Sears Holdings Corp (NASDAQ:SHLD) shares plunged more than 12 percent in pre-market trading after the company warned about difficulties as a going concern.
In Canada, Sears operates separately from its USA parent but is still controlled by hedge fund manager Edward Lampert, who is chairman and chief executive officer of the US chain.
Saunders said Sears would probably have a hard time meeting its obligations as the year progresses. Revenues have been falling and losses and debt mounting. During the same quarter in the previous year, the company posted ($1.70) EPS. The company's retail store sales decline was the worst among the top 250 retailers tracked by eMarketer as of November. Sears would regain its health by closing struggling stores and focusing instead on profitable sales, he wrote.
The company has been considering selling other businesses such as the Kenmore appliances and DieHard vehicle battery brands.
"I think the mall developers watch trends, they attend trade shows, they read a lot", he said.
As recently as the 1990s, the chain thrived under CEO Arthur Martinez who made a bigger push into high-profit apparel and reignited shopper interest in the retailer with the "Softer Side of Sears" campaign. They are operated by Sears Holdings. In other words, many think Sears will go under. "Sometimes multiple retailers to take those large spaces", Bell said. Sears also sold Craftsman tools to Stanley Black & Decker as it raise enough money to remain viable.
Lampert owned close to 10% of the REIT that paid $2.6 billion to Sears in 2015 for its stores that it purchased, of which many were leased back to the longtime retailer.
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"While our historical operating results indicate substantial doubt exists, we want to be very clear that we're taking decisive actions to mitigate that doubt", Howard Riefs, a Sears spokesman, said in an email.
Sears in its January 28 year-end report posted a $2.22 billion loss and since 2013 has accumulated losses of $7.4 billion and revenue drops of 44%.
Additional asset sales could prove problematic, according to Sears' filing.
The company said continued operating losses could restrict access to new funds under its domestic credit agreement.
In March, Sears Holdings sold the Craftsman tool brand for $775 million: it had long-term debt of more than $4 billion as of earlier this year.
The warning on Tuesday added a new element of uncertainty for a company that has $13.19 billion in liabilities and said it could have difficulty obtaining merchandise from vendors.