The perilous position of what once was America’s favorite store

Not America’s favorite anymore.
Not America’s favorite anymore.
Image: AP Photo / Damian Dovarganes
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For decades, Sears, which traces its origins back to 1893, had justifiable claims on being “America’s retail store”.

Now, the company is fighting for its survival.

“[T]his story is not likely to have a happy ending, and that ending continues to depend on suppliers,” Credit Suisse wrote in a research note to clients this morning.

Shortly thereafter, Bloomberg reported that suppliers apparently are halting shipments to the struggling merchant, which operates Sears department stores in the US and Canada and also owns the Kmart discount chain. The company subsequently said on its blog that it has “significant financial flexibility to execute our transformation and meet our obligations.”

But Sears has been bleeding cash for years (Credit Suisse estimates it will generate negative operating cash flow of up to $2 billion this year) and concerns about its crippling debt load are mounting.

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Sears has been selling off assets to raise funds, but credit analysts think it could run out of cash by 2016 (paywall). The markets seem to be heeding the warning—shares of Sears Holdings, down 38% this year through yesterday, were down 11% in today’s session at midday, bringing the year-to-date decline to 45%.