Sears plunges 11% after citing 'substantial doubt' about its future
- Author: Zachary Reyes Mar 31, 2017,
Mar 31, 2017, 7:55
Company shares, which hit an all-time low last month, tumbled more than 13 percent Wednesday.
However, Hollar said the quoted comments "are in line with regulatory standards that require management to assess and disclose potential risks", he wrote.
The company - which is steered by Eddie Lampert, the billionaire hedge fund investor who owns about 48 per cent of Sears through a number of affiliates - attempted to allay concerns by adding that it believes the execution of its restructuring plans should help it mitigate this doubt over the next 12 months.
Sears's popular catalogue became an emblem World War II of the consumer explosion throughout the U.S., however the company has been unable to adjust to changing times and higher competition, especially from companies such as Wal-Mart Stores, Target Corp and more.
Sears Holding Corp, at one time the largest retailer in the US, warned Tuesday over its ability to continue after years of suffering declining sales and losses.
"We've been ahead of the ballgame, and we've been fortunate that a lot of Sears in our different shopping centers have not closed". In 2004, it merged with another iconic department store, Kmart and Sears Holdings became the third largest retailer.
Sears Holdings Corp. raised concerns about its ability to continue operations in its annual 10-K filing with the federal government. In its latest fiscal year, Sears' comparable store sales - those of stores open at least a year - fell 9.3 percent from the prior year, and Kmart's comparable sales fell 5.3 percent.
The question is whether Sears and Kmart will be able to draw more shoppers.
"As the store experience further declines, and everyone reads the headlines about the brand going downhill, it takes whatever value the Sears brand still has with consumers and totally detracts from that", said Denise Lee Yohn, a brand expert.
During the previous year, Sears cut 25 full-line stores and 1 specialty store, leaving it with 695 stores in the U.S. Kmart closed 206 stores, leaving that chain with 735 stores.
Lampert owned almost 10 percent of the REIT that paid Sears $2.6 billion in 2015 for the stores it purchased, many of which were then leased back to the retailer.
But in a filing on Tuesday it also makes clear that additional asset sales could prove problematic.
As part of the Craftsman sale, Sears Holdings reached an agreement with the Pension Benefit Guarantee Corp.
But the company can not expect this plan to work.
The company has taken actions during the year to boost liquidity, including the $900 million USA sale of the Craftsman tool brand to power tool maker Stanley Black & Decker Inc early this year, could satisfy its capital needs for the current fiscal year.
Sears said it continues to face a challenging competitive environment and had to fund operating activities with cash from its investing and financing activities.