As of Thursday, March 23, 2017
The worlds of Sears Holdings Corp. investors and shoppers were rocked this week when the parent company to Sears and KMart issued an annual report noting that there was “substantial doubt” on the Chicago-area company’s future.
“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” a Sears statement said in a filing with the Security and Exchange Commission.
The bombshell statement follows a tough 2016 holiday season and declining business during 2016. Business for Sears’ domestic stores decreased by $1.5 billion to $13.5 billion in 2016 compared to 2015. Same-store sales declined by 9.3 percent due to declines in sales of appliances, apparel and consumer electronics, according to financial statements.
Sears stock tumbled around 12 percent by the close of market on March 22, according to Yahoo Finance. Later that day, Sears Holdings Chief Financial Officer Jason Hollar sought to calm fears in a blog post. He noted that SEC documents require that public companies disclose all potential risks to investors.
The blog noted that Sears Holdings remains a “viable business that can meet its financial and other obligations for the forseeable future,” Hollar said. Earlier this year, Sears increased its liquidity by $1 billion through a secured loan facility. The company also announced an asset-based credit facility that provided an additional $250 million.
In February, it unveiled a strategic transformation program that plans to simplify the company’s organization structure, use data analytics to improve its merchandise mix and seek to cut its massive real estate portfolio. In 2016 it closed 206 Kmart stores and 37 Sears stores in America.