Will Sears' Annual Meeting on Wednesday Be Its Last?May 9, 2018 – Media Mention
The approaching end of Sears (SHLD - Get Report) has been well documented and that slow burn should continue.
As Sears Holdings Corp. stages its annual meeting on Wednesday, May 9, retail experts believe it may hang on longer, although not by conventional means for a department store chain.
"Despite constant speculation about its demise, Sears is the great survivor," GlobalData Retail manager partner Neil Saunders told TheStreet on Tuesday, May 8. "Sears has bought itself time by monetizing assets and receiving loans from its CEO [Eddie Lampert]. Those two dynamics can't continue indefinitely."
Saunders added that asset sales are especially troubling because while they provide liquidity to cover trading losses, they also weaken the balance sheet at a time when Sears has a heavy debt load. Sears has needed some $2 billion in liquidity for the last six years just to keep operating, according to Fitch Ratings.
The stock is also hanging by a thread. It has fallen more than 73% since this time last year, closing at $2.76 on Tuesday. Shares sank to a 52-week-low of $1.99 on Feb. 12.
"Key is the proposed sale of assets to Lampert's fund," Brian Davidoff, head of Greenberg Glusker's Bankruptcy and Financial Restructuring Group, told TheStreet. "While the assets to be spun off will likely produce good cash flow when unhinged from the company's debt burden, in the long term what is Sears left with to restructure its operations if its more profitable businesses are carved off? While the solution may pay dividends to the buyers of the Kenmore and related assets, it deepens the company's problems."
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