Sears, once the largest retailer in the world, could be forced to liquidate. Here's how it got there

  • Sears has until 4 p.m. ET on Friday to secure bids for the company to save it from liquidation after filing for bankruptcy in October.
  • Chairman Edward Lampert and his hedge fund, ESL Investments, outlined a plan earlier this month to buy up the rest of Sears for up to $4.6 billion in cash and stock. However, sources told CNBCthat as of Thursday afternoon Lampert had not submitted his bid or rounded up financing.
  • Sears has been losing money and closing stores for years. Many employees and analysts blame Lampert for the retailer's decline.
  • These photos show how Sears went from being the largest and most prominent retailer in the United States to the struggling company that it is today.

Sears is hours away from possible liquidation.

The century-old department-store chain has until 4 p.m. ET to secure a bid for the company, without which it faces closing down completely.

Sears chairman Edward Lampert and his hedge fund, ESL Investments, outlined a plan earlier this month to buy up the rest of Sears for up to $4.6 billion in cash and stock. However, sources toldCNBC that as of Thursday afternoon Lampert had not submitted his bid or rounded up financing. Despite this, sources said that it could be possible that he meets the deadline.

A spokesperson for ESL Investments declined to comment to Business Insider.

Sears filed for bankruptcy in October and announced that Lampert would be stepping down as CEO.

"Over the last several years, we have worked hard to transform our business and unlock the value of our assets," Lampert said in a statement to the press at the time. "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."

Since then, American consumers have been lamenting the loss of what was at one point the world's largest store and considered to be an early innovator of the shopping landscape.

Keep scrolling to see the story of its downfall in photos:

23 PHOTOS
The rise and fall of Sears
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The rise and fall of Sears

Sears started off as a mail-order catalog company selling watches and jewelry in 1888. It became the largest catalog company in the United States after expanding its assortment. 

Photo credit: AP

In the 1920s, as catalog shopping started to fade out, Sears adapted to the changing times and opened stores. According to Investopedia, sales at its stores outpaced catalog sales by 1931. 

Photo credit: AP

The company grew from being only a retailer to offering financial services, including setting up an insurance arm with Allstate and acquiring various financial brokerage firms. 

It also began rolling out its own brands such as Craftsman, DieHard, and Kenmore.

Its dominance in the retail sector began to fade in the 1970s as lower-priced stores such as Target, Kmart, and Walmart gained momentum. By 1991, Walmart had taken Sears' place as the largest retailer in the country. 

Photo credit: Sears, Roebuck & Co. unveiled their "Store of the Future" in King of Prussia, Pennsylvania, on July 21, 1983  AP Photo/David Fields  

Source: Business Insider

Over the course of the 1990s, Sears started shedding its financial and insurance businesses and discontinued the catalog. 

 Photo credit: A Sears catalog for boy's clothing, 1989. MySpace

In 2003, Sears sold its credit-card business to Citigroup in order to focus exclusively on retail. The credit-card business had outgrown the core retail operation and accounted for 60% of its annual profits at the time. 

Photo credit: AP Photo/Mary Ann Chastain

Source: The New York Times

However, the chain was increasingly coming under pressure as shopping shifted online, and it failed to adapt. 

In 2004, it announced that it would merge with low-cost retailer Kmart.

The deal was masterminded by Lampert, who was chairman of Kmart at the time and owned a 50% stake in its business through his ESL Investments hedge fund. He was also the largest shareholder in Sears at the time, with a 15% stake.

Lampert then became chairman of Sears Holdings, the combined company.

In 2004, BusinessWeek speculated that Lampert would become the next Warren Buffett. 

Photo credit: Getty Images 

In its first year as a combined company, sales rose. 

Photo credit: AP Photo/M. Spencer Green

Source: Investopedia

However, for the next nine years, they dropped.  

Photo credit: AP Photo/Paul Sakuma 

In 2013, Lampert became CEO of Sears Holdings. 

The company's revenue declined substantially from $36.2 billion in fiscal 2013 to $25.1 billion in fiscal 2015.

In 2016, 24/7 Wall St reported that Lampert was the most hated CEO in the US, based on ratings and employee satisfaction reviews from Glassdoor. 

Photo credit: AP 

As sales continued to fall, Sears started to shut down stores, sell real estate, and spin off brands. 

Lampert thought he could turn around both companies by cutting costs and selling the real estate where underperforming stores were located. 

Photo credit: Getty/Scott Olson 

In interviews with Business Insider's Hayley Peterson in 2016, employees blamed Lampert for the downfall of the company. 

They said that Lampert rarely spent time at its headquarters. 

Photo credit: Business Insider/Hayley Peterson

Lampert stopped investing in stores. "He refuses to put a dime in updating stores," one former vice president told Business Insider. 

Stores were severely understaffed, with some operating on less than half of the employees they needed, workers said.

Instead, he banked on Shop Your Way, a rewards program that enabled frequent buyers to accumulate points for their purchases and turn them into coupons and discounts. This complicated program backfired as it created massive lines at checkouts and angered customers. 

Photo credit: Business Insider/Hayley Peterson

Its stores were left to crumble. 

Photo credit: Business Insider/Hayley Peterson

Rotting ceilings were spotted in stores Business Insider visited. 

Photo credit: Business Insider

Suppliers canceled contracts ...

Photo credit: Business Insider/Hayley Peterson

... which left many stores looking empty.

Photo credit: Business Insider/Sarah Jacobs

Several high-level executives left the company. 

"There are so many people running for the door not just because the ship is sinking, but because the captain of the ship is screaming at them, blaming it on them, and telling them it's their fault," one former vice president told Business Insider in 2016

Photo credit: Business Insider/Hayley Peterson

Hundreds of stores closed. Between 2013 and this October, its store count dropped from 1,980 to 687, according to the company. 

Source: Business Insider 

Photo credit: Business Insider/Hayley Peterson

Lampert kept the company afloat by bailing it out with billions of dollars of loans from his hedge fund ESL Investments. 

Photo credit: Business Insider/Hayley Peterson

In October, the company announced it had filed for Chapter 11 bankruptcy and would close 142 stores before the end of the year. 

Lampert stepped down as CEO of the company but stayed on as chairman of the board. 

Photo credit: Business Insider/Hayley Peterson

The remaining stores stayed open for the holiday season. Earlier this month, Sears Holdings reported positive same-store sales growth for Sears and Kmart during the third quarter after several years of declining sales. 

However, it saw revenue decline by millions of dollars. Total revenue was $2.74 billion during the most recent quarter, down from $3.58 billion in the same period the year before. This decline was partly due to store closings. 

Photo credit: Business Insider/Hayley Peterson

The company is now waiting to hear if Lampert's bid will come through. 

Sources familiar told CNBC that ESL Investments is the only party offering to buy Sears as a whole. Without this, Sears will likely be split up by the liquidators.

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