Sears Becomes the Latest Retail Giant to File for Bankruptcy, Suffering From Massive Debt

(NEW YORK) — Sears has filed for Chapter 11 bankruptcy protection, buckling under its massive debt load and staggering losses.

Sears once dominated the American retail landscape. But the big question is whether the shrunken version of itself can be viable or will it be forced to go out of business, closing the final chapter for an iconic name that originated more than a century ago.

The company, which started out as a mail order catalog in the 1880s, has been on a slow march toward extinction as it lagged far behind its peers and has incurred massive losses over the years. The operator of Sears and Kmart stores joins a growing list of retailers that have filed for bankruptcy or liquidated in the last few years amid a fiercely competitive climate. Some like Payless ShoeSource have had success emerging from reorganization in bankruptcy court but plenty of others haven’t, like Toys R Us and Bon-Ton Stores Inc. Both retailers were forced to shutter their operations this year soon after a Chapter 11 filing.

“This is a company that in the 1950s stood like a colossus over the American retail landscape,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy. “Hopefully, a smaller new Sears will be healthier.”

Given its sheer size, Sears’ bankruptcy filing will have wide ripple effects on everything from already ailing landlords to its tens of thousands of workers.

The filing, which is happening ahead of the crucial holiday shopping season, comes after rescue efforts engineered by its CEO and chairman Eddie Lampert have kept it outside of bankruptcy court — until now. Lampert, the largest shareholder, has been loaning out his own money for years and has put together deals to prop up the company, which in turn has benefited his own ESL hedge fund.

Last year, Sears sold its famous Craftsman brand to Stanley Black & Decker Inc., following its earlier moves to spin off pieces of its Sears Hometown and Outlet division and Lands’ End.

In recent weeks, Lampert has been pushing for a debt restructuring and offering to buy some of Sears’ key assets like Kenmore through his hedge fund as a $134 million debt repayment comes due on Monday. Lampert personally owns 31% of the company’s shares. His hedge fund has an 18.5% stake, according to FactSet.

“It is all well and good to undertake financial engineering, but the company is in the business of retailing and without a clear retail plan, the firm simply has no reason to exist,” said Neil Saunders, managing director of GlobalData Retail, in a recent analyst note.

Sears’ stock has fallen from about $6 over the past year to below the minimum $1 level that Nasdaq stocks are required to trade in order to remain on the stock index. In April 2007, shares were trading at around $141. The company, which once had 350,000 workers, has seen its workforce shrink to fewer than 90,000 people as of earlier this year.

The company has racked up $6.26 billion in losses, excluding one-time events, since its last annual profit in 2010, according to Ken Perkins, who heads the research firm Retail Metrics LLC. It’s had 11 years of straight annual drops in revenue. In its last fiscal year, it generated $16.7 billion in sales, down from more than $50 billion in 2008.

As of May, it had fewer than 900 stores, down from about 1,000 at the end of last year. The number of stores peaked in 2012 at 4,000, including its Sears Canada division that was later spun off.

In a March 2017 government filing, Sears said there was “substantial doubt” it would be able to keep its doors open — but insisted its turnaround efforts would mitigate that risk.

But its losses continued into this year. In the fiscal second quarter ended Aug. 4, net losses in the quarter swelled to $508 million, or $4.68 per share, compared with a loss of $250 million, or $2.33 cents per share in the same quarter a year ago.

Such financial woes contrast with the promise that Lampert made when he combined Sears and Kmart in 2005, two years after he helped bring Kmart out of bankruptcy. Back then, it operated 2,200 stores in total.

Lampert pledged to return Sears to greatness by leveraging its best-known brands and its vast holdings of land, and more recently planned to entice customers with a loyalty program. But it struggled to get more people through the doors or to shop online.

Jennifer Roberts, 36 of Dayton, Ohio, had been a long-time fan of Sears and has fond memories of shopping there for clothes as a child. But in recent years, she’s been disappointed by the lack of customer service and outdated stores.

