Sears, an icon of American retail dating to the 19th century, is in danger of having to close its doors. The company said late Tuesday in a regulatory filing that there is “substantial doubt” it can remain in business.
Sears’ stock price, which hit an all-time low last month, tumbled more than 14 percent Wednesday to $7.80. As a measure of how far the company has fallen, in 2007 its shares topped $190
Sears tried to soothe investors’ fears, saying in a post on its site that it remains focused on “executing our transformation plan” and that news reports miss the full disclosure that it’s highlighting actions to reduce risks. It also said that the comments made in the filing were in line with “regulatory standards.”
Chairman and CEO Edward Lampert’s hedge fund has forwarded millions in funding to keep Sears afloat but with sales fading, it is burning through cash.
According to its most recent quarterly earnings, Sears lost more than $2 billion last year. Adjusted for one-time charges, its loss was $887 million. The company has lost more than $10 billion since 2011 and has total liabilities of more than $13 billion. It hasn’t turned a profit since 2011, according to Reuters.
Sears, which employs 140,000 people, has been selling assets like its Craftsman tool brand. But it said its pension agreements may prevent the spin-off of more businesses, potentially leading to a shortfall in funding.
Despite those risks, the company said it expects actions it took in 2016 and this year, including the $900 million sale of Craftsman to power tool maker Stanley Black & Decker in January, will boost its cash holdings and give it financial options. Sears said it expects “to generate additional liquidity through the monetization of our real estate and additional debt financing actions.”
Lampert, a hedge fund investor who merged Kmart, which he controlled, with Sears in 2005. But despite a series of strategic shifts, he has failed to revive the company’s faded brand. In December, Sears said it would close 42 Sears stores and 108 Kmart outlets in a move to cut costs. It now has less than 1,500 stores, down from roughy 3,500 in 2010.
The chain has scaled back unprofitable product lines such as consumer electronics and the pharmacy business that operates in most of its Kmart stores.
The Associated Press contributed to this report.