Survival of Sears and Kmart is in Doubt, Owner Warns

images 58d41da6215b1

The corporate owner of Sears and Kmart has reported that there is “substantial doubt” that it can continue operating, as brick-and-mortar stores continue to face challenges in an e-commerce world.

In a filing with the Securities and Exchange Commission, the corporate owner, Sears Holdings Corporation, cited its efforts to cut costs, sell property, tap new funding sources and make other moves to stanch the flow of red ink. Still, it reported a $2.2 billion loss for last year and said it had to use money from its investments and financing activities to fund operations.

The disclosure is a setback for the company and for Edward S. Lampert, the hedge fund manager who engineered the combination of the two legends of American retail 13 years ago. Lampert has shut down stores, reshuffled the company’s organization and pushed to have a greater online presence. Still, Sears Holdings has lost more than $5 billion over the last three years as sales have declined.

The success of both brands has been squeezed by Walmart Stores, with its heavy discounts, and Target, which sold affordable goods but with more design and flair. Online retailing, with the rise of the likes of Amazon, has also presented challenges.

Find more information on the Amazon effect and its impact on Sears and Kmart HERE.