“My mom had always bought her appliances from Sears. That’s where my dad got his tools,” she said. “But they don’t care about their customers anymore.”

She said a refrigerator her mother bought at Sears broke after two years and it still hasn’t been fixed for almost a month with no help from the retailer.

“If they don’t value a customer, then they don’t need my money,” said Roberts, who voiced her complaints on Sears’ Facebook page.

Sales at the company’s established locations tumbled nearly 4 percent during its fiscal second quarter. Still, that was an improvement from the same period a year ago when it fell 11.5 percent. Total revenue dropped 30 percent in the most recent quarter, hurt by continued store closings.

The bleak figures are an outlier to chains like Walmart, Target, Best Buy and Macy’s, which have been enjoying stronger sales as they benefit from a robust economy and efforts to make the shopping experience more inviting by investing heavily on remodeling and de-cluttering their stores.

For decades, Sears was king of the American shopping landscape. Sears, Roebuck and Co.’s iconic catalog featured items from bicycles to sewing machines to houses, and could generate excitement throughout a household when it arrived. The company began opening retail locations in 1925 and expanded swiftly in suburban malls from the 1950s to 1970s. But the onset of discounters like Walmart created challenges for Sears that have only grown. Sears faced even more competition from online sellers and appliance retailers like Lowe’s and Home Depot. Its stores became an albatross.

Store shelves have been left bare as many vendors have demanded more stringent payment terms, says Mark Cohen, a professor of retailing at Columbia University and a former Sears executive.

Meanwhile, Sears workers are nervous about what kind of severance they’ll receive if their store closes.

John Germann, 46, works full-time and makes $14 per hour as the lead worker unloading merchandise from trucks at the Chicago Ridge, Illinois store, which has been drastically reducing its staff since he started nine years ago. Germann now has only 11 people on his team, compared with about 30 a few years ago.

“We’re doing the job of two to three people. It’s not safe,” he said. “We’re lifting treadmills and refrigerators.”

Real estate experts believe that Sears’ move to further shutter stores as part of its restructuring would be a mixed blessing for landlords. For the healthy malls, landlords would welcome a Sears departure, allowing them to cut up the space and fill it with several smaller successful stores that combined would bring in higher revenue.

But for the struggling malls, Cohen says it will be a “death knell” since it will be harder for them to bring in new tenants. Many of these malls already have had difficulty filling in the void from J.C. Penney and Macy’s closures.

Saunders of GlobalData Retail spared no criticism of Sears in his analyst note, listing failing after failing of the company.

“The problem in Sears case is that it is a poor retailer,” he wrote. “Put bluntly, it has failed on every facet of retailing from assortment to service to merchandise to basic shop keeping standards. Under benign conditions, this would be problematic enough but in today’s hyper-competitive retail environment it is a recipe for failure on a grand scale.”

9 Questions for Slack Chief Product Officer April Underwood

As Slack’s head of product, April Underwood is responsible for expanding what’s possible with the workplace productivity app that’s proliferating across offices worldwide. Formerly of Twitter and Google, Underwood credits her team’s experience with consumer software for turning Slack into a workplace app that employees actually seem to want to use — a rarity in the enterprise software world.

TIME recently spoke with Underwood about her role at Slack (also a 2018 TIME Genius Company), the features she’s most excited about bringing to the platform, and workplace chatroom etiquette. The following conversation has been edited for length and clarity.

TIME: Tell us more about what you do at Slack.

Underwood: I’m the chief product officer here at Slack. In that role, I’m responsible for our overall product vision as well as all of the work that we do to turn that vision into practice. So, how we take the vision we see for the future of how companies are going to want to work, and transform that into our product roadmap and partner closely with engineering to actually build those capabilities into the product.

Slack is a rare example of a company that makes workplace software that people actually like to use. How did that come to be?

