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Cash-starved Sears is putting everything on sale

EmersonHart13

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Cash-starved Sears is putting everything on sale - Nov. 1, 2017

Sears and Kmart are trying to get ahead of the holidays -- and jump-start weak business -- by putting everything on sale.

Through Thanksgiving weekend, Sears will offer up to 50% off everything and Kmart will offer up to 40% off everything.
Sears previously announced it is bringing back the Wish Book, an iconic holiday catalog that it hasn't published since 2011.

Sears and Kmart have been losing billions of dollars and closing stores for years. Their parent company, Sears Holdings (SHLD), hasn't turned a profit since 2010 and warned earlier this year there was "substantial doubt" that it will be able to stay in business.

By the end of this July, Sears Holdings had only 1,250 stores left in the United States, down from 3,400 at the start of 2006. It has announced additional plans to close stores since then.

Shoppers attracted by sales may have trouble finding what they want. Vendors have pulled back shipments to Sears and Kmart, concerned that they won't be paid if the company files for bankruptcy.

Even Whirlpool (WHR), which got its start selling appliances through Sears in 1916, is ending sales of its Whirlpool, Maytag, KitchenAid and Jenn-Air appliances at Sears.

Sears CEO and primary shareholder Edward Lampert has publicly complained about vendors "trying to take advantage of negative rumors about Sears to make themselves a better deal." He said that a "wave of dire predictions about our company's future has done harm to our business."

But Sears issued a statement Tuesday disputing an article in the The Wall Street Journal that claimed many vendors were refusing to send products to Sears and Kmart, calling the story "yet another rehash of inaccurate assertions and negative speculation about Sears Holdings and its future."

"We continue to have strong relationships with over 50,000 vendors and suppliers," the company said.

Still, Sears Holdings disclosed Monday that it had borrowed an additional $60 million from a group of companies controlled by Lampert. It has borrowed $200 million from those entities in just the last month. All the borrowing is guaranteed by liens on Sears Holdings properties.
 

CMNTMXR57

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It is supposedly UP to that amount. It would be product specific.

The way we burn cash around here, looks like they're giving up the attempts to pad margin and going after volume instead, which is something I've long argued. Gotta have the foot traffic first before padding things.
 

RICH17

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Yea but is it half off of "list" price just like cyber Monday?
 

blakbearddelite

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I know a lot of former co-workers that went to work at Sears in the finance department. It kind of boggled my mind because the company was doing so poorly and they were laying people off like crazy.

I wouldn't want to extend them any credit as a supplier. I don't know why Lampert thinks it is ridiculous people think that.
 

CMNTMXR57

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Yea but is it half off of "list" price just like cyber Monday?
Yea, it's not exactly earth shattering to be honest. Maybe more things pushing the 50%/40% thresholds than normal. But no different that going to Sears.com now and selecting a tractor that fits your needs and seeing it's 20% off the normal price. That's kinda the same thing.

I know a lot of former co-workers that went to work at Sears in the finance department. It kind of boggled my mind because the company was doing so poorly and they were laying people off like crazy.

I wouldn't want to extend them any credit as a supplier. I don't know why Lampert thinks it is ridiculous people think that.
I'm one of those (so to be honest, I can't speak to what is happening operationally in terms of pricing and promotions, as I sit in the crystal castle and watch the money as it circles the drain...).

I wouldn't extend us credit either and one of the reasons we've had to tap into our short term revolvers with financial institutions over the past few years for holiday seasons.

We've laid off a lot of people, including my own analyst (I was sick the day I had to do that because there was no reason other than cutting heads = $$$ saving. I think I even posted that here, the day I had to). But it is what it is. This company isn't in the business of retail anymore. It is in a controlled liquidation. To be quite honest, I think something BIG will be happening shortly after the holiday season, and our comp sales are still down double digits (not a shocker to be honest), especially after the largest shareholder after ESL, jumped ship a week or two ago... Signs is in the air.
 

blakbearddelite

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I'm one of those (so to be honest, I can't speak to what is happening operationally in terms of pricing and promotions, as I sit in the crystal castle and watch the money as it circles the drain...)
Where were you before Sears? You didn't happen to work at Schneider Electric, did you? That's where I know most of my former co-workers went to Sears. I was at Schneider from 2006 until 2014, in the finance department.
 

blakbearddelite

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I wouldn't doubt if we know some of the same people. It's a small world in finance in the north west suburbs.
 

CMNTMXR57

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Giving up the margin to drive volume is usually the hail mary right before its all over....
It is now. Had they focused on improving volume THEN increasing margin slightly as volume picked up, way back in 2006 or so, different story.

There are many, many other things now that are defining points to the downfall...

I spend more time playing shell games on the back end and non-value add stuff than doing anything productive because that's what no one wants.

All of us here could tell you exactly what needs to be done to turn it around, but that's not what is wanted. Right now it's to try and maintain as much value in assets and brands so that they can be purged for cash.
 

CMNTMXR57

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I wouldn't doubt if we know some of the same people. It's a small world in finance in the north west suburbs.
Probably. Plus the revolving door around here isn't just layoffs. It's people jumping off the Titanic too.

