Sears Holdings (NASDAQ:SHLD) on Wednesday sought to alleviate concerns among investors about the state of the floundering retailer, which issued an ominous disclosure earlier this week.
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In its annual report filed Tuesday with the SEC, Sears added new language saying its âhistorical operating results indicate substantial doubt exists related to the companyâs ability to continue as a going concern.â The disclosure sent the companyâs shares 12.3% lower Wednesday.
CFO Jason Hollar wrote a blog post to clarify the statement, saying it was meant to comply with regulatory standards that require companies to explain any risks to investors. Despite being a âgoing concern,â Sears is a âviable business that can meet its financial and other obligations for the foreseeable future,â Hollar said.
Tuesdayâs disclosure came six weeks after Sears announced new steps aimed at jumpstarting sales and revitalizing the brand. Sears, which also owns Kmart, targets $1 billion in cost cuts and a $1.5 reduction in the companyâs debt and pension obligations.
Sears is also exploring deals for its Kenmore appliances and Die Hard car batteries. Sears already has a deal in place to sell Craftsman to Stanley Black & Decker (NYSE:SWK). In addition to putting some brands on the block, Sears has closed hundreds of stores, placed other locations into a real estate investment trust (REIT) and raised capital from CEO Edward Lampert, whose hedge fund is the retailerâs second-largest shareholder.