Thread regarding Sears layoffs

The "Orginal Poster" that created this thread. Do you have any contacts in the IT department in the Kmart division of SHC?

Op,

Can you please post your thoughts on the timing of bk after earnings thursday?

Thanks

Thank you and yes I already planned to roll it over and seek advise!!!

Please,Please,Please read this article.

Here is a link explaining the IT equipment Kmart rolled out in 2001, everything the stores have IT wise is from 2001/2002.

http://www.computerworld.com/article/2591284/mobile-wireless/kmart-to-spend--270-million-on-new-technology-for-its-stores.html

I hope this link provides helpful info and explains the IT equipment that stores are running is at least 15years old if not older.

"Those systems hardware wise at Kmart are on their last legs they are between 14 & 15 years old. They were rolled out pre bankruptcy and before bankruptcy was filed in 2002."

This is UNBELIEVABLE. Can you imagine working everyday on a computer that is 14 - 15 years old? It's amazing that they still function at all! Thanks for the insight.

I should have made my question more clearer, if your store is closing, you can still work 40+ hours a week full time and part time employees. They do not care about OT in a closing store.

Is OT still allowed in a closing store?

FYI: I left in January 2014 When I was laid off.

I posted this on the "system upgrade thread" to give you guys an example IT wise on how bad things at SHC. One other thing with the registers crashing at the stores, the part time employees at the store have no idea how to reboot/swap out a damaged printer/keyboard to keep a register on "life support".

So unless your store has a comptent employee to keep your registers and RMUs on life support your screwed.

You have been warned.

Those systems hardware wise at Kmart are on their last legs they are between 14 & 15 years old. They were rolled out pre bankruptcy and before bankruptcy was filed in 2002.

FYI: The RMU's are older than the registers. So if you wonder why the RMU's are failing along with the meridian phone system. None of the IT equipment at Kmart has ever been maintained properly.

SHC is now having problems, maybe I am just guessing, the central servers that control everything, including, SYWR, RMU, ect. Crashed possibly and that caused both Sears and Kmart systems to go offline.

Again, that is only a logical guess, Since the store controller at each store was not compromised the registers we're able to run in "offline" mode.

Usually if the registers are offline you can take a credit card but it will prompt for manual authoration.

Something very serious must have happened in Illinois to bring the entire system down.

"So if I am reading this correctly after 39 years and I really didn't want to go until July of 17,if they go bankrupt before then my pension (small as it is) will be safe? Will I be able to get a lump sum or settle for monthly?"

Yes.......your pension will be safe no matter what happens. I'm not sure if you will be eligible to take a lump sum or not - you need to check with HR or the benefits manager about that.

If you do qualify for a lump sum, I personally would find a good financial planner and roll it over with them. Either way, your pension will be protected in the event of bankruptcy.

So if I am reading this correctly after 39 years and I really didn't want to go until July of 17,if they go bankrupt before then my pension (small as it is) will be safe? Will I be able to get a lump sum or settle for monthly?

Thanks so much for your insiteful answers!!!

Unless this has changed all employees at a closing store can work 40+ hours a week, they do not care about overtime in a closing store. Is this still true in closing stores?

Question: "Are there any indications when Chapter 11, will be filed? Is it sometime between Now and December 2016 or is it early January 2017?"

I'm not sure. We will have a much better idea after the earnings announcement on August 25. It is largely dependent upon how much more cash they can raise via asset sales and / or new loans - everything has been very quiet on that front. However, as I mentioned in a previous post, Sears is almost certainly running low on cash, unless they recently raised more and haven't announced it yet.

IF Sears can make it through this current quarter (ending October 31), then they would almost certainly put off any bankruptcy filing until after the holidays - likely January or February. However, properly funding inventory for the upcoming holiday season is going to be a HUGE challenge for Sears.

I still haven't been able to confirm if the bankruptcy attorneys have been officially retained. As stated in my original post, I know for a fact that several discussions have taken place with them. When bankruptcy attorneys are officially hired, the filing typically takes place within 3 to 6 months afterwards - unless there is some sort of liquidity crisis.

As of today, my best guess is that bankruptcy will most likely be filed sometime early in 2017. However, my opinion may change after the earnings release on August 25. If they don't announce some sort of MAJOR cash infusion, I just don't see how they avoid bankruptcy before the end of 2016. I hope this helps.

POLL: Is there ANYONE on this message board whose store is actually performing better this year than last year?

"You can't work both banners..

K and S, part time people are only allowed max 29 hrs. Why ?

You work 15 at K and 18 at S. = 33hrs.

If you work more than 30 hrs a week for an exended time"

They do this so that they can avoid offering benefits, which is a MAJOR expense for the company. The thing is that replacing long-term, full-time employees with inexperienced part-timers has helped to destroy the company's customer service and pleasant shopping experience. But that's only part of the problem - along with under-staffing, old equipment and stores, minimal capital expenditures, a CEO who is clueless about retailing, etc, etc.

