Future of Sears Canada looks grim, posts $144-million loss

Andrew Cummings
June 13, 2017

Sears Canada is warning there is "significant doubt" about the company's ability to continue and says they have begun exploring strategic alternatives, including the sale of the company.

Revenues for the first quarter fell 15.2 percent, as sales continue to decline at the company since it was divested off from parent Sears Holdings Corp in 2012.

Sears Canada is in trouble.

Based on management's current outlook, cash flow won't be enough to meet obligations over the next year, the Toronto-based chain said on Tuesday.

The net loss for the first quarter was $144.4 million ($1.42 per share) compared to a net loss of $63.6 million (62 cents per share) in the same quarter past year.

Since 2014, Sears Canada has reported recurring operating losses and negative cash flows and the trend continues in 2017.

The company follows its USA counterpart in delivering the so-called going-concern notice, raising fresh doubts about the once-dominant Sears empire.

Sears Canada had expected to be able to borrow up to $175 million to pay off its debts, but has only been able to negotiate an amount of up to $109 million.

"There are material uncertainties as to the Company's ability to continue to satisfy its obligations and implement its business plan in the ordinary course". With that in mind, a special committee of the board of directors has been established to assist the board in this process.

In light of these developments, Sears Canada has determined to postpone its 2017 annual meeting of shareholders scheduled for June 14 to a date to be determined.

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