Chris Isidore at CNN Business looks at the latest bankruptcy court action and provides a grim outlook on the future of Sears and Kmart: Sears’ next few weeks will determine its future. Key points:
- Accounting measures confirm reports of few shoppers in stores.
- Sales have to pick up sharply in the next four days.
- The company is rapidly burning through its cash, something that couldn’t possibly happen at a healthy retailer during the peak shopping season of the year.
- There is only one known bid to keep stores open. This is a no-cash bid from the company’s CEO. Creditors don’t like the bid and have asked the court to disallow it.
The only plausible hope for Sears and Kmart at this point is that holiday-season revenue is better than the company’s own accountants say. If December sales are not as bad as they look, there is a chance that a buyer will materialize during the week after Christmas. It’s hard to get detailed and meaningful financial measures in real time, so it will take about two more weeks to find out whether the two retail chains have to go into liquidation in the early months of 2019.
Update, Friday, December 21: Lauren Hirsch at CNBC reports “Sears weighs 50 to 80 more store closures as challenges mount for Eddie Lampert’s bid to keep the retailer alive.” Unpacking the headline:
- Sears is planning to close more stores ASAP.
- There are gaps in the CEO’s bid for Sears assets. There is no formal bid yet and the problems are serious enough that a bid might not be put together in time for next week’s deadline. In the meantime, there are no publicly known bids.
I am only speculating, but it seems to me that the “bid” for Sears might be just for show, with the thought of creating the appearance of an active auction so that the real bidders will be encouraged to place bids. It is all for nothing if there are no potential buyers waiting in the wings.