannot continue operating as they have been.

For the quarter that ended on January 28th, Sears lost an astounding 607 million dollars

The company said it lost $607 million, or $5.67 per diluted share, during the quarter that ended on Jan. 28. That compared with a loss of $580 million, or $5.44 per diluted share, a year earlier. It has posted a loss in all but two of the last 24 quarters, according to S&P Global Market Intelligence.

How in the world is it possible for a retailer to lose that amount of money in just three months?

As I have said before, if they had employees flushing dollar bills down the toilet 24 hours a day they still shouldn’t have losses that big.

This week we also learned that Payless is heading for bankruptcy.  According to Bloomberg, the chain is planning to imminently close at least 400 stores…

Payless Inc., the struggling discount shoe chain, is preparing to file for bankruptcy as soon as next week, according to people familiar with the matter.

The company is initially planning to close 400 to 500 stores as it reorganizes operations, said the people, who asked not to be identified because the deliberations aren’t public. Payless had originally looked to shutter as many as 1,000 locations, and the number may still be in flux, according to one of the people.

Of course these are just two examples of a much broader phenomenon.

Never before in U.S. history have we seen such a dramatic wave of store closures.  According to Business Insider, over 3,500 retail locations “are expected to close in the next couple of months”…

Thousands of mall-based stores are shutting down in what’s fast becoming one of the biggest waves of retail closures in decades.

More than 3,500 stores are expected to close in the next couple of months.

Once thriving shopping malls are rapidly being transformed into ghost towns.  As I wrote about just recently, “you might be tempted to think that ‘Space Available’ was the hottest new retail chain in the entire country.”

The demise of Sears is going to be an absolute nightmare for many mall owners.  Once “anchor stores” start closing, it is usually only a matter of time before smaller stores start bailing out

When an anchor store like Sears or Macy’s closes, it often triggers a downward spiral in performance for shopping malls.

Not only do the malls lose the income and shopper traffic from that store’s business, but the closure often triggers “co-tenancy clauses” that allow the other mall tenants to terminate their leases or renegotiate the terms, typically with a period of lower rents, until another retailer moves into the anchor space.

Years ago I wrote of a time when we would see boarded-up storefronts all across America, and now it is happening.

Instead of asking which retailers are going to close, perhaps we should be asking which ones are going to survive this retail cataclysm.

In the past, you could always count on middle class U.S. consumers to save the day, but today the middle class is steadily shrinking and U.S. consumers are increasingly tapped out.

For instance, just look at what is happening to delinquency rates on auto loans

US auto loan and lease credit loss rates weakened in the second half of 2016, according to a new report from Fitch Ratings, which said they will continue to deteriorate.

“Subprime credit losses are accelerating faster than the prime segment, and this trend is likely to continue as a result of looser underwriting standards by lenders in recent years,” said Michael Taiano, a director at Fitch.

The last time so many Americans got behind on subprime auto loans was during the last financial crisis.

We are seeing so many similarities to what happened just prior to the last recession, and yet most Americans still seem to think that the U.S. economy is going to be just fine in 2017.

Unfortunately, major red flags are popping up in the hard economic numbers and in the financial markets.

The last recession probably should have started back in late 2015, but thanks to manipulation by the Fed and an unprecedented debt binge by the Obama administration, official U.S. GDP growth has been able to stay barely above zero for the last year and a half.

But just because something is delayed does not mean that it is canceled.

All along, our long-term economic imbalances have continued to get even worse, and a date with destiny is rapidly approaching for the U.S. economy.

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Total 9 comments
  • This is terrible. But the Good News is that Mama June (Honey Boo Boo’s mom) lost 84 lbs – so we always have that.

  • they are downsizing and specializing because online sales are bigger than ever

    • Was just gonna post this.

      “believe that this is one of the early warning signs that the economic collapse”
      No….just brick and mortar stores. Online sales are skyrocketing.

      As for me, the only time I really go “shopping” is for food. 90% of everything else I’ve purchased in the last couple years has been online. Why shop at sears when I can buy something of equal or better quality for less money online from another retailer.

  • Most malls have too many duplicate type stores.

  • Just sharing a new site i found. Loving it so far. Refreshing actually.

    • Wow really? I didn’t know!

      I guess I missed this when you posted it in EVERY OTHER ARTICLE FOR THE LAST WEEK!
      Talk about reverse advertising. You’ve pretty much pissed me off enough, I’ll never go to that site out of spite.

  • Prophecy Links

    A Voice Lamenting This Command, “Kill all parents by,” just as we’re all speeding toward this head on collision with death tolls 2001-2017, prophesied to be in the tens of millions, beware, Apb

    -Why Doeth The Malls Sit So Solitary Who Where Once Filled With Thieves, Robbers And Mass Victims?

    -The death of retail and commerce as has been prophesied these thousands of years, the fall of one of three of this unholy trinity of abandoning God days without numbers. I witness recently as a huge container that finished Saddam Hussein, into Hussein Obama’s two weeks and seven years timetable. Just these ill gotten gains measured in mountainous blood, regardless of it’s economic apocalypse upon the world Trump’s America yet cry, for every time they lament Trump, make America great again, it is to be interpreted, spill more and more foreign blood, foreign soil, lying, stealing, killing and destroying, we need more!
    -No wonder Jesus promised the believer mansions in heaven, all here are thieves and robbers, where unlike treasures this temporary, moth nor rust can corrupt. Nor can thieves break though and steal, for where a man treasures are, now say it again with me, for where a man treasures are, so is his heart. So if you’re wondering why world gains just isn’t doing it for you, religion, politics, voting booths, wall street, Dr. Fields’s mind bending, Olsteen and their mega churches. It is by such lying murderers the heart is made bitter, life and soulless, that even in your vanity, vainly reaching at winds, accursed, Christ died for all of you. Apb, The RAM see more here,

  • Sears is a garbage store that nobody shops at, that is why they are collapsing.

  • It stands to reason when one sees all kinds of folks shopping at Goodwill on half price day, NOT at the mall, that something is really wrong! Many do not shop anywhere else because all of the stores are just too expensive anymore. This is what our greedy government has done to us. Let every tom, dick and harry into OUR nation to take regular jobs and send the best ones overseas, instead of all the jobs in OUR country for OUR people as it should be! They could care less, as long as they can keep taking from us. If you have any money anywhere that they can take, go get it and turn it into something they cannot steal! Trump is trying but everyone is fighting him tooth and nail because they…the rest of them, are rotten and want their old boy game to continue. It is about a lost cause but we have to stand up and fight for our country together, while we still have a nation and before we taken over by One World Governance, that will be anything but freedom. America is going to pay for all the evil that has come in a very awful way. Things we never thought would come are headed our way and there will be nothing that we can do about it. We will HAVE to reach out to each other again because that will be all we have to help each other make it. Grow our own food or do without. We will have to hunt and scrounge for everything. And just what then will the millions of illegals say or do then?………..they will wish they stayed in their own country!! People we are not told the truth ever and the fight in our government has only jsut begun to be ugly…until they are bothered in their own lives, will they admit that things are not good for our nation and certainly not for the world. War is coming, number 3 and when it does all hell will be here for sure.

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