Following a recent “substantial doubt” raised by Sears Holdings over the company's latest annual report, customers are expected to take heed. The company has announced on Tuesday that based on their historical operating results, there are uncertainties related to “the company’s ability to continue.” The focus now shifts towards the vendors of neighborhood Sears stores, who are now in defense mode. Suppliers to the company are taking measures to protect themselves against non-payment.
Check for consumer warranty
Consumer protection agencies are advising customers to get out their warranties and start seeing who honors them.
A warranty that comes from a third party will likely be good, but a warranty from Sears may be troublesome, as it may no longer be in effect once the company goes out of business. Also, gift cards, promotions, and reward points received from one store may not be valid in other outlets. Sears has been shutting down more than 2,000 stores since 2011, so people would need to know where to show up to and if their regular stores are closed, they would want to know which stores are open.
Last month at least 130 people were laid off from Sears’ Hoffman States headquarters, adding to the 250 workers laid off last year and 115 employees early 2015. With each day, another neighborhood store is closed. Sears announced this year it would be closing 150 stores in 40 states, including 108 Kmart and 42 Sears.
Other retail stores are also closing down, unable to compete with the rising popularity of online shopping. J.C. Penney, Macy’s, American Apparel, Abercombie & Fitch, are just a few retail names who had to trim down their outlets to fit in with the crowd. Sears Holdings is even reportedly considering selling its brands to survive.
Suppliers pull out
Vendors are keeping a close eye on Sears’ finances. A former chief executive of Sears Canada and director of retail studies at a business school in New York, Mark Cohen, told Reuters that the vendors that are still with Sears are going to put them on even more of "a shoestring." They’ll ship smaller quantities and demand for payment schemes in advance or upon delivery.
The company’s liquidation sales were started in January, as the company began closing down its stores. Once a successful chain of Department Stores, Sears’ loss has accumulated to $7.4 billion since 2013, and its revenue has Fallen 44 percent to $22.1 billion.
