Sears Holding Corp. shares fell sharply Wednesday morning after a media report said a vendor halted shipments to the department-store chain.
The move comes as suppliers are growing increasingly concerned about Sears's finances ahead of the crucial holiday shopping season.
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Shares slumped as much as 17% to $25.05 on heavy trading volume. The stock has lost about half its value over the past 12 months.
Sears has been slashing costs and shedding businesses in the face of declining sales and weaker margins. The owner of the Sears and Kmart
chains said last week it plans to reap as much as $380 million by selling the bulk of the 51% stake it holds in Sears Canada to its own shareholders.
Chief Executive Officer Edward Lampert has taken steps to turn the company around by making it into more of a digital player, but those efforts haven't boosted the bottom line. Sears lost nearly $1 billion in the six months through Aug. 2, and its operations burned through $747 million in cash, as sales fell 8%.
Wednesday's drop came after Bloomberg reported three of the biggest insurance firms for Sears's suppliers are aiming to reduce coverage. The move prompted at least one medium-sized vendor to halt shipments, Bloomberg said.
A Sears representative wasn't immediately available for comment about the Bloomberg report.
The Wall Street Journal reported last week that Euler Hermes Group SA, a firm that insures suppliers against nonpayment, is canceling policyholder coverage on Sears. It wasn't clear how much Sears inventory was covered by the insurer, which said it continues to monitor the situation closely. Euler Hermes says it insures nearly $1 trillion of business transactions world-wide.
Sears has lost about $6.4 billion over the past three and a half years, and Fitch Ratings has said its operations don't generate enough cash to cover what it needs to spend on pension contributions, interest payments, and investments in its stores and website.