If you look at a lot of folks on our product, design and engineering teams, we have a lot of DNA here that comes from the consumer side. In the consumer world, you have to build software that is delightful and useful enough that people decide to use it. You have to earn every user one-by-one. In enterprise, historically those decisions don’t get made by the people who use the software day-to-day, they get made by CIOs or IT administrators, they get made based on negotiations and cost and a lot of other factors. The usefulness of the platform has historically been an afterthought. But these days that’s much less the case … Slack gets adopted in a very bottom-up fashion.

We’re part of a broader movement here. There’s a whole proliferation of software tools that are getting better and better for every type of task that you need to get done at work. They similarly are being chosen by the employees that actually need to use them, and we’re excited to sit at the center of this movement.

Slack is being used outside the workplace too, with community groups and other organizations. Is that a user base that you’re purposefully targeting, or is that happening organically?

It’s really happening organically, and it’s exciting to see — when I think about what Slack is for, it’s for groups of people to get work done. I hear amazing anecdotes of people using the software for organizing things within their own family, organizing across parent groups, student groups that are using it for class project work. Those are all types of work. They’re not idle chatter, they’re groups of people coming together with a shared purpose and specific goals they’re trying to achieve.

It’s great to see so many people find those other purposes for Slack, even outside the workplace, although our primary focus … is making sure Slack can be the foundation for how companies get work done, so that’s where we focus our product innovation.

That Slack works with so many outside services could present a big product and design challenge. How do you approach that?

It strikes me as so much more of an opportunity than a problem. We take explicit measures to make sure our customers understand what apps they install on their platform. We review every single app that gets submitted to our app directory, we do a variety of testing around security, and also just ensuring quality — does it do what it says it will do?

One of the selling points of Slack is that everyone’s suffering from email overload. But if we shift all of our communications to this new app, what’s to say that problem won’t just occur in this new app instead of email?

Slack is centered around channels. That’s a critical aspect of what makes Slack a fundamentally different way of working. Your team can set up different channels for different topics, so when you open up Slack, you’re able to see what topics actually have recent messages. It’s a very different model from email, where with email you receive a time-sorted list of all of your emails, and you the reader have to triage those many times a day. When you’re done with your work on a project, you can just leave the channel and have it out of your view.

In addition, we invest a lot in our notifications experience. Notifications on Slack give users a huge amount of flexibility that they don’t have with other communications tools. I get a push notification every time there’s a post into our executive team channel, but I’m in hundreds of other channels for which I don’t get any notifications unless my name is mentioned specifically. That gives me a sense of confidence and control that allows me to tune my use of Slack to my own needs.

What happens at our office, and I’m sure offices elsewhere, is that you get one or two people who sometimes put stuff in the wrong channel, and they’re ostracized for it. You have to learn this new Slack etiquette that’s different from email etiquette.

That’s totally true. It’s kind of quirky, but since the early days, we’ve used the raccoon emoji to indicate when something needs to go to a different channel. So we’ve created lighthearted ways to give each other feedback and normalize that process. It’s a new set of etiquette … how more senior people interact with more junior people with a level of transparency, how you install those new cultural norms is a big area of focus for us and our customer success team works closely with a lot of our customers to help them figure out how to make norms their own in their own unique ways that fit their culture.

One of my Slack pet peeves is when someone Slacks me and just says “hey,” trying to get my attention. That’s frustrating because I like to triage what’s going on, so if I don’t know the level of urgency of their request, and it’s stressful. Do you have any solutions for that?

For something like that, the best thing to do is to let your coworkers know how you like to work with them. I know people here that have made it clear that they don’t need to be thanked, because they don’t want to get a one-line message after every single thing they do that just says “thank you.” I know somebody that has that in their bio in Slack.

What’s important to us is to make sure you have the tools to be able to communicate the way you want, so things like emoji reactions for example, those are really great because they allow people to give low-calorie communication — to be able to communicate some kind of feedback without necessarily creating the interruption that comes with getting a whole new message.

What are some product updates that you’re most excited about?

