Sears CFO says the company's outlook not as dire as you think

Marco Green
April 1, 2017

But its once-proud brands have mostly been forgotten by the modern American shopper.

Sears executives said they are trying to raise cash by financing debt and selling off real estate, but warned that those efforts may not be successful. Merchandise inventories as of January 28 fell to $4 billion, compared to $5.2 billion as of January 30, 2016, while merchandise payables dropped to $1 billion this year from $1.6 billion last year.

The company, which hasn't turned a profit since 2011, now has about $13.9 billion in liabilities. Its losses since that time amount to $ 10.4 billion.

The chain has cut its retail stores in the United States by almost a third since 2013 to 670 and has placed some of its stores in a real estate investment trust. The company reached a deal on January 5 to sell its Craftsman brand to Stanley Black & Decker for an upfront price of $900 million. The company reiterated in Tuesday's report its moves to improve its customer experience, including a new Sears MasterCard with enhanced Shop Your Way loyalty rewards, an expanded partnership with Uber to boost rider rewards, mobile capabilities to enhance its Home Services operations and new services in its Auto Center business.

"This revelation in their annual report that they may not be able to continue as a going concern is really just another step towards what is inevitably going to be a financial collapse", said Mark Cohen, former CEO of Sears Canada and director of retail studies at Columbia Business School.

"In line with these initiatives, despite the risks outlined, we remain confident in our financial position and remain focused on executing our transformation plan", read the blog post.

As for Kmart, which Sears also owns, Perkins does not see much of a future.

There are 735 Kmart stores in the USA, as well as 670 Sears stores and 25 specialty stores. Sears Holdings employs about 140,000 people nationwide.

Even that doesn't tell the full picture of the decline.

Their difficulties in integrating online and in-store sales while offering products consumers want have prevented the one-time leaders of United States retailing from capitalising on the 15-year high in consumer confidence that has lifted ecommerce retailers led by Amazon and newer specialist retailers such as beauty store Ulta.

The death of Sears, while not imminent, brings to a close a significant chapter in American history. It filed for bankruptcy in 2002 shortly before Sears merged with its remains.

Just in the previous year, Sports Authority and The Limited have closed, and RadioShack and American Apparel are both in their second bankruptcies and in danger of shutting down.

Both Jenkins and Berry said since the recent announcement that a Slumberland furniture store would be coming to the mall at the west end site that formerly housed a J.C. Penney store, there has been a renewed interest in the mall by retailers. Sears lost out to its direct competitors as well as the explosive growth of e-commerce. 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. No information was available from a Kmart spokesman at the Quincy store, who deferred all questions to Sears Holdings headquarters in Hoffman Estates.

Last year, Sears reduced the size of many of its locations - including the one in the Staten Island Mall in New Springville - by entering into an agreement with Dublin-based Primark to lease several of its stores. Sears, which also owns Kmart, targets $1 billion in cost cuts and a $1.5 reduction in the company's debt and pension obligations.

Other reports by Click Lancashire

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