SEARS HEADED FOR HOLIDAY DISASTER AS BANKRUPTCY FEARS FORCE SUPPLIERS TO REDUCE SHIPMENTS
Will Sears make it through the holiday season? Suppliers don’t think so as they have significantly reduced the amount of product the struggling retailer will have on hand during the holiday season according to this CBS report.
The holiday shopping season is the most important time of the year for retailers, when stores finally go into the black for the year.
But this year it might bring coal for Sears Holdings (SHLD), given the reports that some suppliers have “significantly” reduced their shipments of consumer goods over concerns of a pending bankruptcy filing for the owner of Sears and Kmart stores. Suppliers have become increasingly worried about Sears’ financial strength in recent months, Business Insider reported.
Needless to say, a reduction in inventory as the holidays approach wouldn’t be a winning strategy for a retailer that’s trying to get back on its feet. The company is struggling to right itself after years of dismal operating performance. Its latest results show a loss of almost $400 million and a decline in same-stores sales (sales at stores open a year or more) of 3.3 percent at Kmart and 7 percent at Sears.
The largely self-inflicted wounds prompted one analyst earlier this year to predict a “liquidity event” in 2016.
“There is great concern out there” among suppliers, Marc Wagman, executive vice president of trade credit and political risk at Arthur J. Gallagher & Co., told Business Insider. His firm represents the suppliers to insurers, which protect the suppliers in case of nonpayment.
He added that speculation is mounting that Sears could file for bankruptcy next year.
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