Sears and Kmart owner says 'substantial doubt' it can stay in business
The company that operates Sears, the department store chain that dominated retail for decades, warned Tuesday that it faces a “substantial doubt” about its ability to stay in business unless it can borrow more and tap cash from more of its assets.
“Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern,” Sears Holdings says in a filing with the Securities and Exchange Commission. Sears Holdings operates both Sears and Kmart stores.
While it said it working on finding ways to mitigate that doubt, it said that it can't be sure that it will be able to raise the cash to keep going.
Sears locations in southwestern Pennsylvania include South Hills Village in Bethel Park; the Westmoreland, Cranberry, Ross Park and Indiana malls; The Mall at Robinson and Washington Crown Center, according to information on the company's website. About 14 Kmart stores operate in the region.
Sears initiated a $1 billion restructuring program in February, which included proceeds from closing stores. Last month, it completed the sale of one of its most valuable brands, Craftsman tools to Black & Decker.
“We acknowledge that we continue to face a challenging competitive environment,” Sears said in the filling. But it's bleeding cash: It says that after its 2016 loss, it had to finance its cash needs for operating expenses from “investing and financing activities.”
The company said it lost $607 million, or $5.67 per diluted share, during the quarter that ended on Jan. 28. That compared with a loss of $580 million, or $5.44 per diluted share, a year earlier. It has posted a loss in all but two of the last 24 quarters, according to S&P Global Market Intelligence.
Revenue slid to $6.1 billion during the fourth quarter, from $7.3 billion a year earlier. The dip was largely due to the reduced number of both Sears and Kmart full-line stores, which led to a revenue loss of $596 million. Sales at stores open at least a year also plummeted 10.3 percent, representing a loss of $555 million in revenue.