SEARS, KMART MAY LACK CASH TO STOCK SHELVES

Iconic U. S. retailer warns it could go out of business

Sears, an iconic department store chain whose name is as steeped in Americana as apple pie and Levi’s jeans, warned it might be going the way of the blue light special, uncertain it can survive more than another year in the midst of the upheaval that has disrupted the retail industry.

But despite the death watch that has taken root around a brand that was once a lifeline for the U. S. shopper, Sears Holdings, which also operates Kmart stores, still has cash to invest, assets to sell and a plan to move forward that some experts say signals its demise is not imminent.

Investors were shocked Tuesday when the company that operates Sears said in a filing with the Securities and Exchange Commission that it had “substantial doubt” about its ability to stay in business unless it can borrow more and tap cash from assets.

Its stock had plunged 12.3% to $ 7.98 when markets closed Wednesday.

“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” Sears Holdings said in a filing with the Securities and Exchange Commission.

But analysts say Sears may have more time to stage a turnaround than other companies who made similar declarations.

A 3- year- old rule change requires businesses to be more transparent about potential risks they face within a year of their reported financial statements. Sears, which has closed stores and borrowed millions from its own CEO, acknowledged in the federal filing the headwinds it faces as shoppers bypass traditional retailers for online sellers. Yet in that same filing, independent auditor Deloitte gave an opinion that expressed confidence in Sears’ viability.

“Those are the people who are really intimate with Sears and its finances, and if they’re not saying there is a problem, I’m going to buy it,’’ says Robert Rostan, CFO for Training The Street, a firm that provides financial training to banks and financial institutions. “Yes, they are 1 inch closer to bankruptcy, but I don’t think ( Sears’ situation has) changed materially.’’

Still, Sears said in its Tuesday filing that it can’t be sure it will be able to raise the cash to keep going.

If it continues to experience operating losses and is unable to generate additional cash, it may not be able to access additional funds under its credit agreement or be able to afford to pay for inventory to stock its stores or pay for other services it needs to operate.

FILE PHOTO Sears, founded in 1886, failed to keep up with changing shopper tastes and habits even before the intense competition traditional retailers currently face from the Internet.