Question: "the second quarter results will be telling next week- i presume they will need extra funds but who would lend to them? Potentially the rest of the real estate portfolio (thats not pledged as collateral) could be sold to seritage but i assume whats left is junk."

I'm almost certain that second quarter results will be horrible when they are announced on August 25. Not counting any assets sales (of which I know of no major ones taking place over the past 3+ months), I expect Sears Holdings to have burned through another $350 to $450 million (including capital expenditure costs) for the 3 months ended July 31, 2016.

Now here's the thing: As of April 30, 2016, Sears Holdings only had about $550 million in cash and available credit remaining. Add a MINIMUM $100 million cash burn (which is probably a low figure) for the month of August, and it becomes apparent that Sears is just about out of money - unless they can raise more cash via assets sales or new loans.

Worse yet, Sears has typically burned over $1 billion in cash during the 3rd quarter (ending October 31, 2016) in order to stock up on inventory for the holiday season. Where is that money coming from this year? Additionally, suppliers have also been reducing / cutting off credit to Sears due to their horrible financial condition. This reduced credit could easily add several hundred million more (in addition to the $1+ billion) that Sears will need to come up with in order to properly stock their stores for the holiday season.

What are Sears' alternatives? Don't properly stock the stores for the holiday seasons and lose even more sales and customers?

I wouldn't doubt if Lampert or one of his hedge fund buddies makes another high interest rate loan to keep things going for a little while yet. The thing is that just adds more interest expense to Sears' already negative cash flow. These loans will NEVER be repaid, unless the assets backing them are sold. Many hedge funds and vulture lenders know this and do what's know as "loan-to-own" loans.

I don't think we will see Seritage buying any more SUBSTANTIAL amounts of real estate from Sears. They MAY buy just a few properties, but they are already at substantial risk because of having only Sears as their primary tenant. Seritage is scrambling to re-tenant and re-develop their properties ASAP in order to diversify away from Sears, but that entire process will take several years. Because Lampert is a major owner in both companies, I think that most of the Seritage stores will remain open for a good while even after Sears' bankruptcy. If Sears would file bankruptcy and then reject most or all of the Seritage leases and close those stores down, Seritage would also be bankrupt in a matter of months - I highly doubt that will happen.

Sears still has somewhere between $750 million and $2 billion worth of unencumbered real estate that they could potentially monetize (ie. either sell or borrow against in order to raise cash).

I have a very good friend who used to work in Sears' finance department for years. At times he worked on projects directly for the CFO. He knows the finances and structure of Sears better than anyone I know. He told me over 2.5 years ago that Sears was doomed, but they would be able to stretch things out for a few more years due to their asset base and Lampert's financial games. I spoke with him again this past week, and he gave me his estimates of just about everything Sears could sell and / or borrow against to raise more cash. I will post those figures later today. He keeps telling me to watch the available liquidity (ie. cash + available borrowing capacity) because a company cannot survive when they are depleted.

You can't work both banners..

K and S, part time people are only allowed max 29 hrs. Why ?

You work 15 at K and 18 at S. = 33hrs.

If you work more than 30 hrs a week for an exended time

....you should be eligible for benefits.

The Holdings Corp is not going to offer benefits.

Question: "What happens to the pension plan if the bankruptcy goes through?"

When the bankruptcy occurs, your pensions benefits will be protected (unless your annual pension is in excess of $150,000+ - then it may be slightly reduced). The PBGC - a government protection agency - guarantees pension plans. Also, earlier this year Sears Holdings reached an agreement with the PBGC whereby they basically pledged as collateral the KCD brand entity and the 127 REMIC real estate properties in order to cover any pension shortfall. As of April 30, 2016, the pension was underfunded by over $2 billion dollars! Although this huge shortfall shouldn't directly affect pensions, it is one of several factors that is driving Sears Holdings into bankruptcy. For example, during 2016 alone, Sears is supposed to pay around $400 million into the pension plan (due to the huge deficit). That is a huge amount that otherwise could have been used for advertising, store improvements, raises and many other things that could have improved the retail operations.

@IWD0TBD-1ams: if your store is struggling and they are still sending you tons of merchandise, they might be doing that to get rid of it through the eventual liquidation if they are planning to close you.

Don't know for sure, but if you are on P2P and are still getting tons of shipments, that might be a sign. Just something to look out for.

My store (kmart) was getting 3 trucks a week now down to 2 trucks. We are getting our halloween merchandise is coming in now and going upstairs for now but we are pretty empty. Our stockroom upstairs used to be full but everything now has to go out to the floor so it is empty. Since we have the 1 touch policy and everything has to be forced out there is nothing. They are just stacking things on the overhead. Microwaves are stacked 3 high. blenders and toaster are up to 6 high.

I also wanted to say thank you for all the information that you are providing. It helps a lot.

