Mar 23, 2017 08:47 PM EDT
Sears Holdings Corp., once one of the largest retailers in the US, has admitted overnight its ongoing survival is unlikely and its plan to avoid bankruptcy by selling off or licensing brands may prove difficult.
After six consecutive years of losses, Sears has finally conceded in a legal filing overnight that it is facing "substantial doubt" it can continue to trade and that selling off or licensing brands, including Kenmore and DieHard, may prove difficult because of changing consumer tastes and possible roadblocks.
The company, which also owns Kmart in the US, posted earlier this month a latest quarterly loss of $717 million, taking its annual loss to almost $2 billion.
In recent years, Sears has survived by selling off assets to maintain cashflow. Among the retailer's best-known brands, according to Reuters, are the Kenmore brand for appliances and the DieHard brand for car batteries, whose roots date back to 1886.
Sears, which also has dozens of other in-house apparel and houseware brands, has sold its Craftsman tool brand in January this year to Stanley Black & Decker.
According to analysts, Sears may have failed to move with the changing tastes of consumers. The Reuters article noted the worth of the retailer's assets has declined as it has fallen favor with consumers. It further stated the company's brands are yesterday's names.
Doug Stephens, an independent retail industry consultant, said Sears is serving a customer base that is over the age of 50 or 55. He added that as younger consumers increasingly embrace "smart appliances," they do not perceive the 90-year-old Kenmore brand as being at the cutting edge of technology.
A report from Inside Retail Asia mentioned that Sears has said its pension agreements may prevent the spin-off of further divisions. In other words, the company has run out of cash.
Sears has issued a statement filed with the Securities and Exchange Commission that its "historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern."
The statement issued contradicted to what the company has stated 13 days ago that it had a "clear path towards profitability."
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