With the future of Sears and Kmart a hot topic of conversation among housewares vendors and others throughout the retail community, the parent company of the two venerable retailers is casting doubt on their future.
In its annual report, Sears Holdings said that its historical operating results indicate “substantial doubt” over the company’s ability to continue.
Following an outline of several steps the company has taken to raise cash and improve liquidity that includes store closures, selling of brands such as Craftsman and securing loans, the company wrote, “We believe that [these]actions … are probable of occurring and mitigating the substantial doubt raised by our historical operating results and satisfying our estimated liquidity needs 12 months from the issuance of the financial statements.
“However, we cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional debt financing, or whether such actions would generate the expected liquidity as currently planned.”
The company said if it continues to experience operating losses and are unable to generate additional liquidity, it might not be able to access additional funds under the company’s amended domestic credit agreement. This would impact access to inventory or key services needed to run its business.
In a five-year period from 2012 to 2016, company-wide sales have fallen from $39.85 billion in 2012 to $22.14 billion in 2016. Comparable store sales in 2016 were down 7.4%.