Earlier this summer we launched a new search experience that’s fullscreen, it has filters that are really easy to understand where you can select messages from specific people or specific channels, and we do some of the work to recommend what filters might be useful for you. This is a big step for us, because we’re using relevance signals to help you refine your search query and get to what you’re looking for. Search is a big area of investment for us and we’re only going to continue to ensure that we have the best search experience out there across any application like ours.

This summer we acquired a company called Missions … Missions builds a no-code solution to be able to build workflows into Slack, so if you’re looking to build lightweight approval flows or other sorts of micro-applications inside Slack where you’re really adding some structures to common processes within your organization. Missions had this product that we really loved that helped our customers do that without necessarily having to be extremely technical.

You’ll see us continue to invest in the platform forever, because there’s a need and companies are using more and more third-party applications, but they also have their own internal tools and dashboards, and they need ways to get that information in front of their employees so they can make the best decision, and we think Slack is the right platform on which to do that.

What’s next for Slack?

The big things for us are continued growth — we did not have a product for companies over a couple thousand employees as of January 2017. Last year we launched Enterprise Grid, and we also launched shared channels, which allow companies to work with each other in Slack.

We’re always taking steps to make Slack more intuitive, and help people harness the true potential of what we think is possible on top of the platform. That’s the platform capabilities … as well as other investments to make it easier to format your messages, to really express yourself and do your best work inside Slack.

GE Stock Soars After CEO John Flannery Unexpectedly Ousted

General Electric Co. soared after shocking investors by naming Larry Culp chief executive officer and chairman, as the company ousted John Flannery amid a severe share decline.

Culp, who is highly respected on Wall Street for a successful transformation of Danaher Corp., will take over immediately, just 14 months after Flannery took the reins. Thomas Horton was named lead director.

“GE remains a fundamentally strong company with great businesses and tremendous talent,’’ Culp said Monday in a statement. “We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency.”

GE also said it will take an impairment charge constituting nearly all of the $23 billion of goodwill associated with its power segment, which has struggled with a downturn in the gas-turbine market. As a result, the Boston-based company now expects to miss its free cash flow and earnings forecasts for 2018.

The shares climbed 8.2 percent to $12.22 in New York premarket trading Monday. GE had fallen 35 percent this year through Friday, following a 45 percent decline in 2017.

Elon Musk Is Having a Very Bad Week. So Are Tesla Investors

(Bloomberg) — The prospect that Elon Musk could lose his job as Tesla Inc. CEO over tweets may cost the carkmaker’s shareholders close to $20 billion.

Tesla plunged as much as 14 percent in early trading Friday after the U.S. Securities and Exchange Commission alleged that Musk committed fraud by tweeting last month that he’d secured funding to take the company private. The regulator is seeking to bar Musk from serving as an officer or director of a public company.

At $268.10 — the stock’s lowest price in the first few minutes of regular trading Friday — Tesla had a market capitalization of about $45.7 billion, down from $64.8 billion at the close of trading on Aug. 7, the day Musk sent his take-private tweets.

Read More on Musk Musk’s SEC Woes May Erase Half of Tesla’s Value, Barclays Says Suit Could Rob Tesla of Most-Valuable U.S. Carmaker Crown Tesla Board Backs Musk as SEC Sues, Seeks Ouster Over Tweets SEC Case Is ‘Early Christmas’ for Investor Suits Over Musk Tweet

‘We Do Not Support This Conduct.’ PayPal Joins the Growing Number of Sites to Ban InfoWars

Alex Jones can add PayPal Holdings Inc. to the list of companies ending ties to the conspiracy theorist and his InfoWars website for hateful and intolerant behavior.

The payments company said Friday in a blog post that it will no longer offer its services to InfoWars and related websites. PayPal processes transactions such as credit card payments for websites and apps.