Actually, now that you mention Schneider one of my former Financial Analysts left here because we wouldn't promote her (it was out of my hands, I wanted to), so she left here for Schneider. A couple months in, I get a call from her late at night in absolute tears. So I got her back in here. For awhile in the Mattresses business unit, then when that department started to have some turmoil, I helped her get moved to the Real Estate department where she's been since.
 

Ryan02Stang

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Where were you before Sears? You didn't happen to work at Schneider Electric, did you? That's where I know most of my former co-workers went to Sears. I was at Schneider from 2006 until 2014, in the finance department.
Work with Studer, Hendry, or Logan?!?! Loved those dudes!
 

EmersonHart13

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Sears could run out of money before the holidays - Business Insider

Sears could run out of money before the holidays

Sears has been running out of cash, losing $251 million last quarter.
That, coupled with falling sales, could cause its collapse.


It took less than a month. Sears Holdings disclosed on Monday in an 8-K filing with 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.

Also on October 25, the loan terms were further amended “to add a cross-default provision and make certain other changes,” the filing said.

The administrative agent for the loan is JPP II, LLC, which is controlled by ESL Investments, which is the hedge fund of Sears Holdings CEO Eddie Lampert. ESL is the lender. Lampert is on both sides of the deal, representing Sears Holdings stockholders on one side and his own hedge fund on the other.

The $200 million loan has an annual interest rate of 11%. But more important are the real-estate aspects of the loan agreement:

All of the loans under the Second Amended and Restated Loan Agreement are guaranteed by the Company and secured by a first lien on 76 real properties. The $200 million loan is also secured by a second lien on 16 real properties owned by the Borrowers.”

This loan may be the final step with which Lampert and his hedge fund are positioning themselves to cement their control, when the default comes, over the real estate that isn’t already in the clutches of the creditors or hadn’t been transferred to Seritage, which was spun off via a rights offering from Sears Holdings in July 2015. Lampert is chairman of Seritage. Aggrieved investors that had sued Lampert and Sears Holdings claimed that Seritage is also controlled by Lampert. Earlier this year, Sears Holdings and Lampert agreed to settle the suit for $40 million.

But $60 million is a smallish amount – peanuts, really – compared to how much cash Sears burns through in a month, given that it lost $251 million in the quarter and $2.2 billion last year as sales are plunging at an annual rate of nearly 25%. The $100 million borrowed on October 4 and the $40 million borrowed on October 18 are already gone. The $60 million borrowed on October 25 are not going to last long either at the rate at which Sears is burning cash.

And the fate of the formerly iconic retailer, once the largest in America, is now boiling down to the basic question whether it will make it through the holiday selling season and collapse shortly afterwards, or whether, like Toys ‘R’ Us, it won’t even make it that far.

Two weeks ago, the fourth director in 10 months quit Sears’ board.

Read the original article on Wolf Street. Copyright 2017. Follow Wolf Street on Twitter.
 

CMNTMXR57

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Yup.

I joked to one of the VP's a couple months back if my paycheck would bounce here shortly...
 

CMNTMXR57

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No, Chris isn't here. Hendry is a familiar name, but I think I had communica with Bill a long time ago. I've now been here 7.5 years.
 

blakbearddelite

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Yup.

I joked to one of the VP's a couple months back if my paycheck would bounce here shortly...
The day my paycheck bounces is the day I don't go back to work. Though in my position, I would know before it actually happened since I see the cash daily.
 

VenomousDSG

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What are your criteria for one. Kinda like trucks, there are so many variables.
Just a simple 42 or 46 inch deck one. I was looking at the 19HP 42 inch deck one earlier in the year when they had a sale for $1100, but i didn't see it in time to pull the trigger.

This is the deal i missed, if i could get something like this at that price i'd jump on it in a heartbeat.

https://slickdeals.net/f/10081148-craftsman-42-briggs-stratton-riding-lawn-mower-111-syw-1100-more-free-in-store-pickup?src=SiteSearchV2_SearchBarV2Algo1
 

Ryan02Stang

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Yes, Chris Studer, Jason Hendry, and Bill Logan. I think Chris is still there, I know Bill left years ago.
I used to work with Studer and Hendry at Motorola...both are still at Schneider. Studer is in Nashville, and Hendry went into sales I believe. Crazy parties with those guys back in our 20's.

Logan was my boss at CDW, we used to go on business trips together to Vegas. My God we had a hell of a time!
 

CMNTMXR57

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I'll keep an eye out. 42" deck is the most common, so you can get a lot of HP levels with them. Going to the 46" you start getting limited engine choices. Granted they're bigger engines to begin with, but still...

Also, in case you didn't know, Husqvarna makes them, so look for comparable Husky's.
 

blakbearddelite

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I used to work with Studer and Hendry at Motorola...both are still at Schneider. Studer is in Nashville, and Hendry went into sales I believe. Crazy parties with those guys back in our 20's.

Logan was my boss at CDW, we used to go on business trips together to Vegas. My God we had a hell of a time!
I didn't work with them directly on too many things, mostly just casual conversation in the office. My wife has been at Motorola (finance) since she graduated college in the early 2000's. So I wouldn't doubt if you knew her too. Does the name Pellegrini sound familiar?
 

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