Sears issues dire warning about its ability to survive
The fat lady is singing at Sears Holdings Corp.
The long-struggling retailer said on Tuesday that there was “substantial doubt” that it could stay in business.
“Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern," Sears said in a filing with the Securities and Exchange Commission. In the filing, its annual report for the period ended January 28, 2017, Sears reported a $2.2 billion loss for the year. Its long-term debt as of January totaled nearly $4.2 billion,
In the report, the retailer cited its efforts to cut costs, sell property, tap new funding sources and make other moves to lessen the continuing flow of red ink. But with revenue in a steep decline, it said it had to use money from its investments and other activities to fund operations.
Sears, once the nation’s largest retailer, said an inability to generate additional liquidity might limit its access to new merchandise or its ability to procure services.
Sears’ fortunes have been in decline for years amid its seeming inability to respond effectively to the rise of more nimble competition, both online and in the physical space. The company has lost a total of almost $10 billion over the last six years. It has not reported an annual profit since 2011.
The chain has been selling off real estate and some of its other assets, including most recently its Craftsman tool brand, to raise cash. Sears has also borrowed money from the hedge fund of its chief executive, Eddie Lampert, and refinanced much of its debt.
Sears has been steadily reducing its store fleet over the last several years. In December, it announced plans to close 42 namesake s stores and 108 Kmart outlets. It currently has less than 1,500 stores, down from some 3,500 in 2010.
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