Posted on 03/22/2017 6:47:54 AM PDT by Red Badger
After years of huge losses and store closings, the future is officially in doubt for Sears and Kmart.
Sears Holdings, the holding company for the two iconic retail brands, warned investors late Tuesday that it can’t promise it will stay in business.
It included the language in its annual report while insisting it might still turn things around.
“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” said the statement.
Sears Holdings said it can’t be sure it can raise the cash it needs through loans and debt financing. The company owes $4.2 billion, up from about $3 billion a year ago.
The company lost $2.2 billion in the fiscal year ending in January and has not turned an annual profit since 2010. Its losses since then total $10.4 billion.
Sears Holdings said its ability to sell assets, such as stores and store leases, could be limited because it needs those assets to pay for pension plans. In January, Sears sold its Craftsman brand of tools to Stanley Black & Decker. It is looking to sell Kenmore appliances and Diehard auto parts.
Sears Holdings has been in trouble almost since the 2005 merger that joined the two department store brands.
At the start of 2006, it had 3,400 U.S. stores and 370 more in Canada that it has since sold. By the end of this January, it had only 1,400 stores left, all in the United States. The company still has 140,000 employees, but that too is down sharply from the 355,000 it had in 2006.
Even that doesn’t tell the full picture of the decline.
Sears was once the nation’s largest retailer and business employer, both the Walmart and Amazon of its time. Its groundbreaking catalog business was how many Americans learned to shop from home for a large variety of items they wanted.
And it developed an extensive store network that helped furnish homes as Americans moved to the suburbs after World War II. It also caused trouble for small, locally owned shops.
The company at one time grew to include not just the retail business but a bank, a brokerage, a real estate company and what was then the world’s tallest building, the Sears Tower, for its Chicago headquarters.
But Sears began to suffer from competition from low-price competitors such as Walmart, and big-box stores such as Home Depot. It lost its place in the Dow Jones index of the nation’s most important companies in 1999.
Then came growing competition from Amazon and other online retailers. Analysts said Sears Holdings did little to invest in either the Sears or Kmart brand, instead trying to cut its way back to profitability by trimming advertising and closing stores.
It announced plans to close 150 more stores in January, and its stock hit a post-merger low in February. Then the stock rebounded when the company announced a deal with creditors to borrow $140 million more and cut at least $1 billion in operating costs a year, along with reducing its debt and pension obligations by $1.5 billion.
The “going concern” warning sent shares down 5% in pre-market trading Wednesday.
When we went shopping, mom always let me and my sister get a bag of cheese popcorn at Murphy’s.
We always asked, but she never ever let us have the caramel popcorn.
WalMart, Sam’s, Costco, Goodwill, Salvation Army.......................
They used to have quality items. Now most of it is just junk like everyone else sells.
Retailers come and go. Whatever Sears has to sell can be obtained from many other retailers.
Bad for your teeth.................
Add to your list Kresge & Woolworths. You either learn how to eat lunch or you are lunch.
Yawn should have gone out years ago!!
Do it already!
“another business a victim of Obamanomics.”
I disagree having been a supplier to Sears and KMart for several decades. Both companies were mismanaged for decades. Since the early 2000’s they’ve been owned by Eddie Lampert, a Wall Street “investor” who has effectively milked the real estate and cash out of the company through successive downsizing and restructurings.
Sears is the story of a once great company plundered by financial manipulators who lined their pockets at the expense of suppliers, employees and loyal customers. Consider with visionary leadership and investment the once dominant Sears catalog and mail order business could leveraged emerging technologies and millions of loyal middle class customers to become what we know today as Amazon.com. Instead the catalog business was shut down by the beancounters and the executives earned multimillion dollar bonuses by shedding the assets.
The industrialists and capitalists who built the US economy into the world’s greatest were independent visionaries and creators. The MBA’s, lawyers, and financiers who have destroyed the US economy over the past 30 years are self centered plunderers, financial manipulators, and destroyers allied with big government. Sears will be just another gravestone recording what was once great about America.
“Sears sold its Craftsman brand of tools to Stanley Black & Decker. It is looking to sell Kenmore appliances and Diehard auto parts.”
Those are abstractions, aren’t they? Sears has never designed or manufactured anything.
I’m not criticizing Sears’s strategy of putting their brand on certain things, but they can’t depend on an abstraction to survive in the long run.
I used to stop at the hot nuts kiosk entering Sears and get a 1/4 lb. of cashews to munch on while we window shopped.
So I’ve heard.
Eddie Lampert is clueless.
He made KMart briefly profitable by selling off high priced real estate that KMart owned. After the high priced real estate ran out, he drove them into the dirt.
I knew the wonderboy wasn’t such a wonderboy from day one. It was all about manipulation of the financials.
Wonder how much higher minimum wages contributed to this....
This week Payless Shoes said they will declare bankruptcy. I don’t have the complete list, but they are among a substantial and growing number of bankrupt retailers. Fact is that online shopping is gradually killing physical retail stores, just as online news is gradually killing newspapers and broadcast news. In fact, the Internet is changing pretty much every form of business, work, and entertainment. We are slowly returning to the time when most people worked and studied at home, only this time it won’t be farming, but online work, education,and shopping. I think on balance this is a good thing.
Sears tools used to be the best. If it broke they would replace it. Craftsman was superlative. But that is a thing of “the good old days”. Sorry to see another “ain’t dare no mo”
Sears, like Montgomery Ward is an outdated model.
Bravo! Well said, the takers are killing the makers.
Nice post.
There is an evolution of companies like you describe.
Sears did a lot for this country.
Sears was insolvent two years ago. But two years ago, they could have sold their building to make the pensioners whole. Instead, they sold the buildings to an affiliated company, just to burn through another $2.5 billion, and leave the pensioners with 50 cents on the dollar, some of which will be picked up by the taxpayers, while many Sears retirees will live in poverty.
Still, it’s better than Illinois, with some state pension plans at 13 cents on the dollar. But that’s the legislative pension fund, so I’m sure the legislators will legislate to shovel more bucks at their problem.
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