Sears has ‘substantial doubt’ about its survival in the U.S.
NEW YORK — Sears, a back-toschool shopping destination for generations of kids, has said that after years of losing money that there is “substantial doubt” it will be able to keep its doors open. But it also insisted that its actions to turn around its business should help reduce that risk.
It was still a dramatic acknowledgment from the chain that owns Sears and Kmart stores, which has long held fast to its stance that a turnaround is possible, even as many of its shoppers have moved on to Walmart, Target or Amazon.
Sears has survived of late mainly with millions in loans funnelled through the hedge fund of chairman and CEO Edward Lampert, but with sales fading it is burning through cash. Sears Holdings Corp. said late Tuesday it lost more than $2 billion US last year, and its historical operating results indicated doubt about the future of the company that started in the 1880s as a mail-order catalogue business.
At a largely empty Sears store in St. Paul, Minnesota, where the available parking far outstripped the number of cars in the lot, 85-year-old Jack Walsh and his 82-year-old wife, Mary Ann, said they have shopped at Sears their entire lives, buying items from curtains and window treatments to tires and tools.
“I bought my tools from Sears and I’ve still got them,” Jack Walsh said.
The company known for DieHard batteries and Kenmore appliances has been selling assets, most recently its Craftsman tool brand.
But it says pension agreements might prevent the sale of more businesses, potentially leading to a shortfall in funding.
“It’s a sad story. This is the place that created the first direct to consumer retail, the first modern department store. It stood like the Colossus over the American retail landscape,” said Craig Johnson, president of Customer Growth Partners, a retail consulting firm.
Company shares, which hit an all-time low last month, tumbled more than 13 per cent on Wednesday.
Sears Canada, which operates separately from its U.S. parent, saw its shares drop four per cent, or seven cents, to $1.66 on the TSX.