It risks running out of money just before the holiday selling season. It took less than a month. Sears Holdings disclosed on Monday in an 8-K filingwith the SEC that it drew down the remaining portion, $60 million, of its $200 million credit facility that it had obtained on October 4.
Sears has been bleeding cash. In the last quarter, it lost $251 million. In fiscal 2016, it lost $2.2 billion. In fiscal 2015, it lost $1.3 billion. Over the past six years, it lost $11 billion. Its sales have recently been plunging at a rate of nearly 25% year-over-year. It’s on track to close nearly 300 stores this year, on top of the hundreds of stores it already closed in prior years. Suppliers are very nervous. And key relationships, such as the one between Sears and Whirlpool, have fractured.
Now the holiday selling season is coming up, and this requires loads of cash well in advance, especially with trade credit getting tighter because suppliers don’t want to be hung out to dry. Advertising and promotions are costly. If the money runs out before the absolutely crucial holiday selling season, it’s over for shareholders, and creditors will take control.
So Sears Holdings obtained a $200 million credit facility on October 4 through the expansion of an existing credit facility, and drew $100 million right away. On October 18, Sears drew an additional $40 million. On October 25, Sears drew the remaining $60 million, according to the filing.
This post was published at Wolf Street by Wolf Richter ‘ Oct 31, 2017.
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