My store (Sears) is in the red all over on the LBS, including margin, and has been that way for several months. We haven't kept a store manager longer than a year since I started four years ago, we are on #2 after a seven month span of not having one.

However, shipments have in fact increased from what I have noticed. They keep shipping merchandise to the point that we have no room for a lot of it. This is particularly a problem for softlines.

Every day, customers ask if we are closing because we are empty 90% of the time. It's probably true, our store is bleeding red but we are getting shipments like clockwork.

I guess the only thing that's keeping us open is the fact the building we are in is owned and not leased.

What happens to the pension plan if the bankruptcy goes through?

I know not just me on here, but from everyone else THANK YOU for finally giving us the truth and not the BS corporate is feeding the press and employees about this P2P, BS.

I also wish you good luck in your new job. Are there any indications when Chapter 11, will be filed? Is it sometime between Now and December 2016 or is it early January 2017?

Question: "How long ago did you leave? And congrats on the new job!"

Thanks! It feels great to finally have a job where I'm not constantly worrying about job security. As I said before, I feel terrible for current Sears employees and their families. Dealing with so much uncertainty is extremely stressful.

I left the company within the past 3 months. I still have several very good friends who still work at headquarters (unfortunately for them) with whom I speak with regularly.

QUESTION FOR ANY DISTRIBUTION CENTER EMPLOYEES:

Do INCOMING inventory shipments still seem to be at normal levels, or have they dropped off? Under normal circumstances, incoming shipments should actually be increasing this time of the year in order to ramp up inventory for the upcoming holiday season.

Question: "Bankruptcy aside, do you have any insight as to store closings and layoff announcements that might be coming next week? Rumors are flying."

I don't know for certain, but I'm pretty sure that they will announce AT LEAST 100 more store closures and perhaps many more next week. It will still take at least a few months for those stores to be liquidated. I think the majority of the closures will be K-Mart locations.

Regardless of what corporate says - just another instance where they are giving employees and investors false hope - the fact that K-Mart locations are emptying inventory out of the stock rooms is a precursor to liquidation for many of these stores. Maybe not all of them, but many of those stores will eventually be liquidated. This strategy also helps to temporarily raise cash, but it isn't nearly enough.

I'm just curious, is anyone's store (either K-mart or Sears) seeing much less inventory shipments for this time of the year? If so, that would be a very good indication that your store will be liquidated in the near future. When inventory shipments stop coming in, the store is definitely scheduled to be liquidated.

Question: "You know what I bet will happen if the bankruptcy happens and store closures. They will ramp up hiring for the store to operate them fully through the store closure process and then lay everyone off?"

In the event of bankruptcy, I don't think we will see all of the stores close immediately. I think many of the Seritage stores will remain open, because Lampert needs those stores to continue paying rent to the REIT until new tenants can be located or the properties can be re-developed. Seritage cannot afford to have all of the Sears locations close at once, so they will probably remain open for a good while even after bankruptcy. I think many of the leased stores - outside of the Seritage stores - will be the first to be closed, especially many of the leased K-mart locations.

I think that Lampert privately realizes that his equity investment in Sears Holdings is doomed. He will most likely try to recoup some of his losses via his investment in Seritage and, to a lesser extent, Land's End.

I really doubt that they will ramp up hiring, except to maybe replace full-time employees with part-time employees. They may also need to hire some additional seasonal employees for the holiday season, if they can make it through the financial challenges to fund inventory.

I am sorry for asking so many questions. I am finally someone is telling us the truth for once and not feeding us BS.

I've been busy most of the day, but I will do my best to reply to all of your questions within the next day or so.

How soon do you think the DC's will be closed? And product will be shipped out to stores?

How long ago did you leave? And congrats on the new job!

I highly suspect they are going to start closing the DC's if they file for bankruptcy before October? I expect if a DC closes the dumping of "stale product" will start soon.

Too bad SHC cannot take a hint and let employees work at both banners. So they can atleast get some hours.

That is dumb, if you work at a Sears you cannot work at a Kmart. If you work at a Kmart you cannot work at a Sears. That is just idiotic, corporate must be brain dead.

At my store they are ordering to much of both hardlines and softlines. They keep hiring also. Today we had another 8 people but hours are being cut

Are they ordering too much Softlines or is it too much Hardlines?

When you stop spending, that's when the creditors know you're out of money.

Red flags aside, the buyers at corporate keep ordering too much merchandise. That is contributing to the death spiral.

Unless they push the second quarter results back, that will be a red flag. Like you said the property that is left like the 1960's-1970's stores with asbestos. Are worthless, the land is properly worth more than the buildings are.

the second quarter results will be telling next week- i presume they will need extra funds but who would lend to them? Potentially the rest of the real estate portfolio (thats not pledged as collateral) could be sold to seritage but i assume whats left is junk.

Yes, even though I left 2years ago, I am wondering about store closures?

OP,

Bankruptcy aside, do you have any insight as to store closings and layoff announcements that might be coming next week? Rumors are flying.