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Sears Enters Death Spiral: Vendors Halt Shipments, Insurers Bail

Sears Enters Death Spiral: Vendors Halt Shipments, Insurers Bail


Mar 23, 2017 1:26 PM

When we commented yesterday morning on the unexpected "going concern" notice in Sears' just filed 10-K which sent the stock crashing, we pointed out the immediate spin provided by Eddie Lampert's distressed retailer which promised that its comeback plan may help alleviate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements", to which however we added the footnote that "the question is what happens when vendors start demanding cash on delivery as concerns about SHLD.'s liquidity concerns continue to grow."

As it turned out, we wouldn't have long to wait, because overnight Reuters reported that the worst case Sears scenario we envisioned for Sears is now taking shape and that suppliers to Sears have told Reuters they are doubling down on defensive measures, such as reducing shipments and asking for better payment terms, to protect against the risk of nonpayment as the company warned about its finances.

The company's disclosure turned the focus to its vendors as tension is expected to mount ahead of the key fourth-quarter selling season amid rising concern about a potential bankruptcy, they said.

Quoted by Reuters, the managing director of a Bangladesh-based textile firm said his company is using only a handful of its production lines to manufacture products for Sears' 2017 holiday sales. Last year, nearly half of the company's lines in its four factories were producing for Sears. "We have to protect ourselves from the risk of nonpayment," said the managing director, who declined to be identified for fear of disrupting his company's relationship with Sears.

Furthermore, precisely as we predicted, Mark Cohen, the former CEO of Sears Canada and director of retail studies at Columbia Business School said vendors will keep a close eye on Sears' finances. "Whatever vendors continue to support them are now going to put them on even more of a short string. That means they’ll ship them smaller quantities and demand payment either in advance or immediately upon delivery."

He added: "Sears stores are pathetically badly inventoried today and they will become worse."

Another supplier to Sears, Arnold Kamler, CEO of New Jersey-based bicycle manufacturer and importer Kent International Inc, said he was not surprised by Sears' Tuesday announcement. He said he noticed a warning sign last year when Sears pushed to increase its purchases, which occurred "because a lot of their current suppliers were either cutting them off or limited them on credit."

read more:
http://www.zerohedge.com/news/2017-03-23/sears-enters-death-spiral-vendors-halt-shipments-insurers-bail

"We are shaped by our thoughts; we become what we think. When the mind is pure, joy follows like a shadow that never leaves."

Comments

  • Matt_ADMIN_Matt_ADMIN_ Administrator
    Sears used to be a really big deal when I was a wee lad
    -------------------
    "...Say, 'GOD is sufficient for me.' In Him the trusters shall trust." (Quran 39:38)
  • Sears used to be a really big deal when I was a wee lad
    My mother used to buy much of my childhood wardrobe there.  We'd always wander around Sears when we'd come into town and visit the mall.  Eatons as well (and then later The Bay).

    Now, department stores bookending malls seem to be little more than extravagant entrance lobbies for the rest of the mall's stores.
  • Matt_ADMIN_Matt_ADMIN_ Administrator
    Sears used to be a really big deal when I was a wee lad
    My mother used to buy much of my childhood wardrobe there.  We'd always wander around Sears when we'd come into town and visit the mall.  Eatons as well (and then later The Bay).

    Now, department stores bookending malls seem to be little more than extravagant entrance lobbies for the rest of the mall's stores.
    There doesn't seem to be much point in buying things at a department store anymore, since they're always more expensive than shopping online and have less selection. I remember the "Sears Catalogue" essentially being "the document" that everyone poured through to check out all the latest cool stuff. 

    Eatons - I remember that place being a big deal too. All gone now. I think the one in Toronto still exists. 
    -------------------
    "...Say, 'GOD is sufficient for me.' In Him the trusters shall trust." (Quran 39:38)
  • The Toronto Eaton's is a Nordstrom now.  Walked through there on my visit in January.  They had a $3000 purse shaped like a lap dog, among other luxury nonsense.  Definitely not my kind of place.

    I just checked Wikipedia and it seems all of the Eaton's are gone.  Sears bought the company, but closed the last stores between 2008-2015.  All that's left of Eatons at the Eaton center is the Sears head office on the top floor.
  • Rosie_MOD_Rosie_MOD_ Moderator
    They had a $3000 purse shaped like a lap dog, among other luxury nonsense.

    "The Moggie Bag"
    httpmediagalaxantcom000413237desktop-1445013817jpg

    "The Doggie Bag"
    Image result for purse shaped like dog

    "We are shaped by our thoughts; we become what we think. When the mind is pure, joy follows like a shadow that never leaves."

  • Matt_ADMIN_Matt_ADMIN_ Administrator
    Lol, they both look like the real thing, and I sincerely hope they weren't manufactured in China...
    -------------------
    "...Say, 'GOD is sufficient for me.' In Him the trusters shall trust." (Quran 39:38)
  • Rosie_MOD_Rosie_MOD_ Moderator
    They do tend to  eat a bit much and it can be embarrassing when your handbag yaps out the window at passing cars :(

    "We are shaped by our thoughts; we become what we think. When the mind is pure, joy follows like a shadow that never leaves."

  • Matt_ADMIN_Matt_ADMIN_ Administrator
    I wonder, what happened to "people's malls"? What happened to the videogame arcades? The inexpensive movie theatres? The lively food courts that offered more than the same dozen corporate offerings? The water fountains? 

    What happened to a generous variety of stores that offered interesting things for all manner of customers, rather than just an infinity of women's clothing shops and luxury goods?

    Why do "higher end" malls all suddenly feel so sterile, like clones of one another? In fact, why does everything altogether in society seem like it's oozed out of some factory mould, with little character or life to it?


    -------------------
    "...Say, 'GOD is sufficient for me.' In Him the trusters shall trust." (Quran 39:38)
  • Rosie_MOD_Rosie_MOD_ Moderator
    Friends have told me American and Australian shopping centres are very similarly arranged.  Agreed there is a sterile quality about the renovated malls. Most no longer have CD shops or individual niche stores that aren't part of a major chain. Simply doesn't make sense that these centres are being "embiggened" when people are getting cheaper deals on line by ordering in their lounge room.

    "We are shaped by our thoughts; we become what we think. When the mind is pure, joy follows like a shadow that never leaves."

  • Matt_ADMIN_Matt_ADMIN_ Administrator
    They use "embiggened" in Australia! Excellent.
    -------------------
    "...Say, 'GOD is sufficient for me.' In Him the trusters shall trust." (Quran 39:38)
  • Rosie_MOD_Rosie_MOD_ Moderator
    Have an inkling it was used on The Simpsons which was one of my lowbrow favourites.

    "We are shaped by our thoughts; we become what we think. When the mind is pure, joy follows like a shadow that never leaves."

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