Sears faces new obstacle in turnaround
A company that lent money to the chain's suppliers will stop providing financial assistance.
One company that makes loans to small businesses, CIT Group (CIT), will no longer provide financial assistance to Sears' suppliers waiting to be paid.
Sears shares fell 3.5% to $31.75 in midday trading, and CIT Group shares were unchanged at $37.14.
The news couldn't have come at a worse time. The company recently reported dismal holiday sales and plans to shutter as many as 120 underperforming locations. Sears is downplaying the significance of CIT's decision not to provide suppliers with payment guarantees, arguing that "goods factored by CIT represent less than 5% of the company's inventory," according to Bloomberg. However, CIT is a giant in the industry, and other companies may follow its lead.
The following video discusses whether CIT Group's move may undermine the confidence of some of Sears' suppliers.
Post continues below.
Among Sears' biggest suppliers are appliance makers Whirlpool (WHR) and Electrolux (ELUXB), the news service says. CIT's decision may also affect apparel providers such as the Kardashians, whose Kardashian Kollection is available exclusively at Sears. Other big Sears brands include Craftsman, DieHard and Land's End.
Sears, whose shares have plunged more than 58% in the past year, has huge problems. Sales have fallen ever since Lampert merged Sears Roebuck and Kmart in 2005. The company's brand identity is muddled among customers and investors.
Though Thursday's news is hardly a death knell for Sears, it highlights the challenges that Lampert and CEO Lou D'Ambrosio face in turning around this once-venerable brand.
Jonathan Berr owns no shares of the listed companies.
Sears went from a store where you could buy anything to a clothing and appliance store with tools. If they would go back to their original concept then they could be a major factor in the business world.
They have forgotten what made them strong in the first place. Having what the customer wanted and customer service. They do not carry hunting items, bikes, carpeting, kitchen cabinets, all of the things that made them America's Store. Go back to their roots and they will survive.
Bring back the quality of yesterday and make your products as they were before, Made In America. Your tools are junk anymore, they used to be the best. Your warrantee is pure rubbish.
Turn it around? Get rid of the hedge fund guy. Crapert or whatever his name is. The guy who excels at failure.
This was one of Jim Cramer's biggest picks of all time.
I went to a K-mart in my community two Christmas' ago. We waited by the Jewelry counter for over 1/2 hour with the Light on. Finally had the check out girl call the manager. No one showed up for another 15 minutes and those "associates' that walked by said it wasn't their department. I told the Check out gal, she was very nice to us and that she should be looking for another job as I didn't think this store would stay open much longer. This year it is one of those being closed. I hope the check out girl found a different job last year.
Next time Jim says buy, buy, buy, I will know to sell, sell, sell.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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