Sears Holding Corp. (SHLD) stock is plummeting in pre-market trade on Wednesday, down 12.20% following the former retail giant’s annual report. The report states, “Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern.”
The company’s annual report shed more doubt on the company, as the inability to procure services and new merchandise is probable with the company’s inability to generate liquidity. The company states that continued losses may cause a risk of the company not being able to procure new funds under their credit agreement.
Sears Holding Corp. (SHLD) to Reduce Debt
Sears Holding Corp. (SHLD) stated a month ago that the company aims to reduce debt by $1 billion while reducing pension obligations by $1.5 billion or more.
Sears lost $2.22 billion last year and $7.4 billion since 2013. The company’s revenue is down 44% during the same period to $22.1 billion. Total liabilities are $13.19 billion. The company has sold off several brands and reduced the number of U.S. stores by a third.
The company is considering selling off some of its key businesses, including the DieHard battery brand and Kenmore appliances.
Sears created a real estate investment trust years ago to alleviate initial costs. The company’s chief executive, Edward Lampert, a billionaire hedge fund owner, helped raise debt for the company and owns 10% of the Sears REIT.
Lampert came to the company during the Kmart merger in 2004 and reaffirms that Sears will regain its retail success by focusing on profitable sales and closing struggling stores. The company’s last annual profit was in 2011.
Sears may have enough liquidity to remain active in 2017 following the $900 million sale of the Craftsman tool brand. The company’s agreement with the pension board requires a $250 million payment by 2020 and a lien on revenue owed to Sears from future Craftsman product sales.
Anthony Young
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