Sears Canada said today that there is “significant doubt” about its future.
The plan? It could sell or restructure itself, but the bottom line is that online shopping is burying the business.
Sears, known for catalogues that were a staple in the homes of generations of Canadians, saw its shares plummet by 39 per cent to 70 cents on the Toronto Stock Exchange minutes after the opening bell and said based on its current assessment, cash and forecast cash flows from operations are not expected to be enough to meet its obligations over the next 12 months.
Sears Canada reported a first-quarter loss of $144.4 million, more than double what it was a year ago, and a 15.2 per cent decline in revenue. On top of that the company had expected to be able to borrow $175 million, but that has been reduced to about $109 million. It said it also lacks other assets, such as real estate, that can be monetized in a timely manner.
While there were improvements in sales at its stores, revenue fell by about $90 million to $505.5 million due to a drop in its catalogue and online sales. Sears Canada also postponed its annual meeting, which had been scheduled for Wednesday, until an unspecified date.
According to its 2016 annual report, the company had 95 department stores, 26 Sears Home locations and 14 outlets.
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