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Offbeat Sears skips payments to vendors amid bankruptcy concerns

16:51  11 october  2018
16:51  11 october  2018 Source:   reuters.com

Sears stock dives 30 percent on news of bankruptcy preparations

  Sears stock dives 30 percent on news of bankruptcy preparations Sears' stock lost nearly a third of its value in morning trading Wednesday after a report said that the beleaguered retailer had hired advisers to prepare for a bankruptcy filing ahead of a debt payment deadline.Shares of Sears, an iconic American retail brand which traded above $100 a decade ago but have fallen to less than $1 in the past year, were down 30 percent.

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Sears is teetering on the edge of bankruptcy and Kmart could be its first casualty. Kmart's relative weakness in food sales is particularly concerning because a strong grocery offering drives Amid these problems, merchandise inventory at Sears has fallen to .4 billion as of October 28 from

Sears has started to miss payments to vendors, adding to concerns about its future after sources said the U.S. department store operator was preparing to file for bankruptcy in the coming days.

Three vendors told Reuters that Sears has missed scheduled payments in the last couple of weeks.

It was not immediately clear how widespread the vendor problems were and how they would affect Sears' supply chain ahead of the holiday shopping season. Sears is also scrambling to secure financing for its expected bankruptcy, and has been unsuccessful so far, sources familiar with the effort said late Wednesday.

Lampert explores bid for Sears' assets in bankruptcy, sources say

  Lampert explores bid for Sears' assets in bankruptcy, sources say Sears CEO Eddie Lampert is exploring a bid for some of the cash-strapped U.S. retailer's businesses and real estate once it files for bankruptcy as an alternative to a traditional court-supervised reorganization, people familiar with the matter said Thursday.Under this scenario, the 125-year-old department store operator, once the world's largest retailer, would initially avoid an outright liquidation, but would have to navigate the bankruptcy process without some of its key assets.

Skip to Article. Concerns are growing that Sears Holding Company - which operates Sears and Kmart - may soon file for bankruptcy . In Wednesday filings with the Securities and Exchange Commission, Sears said its "historical operating results indicate substantial doubt exists related to the

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Vendors could stop shipments if they are worried Sears cannot pay, potentially sending the retailer into free fall.

"We went into business with them with our eyes open and knew this day would come one day," said Arnold Kamler, the chief executive officer of Parsippany, New Jersey, bike maker Kent International Inc. Kamler said he withheld a shipment to Sears after it missed a regular payment last week for the first time.

Sears did not respond to multiple requests for comment.

Vendors are usually considered unsecured creditors and usually get pennies on the dollar in bankruptcy court.

For this reason, securing a sizable financing package to carry Sears through bankruptcy could boost confidence among vendors.

Sears' talks on Wednesday night with some banks, including Bank of America and Wells Fargo, about securing debtor-in-possession financing ended unsuccessfully, according to two people with knowledge of the discussions.

Nearing bankruptcy, Sears closes in on a deal to stay alive until Christmas

  Nearing bankruptcy, Sears closes in on a deal to stay alive until Christmas Sears is nearing a bankruptcy deal that could keep it open through Christmas. It has roughly 900 stores and employs roughly 90,000 workers.Such a deal would allow Sears to keep open some of its roughly 900 stores for at least a little bit longer, these people say. The goal would be to stay open until at least Christmas with a hope of finding a buyer while Sears is in bankruptcy, the people said.

“Whatever vendors continue to support them are now going to put them on even more of a short string. “So far there was only speculation that they would declare bankruptcy in 2017. Another sign of Sears ’ weakness is that insurance companies that once provided policies to Sears vendors

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Sears could file for bankruptcy as early as Sunday, and it would need to secure the financing by then to avoid liquidation, the sources said. It was not clear whether Sears will succeed.

Bank of America and Wells Fargo did not immediately respond to requests for comment.

The Wall Street Journal first reported on the unsuccessful debtor-in-possession talks.

If Sears files for bankruptcy, stocking shelves adequately could prove key to escaping liquidation. Both vendors and creditors will be looking at the retailer's sales performance during the holiday season in deciding whether to continue to back it, sources have said.

"If consumers walk into a store and there are empty shelves, it lowers consumer confidence and that is what has ultimately happened," said Brett Rose, CEO of United National Consumer Suppliers, a wholesale distributor of overstocked goods such as garden tools, beauty products and toys.

Sears aims to close up to 150 stores in bankruptcy, sources say

  Sears aims to close up to 150 stores in bankruptcy, sources say Sears is planning to close up to 150 of its department and discount stores and keep at least 300 open as part of a plan to restructure under U.S. bankruptcy protection, people familiar with the matter said Friday.The plans, which remained in flux Friday afternoon, would leave the fate of Sears' remaining roughly 250 stores uncertain, the sources said. The future of the stores could hinge on Sears' negotiations with landlords over their leases.

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"If you can go to Amazon.com and get Craftsman tools, why do you have to walk into a Sears," said Rose.

As Sears' financial condition deteriorated over the years, some vendors stopped supplying it, cut down on shipments or tightened repayment terms, concerned about the retailer's financial woes and the soaring cost of insuring supply agreements, Reuters reported last year.

PURCHASING PIPELINE STOPPED

As vendors became more concerned about Sears' financial health, they started asking for full payment before they shipped orders. However, last summer Sears told vendors it would no longer prepay for orders, according to a source with direct knowledge of the strategy, who requested anonymity to discuss a commercially confidential matter.

Sears also tried to keep vendors onboard by placing purchasing orders and not picking up the goods until it could make payment, the source said.

Merchandise inventory at Sears was $2.7 billion as of Aug. 4, a decrease of about $719 million from a year ago, according to the company's most recent quarterly financial report. Sears cited store closures and improved productivity.

Sears said its inventory decreased in all categories, most notably apparel, tools and outdoor living, including lawn and patio furniture. Inventory at discount chain Kmart also decreased in all categories, Sears said.

The belt-tightening has been in sharp contrast to Sears' legacy. At its peak in the 1960s, Sears sold everything from toys and auto parts to mail-order homes, and was a key tenant in almost every big mall across the United States.

But it has struggled to reinvent itself in the face of online competition from companies such as Amazon.com Inc and other brick-and-mortar retailers, including Walmart.

Lampert, Sears Creditors Gird for Battle Over Recent Asset Sales.
Creditors are sifting through the smoking ruins of Sears Holdings Corp.’s bankruptcy to question whether any of Eddie Lampert’s deals involving the bankrupt retailer were improper. Lampert, 56, a billionaire who controls nearly half of Sears stock, has had interests on both sides of significant transactions the past few years. He remains the retailer’s chairman after resigning Monday as chief executive officer, and he’s also chairman of the retailer’s spinoff, Seritage Growth Properties, which collects rent from 230 Sears and Kmart stores. Lampert and his hedge fund, ESL Investments Inc., have loaned Sears $2.

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