Sears, a symbol of US department stores, warns it may fail
Company has lost more then US$10 billion the past few years
Sears Holdings Corp. acknowledged “substantial doubt” about its ability to keep operating, raising fresh concerns about a company that has lost more than US$10 billion in recent years.
The retailer added so-called going-concern language to its latest annual report filing, suggesting that weak earnings have cast a pall on its future as a business.
“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” the Hoffman Estates, Illinois-based company said in the filing. But the company added that its comeback plan may help mitigate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements.”
The disclosure comes after more optimistic signs from the company, which has been working on a turnaround under Chief Executive Officer Eddie Lampert. Sears posted a narrower loss than predicted in the fourth quarter, and it has pledged to lower its debt burden and cut annual expenses by at least US$1 billion.
Lampert, a hedge fund manager who is also Sears’s biggest investor, aims to reduce debt and pension obligations by US$1.5 billion. The CEO has helped keep the ailing retailer afloat by offering more than US$1 billion of assistance, including a US$500 million loan facility announced in January.
As part of its comeback plan, Sears had closed stores, sold real estate and offloaded businesses. Earlier this month, the department-store chain completed the sale of its Craftsman tool brand to Stanley Black & Decker Inc. for about US$900 million.