Sears Holdings (NASDAQ:SHLDQ) recently filed for bankruptcy protection and announced that it will close nearly 200 stores by the end of the year. Sears still hopes to operate at least 400 stores going forward, but their fate remains uncertain as the company undergoes a painful restructuring to alleviate its billions of dollars in debt.

Sears' bankruptcy was telegraphed years ago, as the retailer struggled with declining mall traffic and intense competition from superstores and (NASDAQ:AMZN). Between fiscal 2007 and 2017, Sears' annual revenue plunged from $50.7 billion to $16.7 billion, and analysts were expecting another 26% drop this year.

Moves such as cutting costs, closing stores, and divesting assets failed to right the sinking ship, and CEO Eddie Lampert blew billions on buybacks instead of reinvesting the cash into Sears Holdings' struggling stores or expanding its e-commerce presence. By the end, Sears was a hollowed-out shell of its former self.

The outside of a Sears store.

Image source: Sears.

On the bright side, Sears' downfall could lift other struggling brick-and-mortar retailers. Here are the top three companies that might see a sales boost: J.C. Penney (OTC:JCPN.Q), Kohl's (NYSE:KSS), and Macy's (NYSE:M).

1. J.C. Penney

J.C. Penney is often compared to Sears, but the former is in much better shape than the latter. J.C. Penney still operates more than 860 stores in the United States and Puerto Rico, and the company can easily cover the current maturities on its long-term debt. Unlike Sears, which struggled with double-digit comparable store sales declines for years, J.C. Penney expects its comps to stay roughly flat this year.

However, J.C. Penney also faces slow mall traffic and lacks a meaningful moat against Amazon and Walmart. Amazon's recent moves into private-label apparel represent a particularly notable long-term threat to J.C. Penney's apparel sales. J.C. Penney has also struggled with a series of C-suite departures -- which briefly left the company without a CEO or CFO -- before Jill Soltau filled the CEO position earlier this month.

The outside of a JCPenney store with an empty parking lot.

Image source: J.C. Penney.

Despite those challenges, J.C. Penney should inherit many of the customers that Sears and Kmart will leave behind. Many JCPenney stores are located in the same shopping complexes as Sears stores, and the retailer's focus on home goods (spearheaded by former CEO Marvin Ellison) might attract some Sears shoppers.

2. Kohl's

Kohl's is faring much better than Sears or J.C. Penney in the low-end retail market. The diversified retailer has posted positive comps in each of the past four quarters, and anticipates 0.5% to 2% comp sales growth for the full year.

Last quarter, Kohl's attributed its ongoing growth to robust demand for men's, women's, and children's apparel, footwear, and accessories -- which offset a slight decline in sales of home goods. It also stated that its focus on speed, product localization, and inventory reductions boosted store traffic and drove gross margin expansion.

Kohl's operates over 1,100 stores in the U.S., and it saw sales growth across all regions last quarter. Sears lists Kohl's as one of its primary competitors, so the closure of nearly 200 Sears locations could send more customers to Kohl's stores.

3. Macy's

Macy's has posted positive comp sales growth for the past three quarters. For the full year, it expects its comps to rise 2% to 2.5%, including licensed departments. That's a pretty rosy outlook relative to its industry peers.

A Macy's store sign viewed up from street level.

Image source: Macy's.

Last quarter, Macy's reported strong sales across its namesake, Bloomingdale's, and Bluemercury stores. It also benefited from the ongoing expansion of its Backstage off-price concept. The company operates about 690 Macy's and Bloomingdale's stores, and over 170 specialty stores like Bloomingdale's Outlet, Bluemercury, and Macy's Backstage. Macy's also expects the continued expansion of its mobile ecosystem to boost its mobile sales past $1 billion (4% of its revenue) this year.

The only soft spot for Macy's recently has been its mattress business, which could absorb some of Sears' mattress sales. Macy's is generally considered a higher-end retailer, while Sears targets the lower-end market, but the two retailers still have customer overlap in the mid-range market. The Macy's Backstage off-price business could also benefit from Sears' bankruptcy.

But let's not jump to conclusions...

Sears' bankruptcy might help J.C. Penney, Kohl's, and Macy's, but the gains will likely be incremental. Moreover, Amazon or Walmart could simply absorb most of Sears' lost customers and leave other retailers fighting over the leftovers. Therefore, investors should view Sears' downfall as a tailwind for its rivals, but they shouldn't overestimate the potential benefits.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.