Northwest Arkansas Democrat-Gazette
Filing puts Sears’ future in doubt
Stock falls after report; shoppers say stores would be missed
Sherry McGuire doesn’t shop at Sears as much as she used to, but the Siloam Springs resident said she still couldn’t imagine a day the department store chain would close its doors.
“We grew up with Sears,” McGuire said after browsing through the store Wednesday at Northwest Arkansas Mall in Fayetteville. “It would be strange if it wasn’t here.”
Sears Holdings Corp., which owns both Sears and Kmart stores, acknowledged the possibility of closure in an annual report submitted to the U. S. Securities and Exchange Commission late Tuesday. For the first time, the once- dominant chain raised questions in its annual filing about whether it will be able to keep operating as it struggles to drive traffic and sales in its 1,430 stores nationwide.
“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” Sears Holdings said Tuesday in the report. The annual report also indicated that Sears believed it had enough liquidity for at least the next 12 months.
The acknowledgment caused shares of Sears Holdings stock to plummet as much as 15 percent Wednesday before it closed down 12 percent to $ 7.98. But Jason Hollar, the retailer’s chief financial officer, tried Wednesday to quell concerns about an imminent end in a blog post on the company’s website.
Hollar wrote that the comments from the report were simply in line with regulatory standards that require management to assess and disclose potential risks the company could face in the next year. Despite the outlined risks, Hollar said Sears Holdings remains confident in its financial position and is focused on executing its transformation plan.
“As 2016 proved to be another challenging year for most ‘bricks and mortar’ retailers, our disclosures reflected these developments,” Hollar wrote. “While his-
● torical performance drives the disclosure, our financial plans and forecast do not reflect the continuation of that performance.”
But the outlook for Sears remains grim, according to retail experts.
“I haven’t seen anybody that says there’s any hope for Sears, which is quite remarkable because when I started my career they were the only retailer in town,” said Chris Petersen, who is the founding partner and chief executive officer of Integrated Marketing Solutions Inc. in Omaha, Neb. “So it’s a pretty sad tale, actually, of very bad management over time.”
Sears, which has been led by chairman and chief executive officer Eddie Lampert since 2004, has struggled to maintain relevance in a changing and competitive retail environment as more shoppers turn to e- commerce and make fewer trips to stores because of online
retailers like Amazon.com.
The company, which was the nation’s largest retailer in terms of sales until WalMart Stores Inc. surpassed it in 1991, last turned a profit in 2011 and has reported $10.4 billion in losses since, according to The Associated Press. In the latest quarter, the company reported samestore sales fell 7.4 percent at Kmart and fell 9.3 percent at Sears. The company has $13.19 billion in liabilities.
In February, Sears announced a restructuring plan intended to cut costs by at least $1 billion in 2017. The strategy included the closing of 108 Kmart and 42 Sears stores, which included two Kmart stores in Arkansas, in Springdale and Jonesboro. A Sears store in Little Rock closed last year.
In addition, Sears has been divesting assets like its Craftsman tool brand, which the company sold for $900 million.
In Arkansas, Sears Holdings operates five full-line Sears stores and three Kmart stores, according to the SEC filing. There were
few shoppers in two of the Sears stores Wednesday.
In North Little Rock, William Scott and his wife, Laurie McGill- Scott, were shopping in a men’s clothing aisle. They’ve shopped at Sears for years, particularly for appliances and tools.
“I’m old school,” Scott, 64, said. “I was raised on Sears & Roebuck, the Wish Book [ Christmas catalog]. The prices here are competitive with Lowe’s and others.”
McGill-Scott, 51, said she appreciates the well-trained employees. They both said they’ve shopped at Sears all their lives. She said she frequently shops online with Sears and other retailers.
They were aware that Sears already has closed stores nationally, including the Little Rock store.
“I guess people think [Sears] is an old store and maybe that’s why it’s losing money,” McGill-Scott said.
Another shopper, Sean, who did not provide his last name, said if Sears were to close, it would probably hurt the job market. He doesn’t shop at Sears often, but does buy clothes at Sears because it offers nicer brands and better quality clothing, he said.
Sharron Allen, who lives in Stilwell, Okla., was shopping Wednesday in the Fayetteville store and has been a Sears credit- card holder for about 16 years. Over the years, she has purchased appliances, tools, lawnmowers and other items.
Like many, Allen said she grew up with Sears and used to shop at the store all the time. She said the idea of Sears closing its doors because of financial struggles would be disappointing.
“It would be horrible,” Allen said. “But you’ll always find somewhere else to go.”