It hired boutique advisory firm M-III Partners LLC, the Wall Street Journal reported late yesterday, citing people familiar with the situation it didn't identify.
The world's largest retailer in the 1960s, Sears sold everything from toys to auto parts to mail-order homes and was a key tenant in nearly every big mall across the United States.
Sears shares are down 35 percent this morning and trading at 38 cents a share.
"The problem in Sears case is that it is a poor retailer", said Neil Saunders, Managing Director of GlobalData Retail, in a Tuesday research note, where he wrote that he wasn't surprised the retailer was preparing for a possible bankruptcy filing. Sears Canada declared bankruptcy previous year.
Business Insider reported on Wednesday that Sears' top spokesman, Chris Brathwaite, jumped ship just days ago after more than a decade working at the company. Sears is facing a debt repayment of $134 million on Monday, although one option would be for its CEO, the billionaire investor Edward Lampert, to make the payment and rescue the company from bankruptcy, the Journal noted. His history of financial engineering at Sears for more than a decade through deals tied to his hedge fund ESL Investments Inc could now be subjected to new scrutiny by Sears' creditors in bankruptcy court, according to the sources.
If Sears were to file for bankruptcy, its financial performance during the upcoming holiday season could prove crucial in determining its future, according to the sources.
Sears acquired discount chain Kmart in an $11 billion deal engineered by Lampert in 2004. In just the last few years RadioShack, Toys "R" Us and Sports Authority have all followed the path to the retailer graveyard.
Hedge fund manager Edward Lampert, who serves as Sears' chairman, CEO, largest shareholder, and biggest creditor, announced an attempt at restructuring the company's debt on September 24.
Sears and Kmart have lost more than $11 billion since 2011, and their annual sales have dropped almost 60 percent in that period to $16.7 billion, according to the report.