The parent company of Sears, once the nation’s largest retailer, issued a somber warning Tuesday about its survival.
According to USA Today, Sears Holdings, which also owns Kmart, broke the news in an annual report filed with the Security and Exchange Commission.
“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” the company said.
According to The New York Times, Sears Holdings lost $2.2 billion last year. Sears reported a 9.3 percent decline in sales, while Kmart’s sales dropped 7.4 percent, Fortune reported.
Earlier this year, Sears Holdings said it would shutter 150 Sears and Kmart stores in 40 states.
sears Holdings Corp. acknowledged “substantial doubt” about its ability to keep operating, raising fresh concerns about a company that has lost more than $10 billion in recent years.
The retailer added so-called going-concern language to its latest annual report filing, suggesting that weak earnings have cast a pall on its future as a business.
“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” the Hoffman Estates, Illinois-based company said in the filing. But the company added that its comeback plan may help mitigate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements.”
A video timeline of Sears from 1886 through 2017. (Jemal R. Brinson / Chicago Tribune)
The disclosure comes after more optimistic signs from the company, which has been working on a turnaround under Chief Executive Officer Eddie Lampert. 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.
Lampert, a hedge fund manager who is also Sears’s biggest investor, aims to reduce debt and pension obligations by $1.5 billion. 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.