Is Sears headed for bankruptcy?
With department store chains shuttering retail locations and retailers filing for bankruptcy, all eyes are set on Sears, which many believe will file for bankruptcy soon. According to a research note from Fitch Ratings, Sears is expected to lose $1.8 billion in the fiscal year. The credit agency implies that Sears will have to file for bankruptcy or raise almost $2 billion in funds.
"Fitch believes restructuring risk for Sears remains high over the next 12 to 24 months given the significant cash burn and reduced sources of liquidity," the note said.
A spokesperson for Sears rebutted to Fortune in an email saying, "We believe that we have sufficient resources to support our operations and meet all of our financial obligations."
Sears kicked off 2017 selling its Craftsman business to Stanley Black & Decker for $900 million, which analysts believe overshadowed its poor holiday performance. The company also announced a $500 million secured loan facility with ESL Investments, which would provide liquidity to fund its operations.
In addition, the company this week confirmed to Business Insider that it had laid off full-time employees for its Kmart business in order to cut costs. The lay offs, , according to Business Insider, included assistant store managers, front-end leads, backroom leads, and pricing leads, and it impacted 800 stores. The publication also shared images of a Kmart location in Rochester, New Hampshire that stores all of its stock on the sales floor. The company calls the change a “simple store” strategy.
In December, Sears posted its fifth straight quarterly loss with total revenue decreasing 14.3% to $5.03 billion and net loss increasing to $748 million from $454 million in the previous year. According to Reuters, Sears has not posted an increase in quarterly sales in five years.
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