Retail Nightmare Just Won't End: Sears Crashes On "Going Concern" Warning, Payless To File Bankruptcy In Days

Tyler Durden's picture

Lately not a day seems to pass without some materially adverse news hitting a prominent retailer, or the broader space, and today it is perennial default candidate Sears to crash at the open after issuing a "going concern" in its latest 10-K, warning overnight, wrning “substantial doubt” about its ability to keep operating, raising fresh concerns about a company that has lost more than $10 billion in recent years.

“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” Eddie Lampert's company said although always eager to put a positive twist on the worst of news, the company added that its comeback plan may help alleviate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements.” Of course, the question is what happens when vendors start demanding cash on delivery as concerns about SHLD's liquidity concerns continue to grow.

Sears’s stock fell as low as $7.30 in premarket trading before rebounding modestly . It had been down 2 percent this year through Tuesday’s close.

The disclosure comes after more optimistic signs from the company, which has been working on a turnaround under Chief Executive Officer Eddie Lampert. As Bloomberg notes, Sears posted a narrower loss than predicted in the fourth quarter, and it has pledged to lower its debt burden and cut annual expenses by at least $1 billion.

As discussed one month ago, Lampert said he aims to reduce debt and pension obligations by $1.5 billion, an announcement which sent the stock surging although the optimism has been largely eliminated by now. The CEO has helped keep the ailing retailer afloat by offering more than $1 billion of assistance, including a $500 million loan facility announced in January.

As part of its comeback plan, Sears had closed stores, sold real estate and offloaded businesses. Earlier this month, the department-store chain completed the sale of its Craftsman tool brand to Stanley Black & Decker Inc. for about $900 million. “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, told Bloomberg.

* * *

In a separate report, Payless Inc., yet another struggling discount shoe chain, was preparing to file for bankruptcy as soon as next week, according to people familiar with the matter Bloomberg noted, and added that the company is initially planning to close 400 to 500 stores as it reorganizes operations. Payless had originally looked to shutter as many as 1,000 locations, and the number may still be in flux, according to one of the people.

Payless’s bankruptcy would add to a tumultuous year in retail, with several bankruptcies and hundreds of store closings -- even at companies that aren’t distressed. The industry is racing to try to adapt to more online purchasing and a shift away from mall shopping.

 

Payless was bought by private equity firms Golden Gate Capital and Blum Capital Partners in 2012 as part of the breakup of publicly traded Collective Brands Inc. The company, founded in 1956 in Topeka, Kansas, employs almost 22,000 people, according to its website. It has more than 4,000 stores in 30 countries.

As a result of the hundreds of upcoming storefronts between just these two companies, mall operators are bracing for another collapse in rental revenue, which in turn continues to provide fuel to the "big short" trade, namely shorting the debt of mall REITs via CMBX, which as of this morning, hit new lows.

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Raffie's picture

where will I buy cheap shoes now?

MillionDollarBonus_'s picture

Well done conservatives! Trump is literally destroying the economy while repealing affordable healthcare! Progressives told you this would happen! You are literally idiots wo don’t even understand economics!

 

America’s New Alt Right Criminal Class

Looney's picture

 

Sears’ demise has nothing to do with On-line Retail.

They, for a very long time, have been treating their customers as cockroaches. Karma is a Goddess!  ;-)

Looney

Countrybunkererd's picture

why won't starbucks die!!???!!   oh yeah, student loans.

NoDebt's picture

Thank God for Harbor Freight- they're picking up for me where Sears left off.  It's my new favorite spot for cheap hand tools.  No warranty, but they're so cheap you just throw them away when you break them and buy another one.  Besides, they're all made in China anyway.  All of them- Sears (Craftsman), Mac, Snap-On, etc.  They just slap a different name on them and sell them through different channels.  All the same tools.  It's just that, for instance, a decent 1/2" breaker bar will cost you over $100 from Mac or Snap-On but only $20 from Harbor Freight.  