“We undertook an extensive review of the InfoWars sites, and found instances that promoted hate and discriminatory intolerance against certain communities and religions that run counter to our core value of inclusion,’’ the payments company said. “We believe that hatred and discrimination have no place in our democratic society and, we do not support this conduct.’’

PayPal joins a variety of other technology companies, including Apple Inc., Facebook Inc.. Google’s YouTube and Twitter Inc., in banning Jones and InfoWars from their platforms, saying he promotes hate speech, bullying and harassment. Jones is known for spreading false allegations such as that the 2012 mass shooting at Sandy Hook Elementary School in Connecticut was a hoax.

InfoWars shot back on its website, writing that the ban “represents nothing less than a political ploy designed to financially sabotage.’’ PayPal is giving the site 10 business days to switch payment processors before its services will be terminated.

PayPal took similar action in August 2017 to stop processing payments for groups associated with the hate march in Charlottesville, Virginia. The San Jose, California-based company declined further comment on its action against InfoWars.

Head of Verizon-Owned AOL and Yahoo Will Depart the Company

(NEW YORK) — Verizon is replacing its media and advertising chief Tim Armstrong.

Oath President and COO K. Guru Gowrappan will assume the Oath CEO role Oct. 1. Armstrong will stay through year-end as a strategic adviser.

Gowrappan joined Verizon in April and before that was global managing director of Chinese e-commerce behemoth Alibaba.

Armstrong was tasked with growing Verizon’s ad business in a challenge to Facebook and Google, but that business remains one of Verizon’s less profitable divisions. Armstrong came to Verizon when it bought AOL in 2015 and began overseeing Yahoo when Verizon bought it in 2017.

Armstrong was one of Google’s early employees and was key to developing its digital ad business before joining AOL in 2009. Telecoms have been buying content makers to diversify as the wireless industry slows.

McDonald’s Workers Are Going on Strike Over Sexual Harassment

(NEW YORK) — Emboldened by the #MeToo movement, McDonald’s workers have voted to stage a one-day strike next week at restaurants in 10 cities in hopes of pressuring management to take stronger steps against on-the-job sexual harassment.

Organizers say it will be the first multistate strike in the U.S. specifically targeting sexual harassment.

Plans for the walkout — to start at lunchtime on Sept. 18 — have been approved in recent days by “women’s committees” formed by employees at dozens of McDonald’s restaurants across the U.S. Lead organizers include several women who filed complaints with the U.S. Equal Employment Opportunity Commission in May alleging pervasive harassment at some of McDonald’s franchise restaurants.

The strike comes as union-backed organizations have been putting pressure on McDonald’s on several fronts for better working conditions, including $15 an hour wages — at a burger chain that employs tens of thousands of people around the country, many of them at low pay.

Organizers said the strike would target multiple restaurants — but not every local McDonald’s — in each of the 10 cities: Chicago; Durham, North Carolina; Kansas City, Missouri; Los Angeles; Miami; Milwaukee; New Orleans; Orlando, Florida; San Francisco and St. Louis.

They said they could not predict with precision how many workers would join the strike, but noted that hundreds of workers had participated in the committee meetings at which the strike was planned.

McDonald’s, in an e-mail to The Associated Press, defended its anti-harassment efforts.

“We have policies, procedures and training in place that are specifically designed to prevent sexual harassment at our company and company-owned restaurants, and we firmly believe that our franchisees share this commitment,” the company said.

The company also disclosed a new initiative that will engage outside experts to work with the company to help “evolve” those policies and procedures. Some of the experts would come from an employment law training firm and an anti-sexual violence organization.

Labor lawyer Mary Joyce Carlson, who has been collaborating with women who filed the EEOC complaints, says the company needs to back up such gestures with tougher enforcement.

“We see no evidence there’s been any change at all,” she said. “Whatever policy they have is not effective.”

Organizers of the planned walkout say strikers will be demanding that the company improve procedures for receiving and responding to harassment complaints, and require anti-harassment training for managers and employees. Another demand will be formation of a national committee to address sexual harassment, comprised of workers, representatives from corporate and franchise stores, and leaders of national women’s groups.

