With Sears future in doubt, vendors begin pulling back

← Homepage

Sears Holdings Corp's (SHLD. O) disclosure that it could lack the financial strength to continue as a going concern is turning attention to the key difference maker for any cash-strapped retailer: vendors. Suppliers to Sears told Reuters they are doubling down on defensive measures, such as reducing shipments and asking for better payment terms, to protect against the risk of nonpayment. They expect tension to mount as Sears approaches the key fourth-quarter selling season amid rising concern about a potential bankruptcy, they said. The storied American retailer, whose roots date back to 1886, said on Tuesday that "substantial doubt exists related to the company's ability to continue as a going concern."The managing director of a Bangladesh-based textile firm said his company is using only a handful of its production lines to manufacture products for Sears' 2017 holiday sales. Last year, nearly half of the company's lines in its four factories were producing for Sears. "We have to protect ourselves from the risk of nonpayment," said the managing director, who declined to be identified for fear of disrupting his company's relationship with Sears. Mark Cohen, the former chief executive of Sears Canada and director of retail studies at Columbia Business School in New York City, said vendors will keep a close eye on Sears' finances. "Whatever vendors continue to support them are now going to put them on even more of a short string. That means they’ll ship them smaller quantities and demand payment either in advance or immediately upon delivery."He added: "Sears stores are pathetically badly inventoried today and they will become worse."

Jason Hollar, Sears' chief financial officer, said in a Wednesday blog post that Sears' move to raise capital in recent months is helping strengthen the company's balance sheet. Sears is "a viable business that can meet its financial and other obligations for the foreseeable future," Hollar said. He cited a $1 billion increase in liquidity from a new secured loan facility and a new asset-based loan that provided $250 million more in "financial flexibility."SIGNS OF WEAKNESS Still, Sears' cash position has shrunk dramatically in recent years. Sears, which lost $2.22 billion in the year ended Jan. 28, 2017, had $286 million in cash on hand, down from $609 million in 2012.

Retailers in distress often use their accounts receivable to finance operations, and Sears had $466 million in receivables, down from $635 million in 2012. Another supplier to Sears, Arnold Kamler, CEO of New Jersey-based bicycle manufacturer and importer Kent International Inc, said he was not surprised by Sears' Tuesday announcement. He said he noticed a warning sign last year when Sears pushed to increase its purchases, which occurred "because a lot of their current suppliers were either cutting them off or limited them on credit." Kamler said he declined to sell Sears more product and that he receives a report once a week from his accounting department because of concerns around billing, payments and deductions.

Exclusive: Advent pulls bid for Pfizer's Brazil venture - sources SAO PAULO U.S. private equity firm Advent International Corp has withdrawn from a bidding process to acquire Pfizer Inc's Brazilian generic drugs joint venture, leaving rival Bain Capital LP as the only contender for the company, two people with direct knowledge of the matter said on Thursday.

Brazil scandal tests JBS, BRF push for overseas units IPOs SAO PAULO Brazil's two largest food processors are striving to restore confidence in their quality controls as they pursue plans to list overseas units after a scandal over alleged bribery of health officials that triggered bans on Brazilian meat exports.

var dz_final = TR3.extractDartZone(); // leaderboard if( 'bi_content_article' == 'leaderboard'){ //US/UK HOME FASTLANE if((TR3.extractDartZone().indexOf("us.reuters") > -1) || (TR3.extractDartZone().indexOf("uk.reuters") > -1) || (TR3.extractDartZone().indexOf("jp.reuters") > -1)){ if(typeof(Reuters)!='undefined' && typeof(Reuters.info)!='undefined' && typeof(Reuters.info.channel)!='undefined') {displayAd_sync_fastlane(dz_final, "articleID=USKBN16T31S;storychannel=" + Reuters.info.channel + ";" + adParams2 + "" );} else{ displayAd_sync_fastlane( dz_final, "articleID=USKBN16T31S;" + adParams2 + "" ); } } else{ if(typeof(Reuters)!='undefined' && typeof(Reuters.info)!='undefined' && typeof(Reuters.info.channel)!='undefined') { displayAd_sync(dz_final, "articleID=USKBN16T31S;storychannel=" + Reuters.info.channel + ";" + adParams2 + "");} else{ displayAd_sync( dz_final, "articleID=USKBN16T31S;" + adParams2 + "" ); } } } else if('bi_content_article' == 'mpu'){ googletag.cmd.push(function() { googletag.display('div_gpt_mpu'); }); } else if('bi_content_article' == 'mpu2'){ googletag.cmd.push(function() { googletag.display('div_gpt_mpu2'); }); } else if('bi_content_article' == 'mpulow'){ googletag.cmd.push(function() { googletag.display('div_gpt_mpulow'); }); } else if('bi_content_article' == 'leaderboardcenter'){ if((TR3.extractDartZone().indexOf("us.reuters") > -1) || (TR3.extractDartZone().indexOf("uk.reuters") > -1)|| (TR3.extractDartZone().indexOf("jp.reuters") > -1)){ googletag.cmd.push(function() { googletag.display('div_gpt_lb_center'); }); } else{ displayAd("div_gpt_bi_content", dz_final, [[265,260],[1,1]], "type=bi_content_article;articleID=USKBN16T31S;" + adParams2 + "" ); } } else if('bi_content_article' == 'leaderboardlow'){ if((TR3.extractDartZone().indexOf("us.reuters") > -1) || (TR3.extractDartZone().indexOf("uk.reuters") > -1) || (TR3.extractDartZone().indexOf("jp.reuters") > -1)){ googletag.cmd.push(function() { googletag.display('div_gpt_lb_low'); }); } else{ displayAd("div_gpt_bi_content", dz_final, [[265,260],[1,1]], "type=bi_content_article;articleID=USKBN16T31S;" + adParams2 + "" ); } } else{ if(typeof(Reuters)!='undefined' && typeof(Reuters.info)!='undefined' && typeof(Reuters.info.channel)!='undefined'){ displayAd("div_gpt_bi_content", dz_final, [[265,260],[1,1]], "type=bi_content_article;articleID=USKBN16T31S;storychannel=" + Reuters.info.channel+ ";" + adParams2 + "" ); } else{ displayAd("div_gpt_bi_content", dz_final, [[265,260],[1,1]], "type=bi_content_article;articleID=USKBN16T31S;" + adParams2 + "" ); } }