 

adr's picture

No shit. I love Harbor Freight. I buy all my rechargeable batteries from there. Essentially they cut out the Jew premium from Chinese made crap and sell it for double what they paid instead of the quadrupling most "brands" charge you.

Déjà view's picture

Make sure mAh are near 1000/AAA...2500-3000/AA

Inzidious's picture

And as I am sure most Americans agree with you and have similar shoping desires, I wonder what that means for our 0.00000004% margin on slave labor wages global economy.

BlindMonkey's picture

Globalism is the devil except for my access to cheap hand tools.

Bigern's picture

Got an $18 air ratchet at HF. With the 20% off coupon it was even sweeter. In addition, I got a free tarp with another coupon. Every time I walk in there I get a free tarp or a 24-pack of batteries. I can even do that when I only buy a .99 cent package of magnets. It can't be beat.

R Man J's picture

False comment. Snap-on Breaker bars, ratchets, sockets are made in Milwaukee.  Wrenches in Tenessee, power tools in south carolina, tool boxes in Iowa.

fishwharf's picture

I've bought many things from Harbor Freight, and most did the job, but the $20 cordless drill I bought worked until the battery caught fire.

pods's picture

For 20 bucks just think of it as a drill/fire starter.
Voila!

pods 

peippe's picture

like that outside the box thinking

now I won't be dissappointed when mine catches fire.

JuliaS's picture

Must've been a Tesla drill.

hannah's picture

just bought the harbor freight greenhouse to start seeds early...great place for tools for the shtf....

Synoia's picture

Harbot Freight?

 

What junk. Cheap tools are not cheap.

 

Home Depot, Lowes or Ace for tools.

TheObsoleteMan's picture

Democrats and cheap tools, neither are worth a shit. If you want the job done right, and you take any pride at all in your work, don't use JUNK TOOLS for your job. I am still using tools I bought when I was barely out of my teens from an old man who was retiring and didn't need them anymore. He told me he bought them when he was around my age at the time. That was thirty five years ago, and they still perform as good as the day I bought them. We were both working at the municipal garage at the time. His initials are still stamped on them {he did that in case the niggers that worked there stole them}. That way, I will always remember his name. I am sure by now he has passed away. God bless you, Russell Davidson. Now that is what I call cheap tools, if you have to throw something away after only a couple of jobs {or on the first job}, that isn't cheap, it's expensive. Your not only throwing tools away, your throwing money away, and I don't like doing that. Piss on Harbor Freight.

Raffie's picture

Ya SuckBucks needs to die for sure.

Besides bad over priced coffee they are morally and ethically bankrupt.

MillionDollarBonus_'s picture

Oh, so you think it’s just a "coincidence" that this is happening now that Trump is in office?? Another useful idiot!

 

America’s New Alt Right Criminal Class

Looney's picture

 

MDB, go suck on a used tampon. Please?  ;-)

Looney

Countrybunkererd's picture

when he wrote "another useful idiot"  i thought maybe he saw himself in the mirror.

SumTing Wong's picture

Didn't even realize it was MDB. He has lost the abilities he once had. What an idiot. He used to at least be good for entertainment, bu tnow...

Jubal Early's picture

This is MillionDollarBonus_ not MillionDollarBonus.  MillionDollarBonus was actually pulling off satire and was quite clever.  It would be nice if MillionDollarBonus would frag this douche.

My question is what happens to the lifetime guarantee on my Craftsman tools?

New_Meat's picture

Jubal, that was the lifetime of Sears.

although Craftsman is now in e.g. ACE since they spun off.

Akzed's picture

When Seears' lifetime expires, so do the warranties on your Craftsman tools.

Mr. Bones's picture

Black and Decker would be wise to pick up the slack.  I've never broken a Craftsman tool so it wouldn't cost them much for a huge gain in good will.

Arnold's picture

The new MDB avatar is so stunning in its' metrosexualness.