Carlson is an attorney for Fight for $15, a national movement seeking to increase the minimum wage to $15 an hour. She said McDonald’s has successfully resisted efforts to unionize its employees, and suggested that workers’ anger related to sexual harassment might fuel broader efforts to gain better working conditions.

Among the strike organizers is Tanya Harrell, 22, of New Orleans, who filed a complaint with the EEOC in May alleging that her two managers at a local McDonald’s teased her, but otherwise took no action after she told them of sustained verbal and physical harassment by a co-worker. Harrell, who makes $8.15 an hour, said she and many of her colleagues were skeptical of the company’s commitment to combating harassment.

“They want people to think they care, but they don’t care,” she said. “They could do a way more better job.”

Another organizer is Kim Lawson, 25, of Kansas City, who also filed an EEOC complaint alleging that managers responded ineffectively when she reported sexual harassment by a co-worker.

Lawson, who has a 4-year-old daughter, says she makes $9 an hour. She is heartened by strong support from other workers for the planned walkout.

“Everybody’s been brave about it,” she said. “It’s time to stand up for what we believe in.”

Thus far, the nearly year-old #MeToo movement has not triggered a strike targeting a specific U.S. company. Last March, on International Women’s Day, there were broad-based calls for women to stay away from work in several countries, notably in Western Europe.

Annelise Orleck, a history professor at Dartmouth College who has written about low-wage workers, said she knows of only one precedent in the United States to the planned McDonald’s walkout.

In 1912, she said, several hundred garment workers at a corset factory in Kalamazoo, Michigan, walked off the job in a strike prompted by pervasive sexual harassment, as well as other poor working conditions. The strikers did not win all of their demands, but succeeded in winning public support and drawing attention to workplace abuses.

Starbucks Debuts in Italy, Betting New Roastery Will Win Over Espresso Aficionados

(MILAN) — Starbucks is opening its first store in Italy, betting that premium brews and novelties like a heated marble-topped coffee bar will win customers in a country fond of its daily espresso rituals.

Decades ago, Milan’s coffee bars inspired the chain’s vision. Now Starbucks is hoping clients will visit its new store, called the Reserve Roastery, to watch beans being roasted, sip coffee or enjoy cocktails at a mezzanine-level bar in a cavernous, former post office near the city’s Duomo, or cathedral.

Starbucks chief design officer Liz Muller told The Associated Press earlier this week that the company’s “not coming to Italy to teach people about coffee. This is where coffee was born.”

Instead, Muller said, Starbucks “wanted to come and bring a premium experience that is different to what people in Italy are used to.”

She described that formula as including “many different brewing techniques and a space where we want you to stay longer and relax and enjoy.”

In Italy, an espresso at a coffee bar is usually a quick morning or after-lunch ritual performed standing up. In many neighborhoods, cafes are practically on every corner, and Italians are on a first-name basis with their trusted barista.

Italy is Starbucks‘ 78th global market, and the Milan opening comes 20 years after Starbucks opened its first store in Europe, in London. The company has described the Milan store as “the crown jewel of Starbucks global retail footprint.” It says it plans more cafes for Milan later this year.

Milan is the first place where Starbucks has opened a store in its Roastery format in untested territory. It opened a Roastery in Seattle, the U.S. city that is home to its corporate headquarters, in 2014, and a second one in Shanghai last year.

Italians are used to marble counters for coffee bars, but Starbucks boasts that it outfitted its counter tops in the Milan store with heating so they won’t feel stone cold on chill days. The centerpiece of the Milan store is a 6.5 m (22 ft.) high bronze cask, part of the roasting process.

The company also hopes the store’s cocktail bar will be an attraction: Many who work in Milan, Italy’s fashion and financial capital, cherish the tradition of meeting friends or colleagues for an “aperitivo,” or pre-dinner cocktail, often in cafes.