Sears Canada Increases ‘significant doubt’ Concerning the Future

Sears Canada, recognized for its catalogs that were a household foundation for a very long time, stated on Tuesday that there is “significant doubt” about its future and it could sell or reconstitute itself.

The struggling retailer, which tried to reinvent itself last year with a new corporate logo, said it doesn’t expect to have enough cash flow over the next 12 months to meet its obligations. It’s the latest sign of how the retail sector is being upended by numerous factors, including the rise of online shopping.

“The company continues to face a very challenging environment with recurring operating losses and negative cash flows from operating activities in the last five fiscal years, with net losses beginning in 2014,” Sears Canada (TSX:SCC) said in a statement.

“While the company’s plans have demonstrated early successes, notably in same-store sales, the ability of the company to continue as a going concern is dependent on the company’s ability to obtain additional sources of liquidity in order to implement its business plan.”

In a retail world governed by companies like Amazon, Sears Canada has struggled, and has so far been in the shadow of what it used to be in the past.

In spite of its recent changes and hard work to go back to where it belongs, “the writing has been on the wall for Sears Canada for about a decade,” said Mandeep Malik, an assistant professor at the DeGroote School of Business at McMaster University.

“It was a too-little, too-late kind of story,” he said.

Malik said Sears Canada was not able to meet the demands and expectations of its clients and is now trying to make it up in a super-competitive market.

Sears Canada recently announced that it had a loss of $144,4 million, more than twice what it lost last year. Its income dropped from about $90 million to $505,5 million, a 15,2 per cent drop.