The central planners's picture

Well .. Trump is another idiot in office but this is definelly not his fault.

Truther's picture

HRC's tampon should do the trick. I doubt he'll be back after.

Elco the Constitutionalist's picture
Elco the Constitutionalist (not verified) Truther Mar 22, 2017 11:24 AM

I think his new avatar is of a Jew sex offender who was arrested for trying to rape a jogger recently.

tuetenueggel's picture

but don´t forget that it´s a teabag.

doc333's picture

hmmmmm.... I dated a girl once that was SO.... well, I just might have done that if she would've stayed...

Truther's picture

MDB... Go suck a st**f conservative dick. It'll clear your throat for good.

in4mayshun's picture

Trump's companies are doing just fine. Maybe the problem is that he should have been running Sears too

Raffie's picture

ALRIGHT! A LUNATIC LEFT SHOWED UP. How special. (I think I will put some sprinkles on my coffee to celebrate the moment)

Obamma handed PRESIDENT TRUMP (Which is also your President) a live grenade, so there you go.

You sound like you would rather live in fantasy land and make the bubble even bigger then letting it pop so we can rebuild all the damage the demarcates have done over the decades.

I'm sure Canada, China or even North Korea would love to have you live there.

Thx for stopping by.

Cman5000's picture

I see it's computer time at the group home.

KimAsa's picture

Hahaha. Love this! Classic ^^^^

Anteater's picture

"Bank-brokers have no fiduciary duty to savers, investors and pensioners!" The Red Donald

By October, on the 100th Golden Jubilee Centennial of Bolshevism, The Red Donal and his New Bolshevik Crew will have jacked to debt-ceiling to -$30 trillion, and declared a Goldman-MIC martial economy.

We'll all be wearing short bathrobes and raw leather jhodpuhrs in the fileds with our potato forks.

Donald J. Trump's picture

Actually, it does have something to do with online retail.  Sears could have capitalized on online retail but their website and mobile site have been atrocious.  I agree their customer service is horrible as well and helped their demise, but they just have everything going against them, including being in malls.

fishwharf's picture

At one time Sears was the go-to mail order business.   They were a powerhouse before the age of easy transportation and the internet.  Millions of people in America greeted the arrival of the Sears catalog with unbridled joy.  New clothes and shoes for the family, farm tools, toys and just about anything a person could want.  They were the Amazon of their day.  I believe Sears management failed to see what was coming online.  With their name recognition and access to capital they could have transitioned from bricks and mortar to the internet in an orderly fashion and become an online powerhouse.  

Hal n back's picture

Montgomery Wards is gone now too, right?

 

mtl4's picture

Most businesses don't make the leap, they just become too large and die off.........anyone seen an encyclopedia lately? me neither.

Anyone remember Woolworth, the original dollar (5 & 10) store?  Walmart killed that one off.

Hard to believe now but even Amazon and Walmart will likely die off too and be replaced with sometthing better.

More_sellers_than_buyers's picture

They were still in the real world then.  They thought like most people that you needed a business plan that would show a profit.  Hell I remember Barrons telling the world to Short Amazon at 22 bucks... Who knew you could survive 20 years just selling more stock.

OldTrooper's picture

Sears was dying long before the internet.

Theta_Burn's picture

Sears is just being replaced by equally shitty service star Home depot/Lowes.

Sears is outdated outcompeted and outmanuvered...

Even Craftsman tools got cheap.. and at 1 time craftsman's policy and quality was best in America..

Erek's picture

Craftsman is now made in China.

MaxMax's picture

Craftsman was sold to Black and Decker.  40 years ago, Black and Decker had quality tools.  Then they went down the same path of buying cheap Chinese tools.  It got so bad that they had to buy Dewalt, a relatively unknown brand, because the customer figured out that Black and Decker tools were crappy.

tuetenueggel's picture

B & D was english and shit.

No professional chraftmen worked with their crappy tools. playgood