Published: Thu, March 23, 2017
Health Care | By Gwendolyn Kim

Sears and Kmart might not have enough money to stock their shelves


"Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern", Sears said in a statement.

Sears's forewarning comes after more optimistic signs from the company, which has been working on a turnaround under Chief Executive Officer Eddie Lampert.

Sears Holding Corp. said "substantial doubt" clouds the future of the Hoffman Estates-based company, which has seen revenues and assets plummet in recent years.

Sears has upped its presence online, but is having a hard time disguising its age. Similarly, its revenue of $310.43 million came in above expectations by $12.01 million.

Sears or Sears, Roebuck and Company as it was formally known has been a "fixture" in mainstream society for more than 130 years.

Already, the pension board agreement requires Sears to make a $250-million cash payment to its pension plan three years after the consummation of the Craftsman deal, and the pension board has a 15-year lien on revenue owed to Sears from future sales of Craftsman products.

Sears Holdings Corp's disclosure that it could lack the financial strength to continue as a going concern is turning attention to the key difference maker for any cash-strapped retailer: vendors.

"They've got all kinds of issues", said Noel Hebert, an analyst at Bloomberg Intelligence. He said he noticed a warning sign a year ago when Sears pushed to increase its purchases, which occurred "because a lot of their current suppliers were either cutting them off or limited them on credit".

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Three other retail locations that Sears Holdings owns in SC also are going dark.

Landlords are now looking at splitting up Target locations for multiple retailers, rather than replacing Target with just one merchant, although chopping up the space for multiple players can be costlier, said consultant Mr. Williams.

In its annual report for the fiscal year ended January 28, the parent company of Sears and Kmart stores said "Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern".

In 2012, the company reported almost $20 billion in total assets with more than 2,500 stores open. Investors who are keeping close eye on the stock of Sears Holdings Corporation (NASDAQ:SHLD) established that the company was able to keep return on investment at -42.01 in the trailing twelve month while Reuters data showed that industry's average stands at 13.25 and sector's optimum level is 10.69.

Additional asset sales could prove problematic, according to Sears' filing.

In March, Sears Holdings sold the Craftsman tool brand for $775 million: it had long-term debt of more than $4 billion as of earlier this year.

The company said it could not predict with certainty the outcome of its actions to generate liquidity.

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