Sears files for Chapter 11; Lampert resigns as CEO
Sears Holding Corp. filed for Chapter 11 bankruptcy protection early Monday morning, hours before a $134 million debt payment came due.
As part of the bankruptcy, the 125-year-old company, which was once the nation’s largest retailer, will close 142 stores near the end of the year, with liquidation sales to begin soon. (This is in addition to the previously announced closure of 46 unprofitable stores by November 2018.) Sears, which has shuttered thousands of locations during the past several years, currently operates a total of about 700 Sears and Kmart stores.
Also, Eddie Lampert, Sears’ chairman, CEO and its biggest shareholder, is stepping down as CEO, effective immediately. He remains chairman. The company has appointed restructuring expert Mohsin Meghji, managing partner of M-III Partners, as its chief restructuring officer.
Lampert, who purchased Sears, Roebuck & Co. and brought it together with Kmart in an $11 billion deal in 2005, is Sears’ biggest creditor through his hedge fund ESL Investments. He has been helping to keep the company afloat for years, primarily with billions of dollars of short-term loans. And he still is. Sears said ESL is negotiating a $300 million debtor-in-possession loan to support it through bankruptcy. (Sears has also secured commitments for $300 million in senior priming debtor-in-possession financing from its senior secured asset-based revolving lenders.)
In addition, ESL is also exploring a stalking-horse bid to buy “a large portion” of the company’s stores in the bankruptcy process.
“Over the last several years, we have worked hard to transform our business and unlock the value of our assets,” said Lampert. “While we have made progress, the plan has yet to deliver the results we have desired, and addressing the company’s immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer. The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability.”
Sears said it has created an “office of the CEO,” which will be responsible for managing the company’s day-to-day operations during the bankruptcy restructuring process. It will be composed of Robert A. Riecker, CFO; Leena Munjal, chief digital officer, customer experience and integrated retail; and Gregory Ladley, president of apparel and footwear.
Sears said it intends to continue payment of employee wages and benefits, honor member programs, and pay vendors and suppliers in the ordinary course for all goods and services provided on or after the filing date. Sears and Kmart stores, and its online and mobile platforms, are open and continue to offer a full range of products and services to customers.
“As we look toward the holiday season, Sears and Kmart stores remain open for business and our dedicated associates look forward to serving our members and customers,” Lampert stated. “We thank our vendors for their continuing support through the upcoming season and beyond.”
New single-family home sales rise in August
Sales soar in the Northeast, but stagger in the South.
Sales of new single-family houses in August increased 3.5% to a seasonally adjusted annual rate of 629,000 from the revised July rate of 608,000, the U.S. Commerce Department reported today.
The latest report is also 12.7% above the August 2017 estimate of 558,000.
The median sales price of new houses sold in August increased 1.9% $320,200 while the average sales price grew 5.2% from a year ago to $388,400.
Housing affordability remains a concern for the National Home Builders Association (NAHB).
“New home sales have ticked up in August, due to positive demographics and a strong overall economy,” said Randy Noel, chairman of the National Association of Home Builders and a custom home builder from LaPlace, La. “However, housing affordability remains a serious concern and builders must manage supply-side costs and stiff regulatory hurdles to keep prices competitive.”
The seasonally-adjusted estimate of new houses for sale at the end of August was 318,000, representing a supply of 6.1 months at the current sales rate.
Regionally, sales in the Northeast jumped 47.8% to 34,000 while sales in the West increased 9.1% to 168,000. Midwest sales also increased, rising 2.7% to 77,000. Sales in the South declined 1.7% to 350,000.
“Housing affordability has taken a toll on new home sales over the summer, and there could be market volatility in the months ahead as communities grapple with the aftereffects of Hurricane Florence,” said NAHB Chief Economist Robert Dietz. “Still, we expect the overall housing market to grow this year as demand continues to increase among millennials and other newcomers.”
Huttig names new CFO
Former Huttig CFO is officially named as the company’s new CFO.
Huttig Building Products has named Phillip Keipp as the company’s new vice president and chief financial officer, effective Sept. 24.
Keipp most recently served as a senior financial consultant for Huttig, named to the position on Aug. 6. He also served as Huttig’s CFO from July 2009 through June 2015.
Prior to joining Huttig in 2009, Keipp served as CFO and chief operating officer for HD Supply Waterworks, the distributor of water and wastewater transmission products.
“I am pleased that Phil has rejoined Huttig as his in-depth knowledge of the company will make for a seamless transition and he will have an immediate impact on the business,” Huttig CEO and president John Vrabley said.
Vrabley has served as Huttig’s interim CFO since January. This followed the departure of Oscar Martinez who had joined the company as CFO and vice president in April 2016. Details about the personnel change were not revealed.
Based in St. Louis, Mo., Huttig Building Products is one of the nation’s largest building product distributors. The company operates 27 distribution centers, serving 41 states, and while distributing building products and millwork used in new residential construction and remodeling.