Following the release of our annual 10-K filing on Tuesday, there have been various media reports quoting a portion of the report that outlines potential risks associated with the company’s financial position, but those reports do not include the full disclosure which highlights the actions we are taking to mitigate those risks.
It is very important to reiterate that Sears Holdings remains focused on executing our transformation plan and will continue to take actions to help ensure our competitiveness and ability to continue to meet our financial obligations. However, we recognize there has been some negative commentary related to our recent disclosures.
To clarify, the comments from our Annual Report quoted by the media are in line with regulatory standards that require management to assess and disclose potential risks the company could face within one year from the reported financial statements. As 2016 proved to be another challenging year for most “bricks and mortar” retailers, our disclosures reflected these developments. While historical performance drives the disclosure, our financial plans and forecast do not reflect the continuation of that performance.
It is also critical to understand that our independent auditors have provided Sears Holdings with an “unqualified audit opinion.” This indicates the Company remains a “going concern,” which means we are a viable business that can meet its financial and other obligations for the foreseeable future. Nonetheless, we have always followed SEC guidelines by providing a complete and comprehensive set of disclosures, just as many other publicly traded companies do.
Again, as we have previously communicated, we are firmly focused on improving the operational performance and financial flexibility of Sears Holdings. This is evident in the decisive actions we have taken in recent months, which include:
- earlier this year, we increased our liquidity by up to $1.0 billion through our Secured Loan Facility and a standby letter of credit facility;
- we also announced an amendment to our existing asset-based credit facility in February 2017, which provided an additional $250 million of financial flexibility;
- additionally, last month, the Company initiated a restructuring program targeted to deliver at least $1.0 billion in annualized cost savings;
- earlier this month, we closed the previously announced Craftsman transaction for a net present value of over $900 million in cash; and
- in late January, we monetized five Sears full-line stores and two Sears Auto Centers for $72.5 million, and we recently received an additional $105 million in gross proceeds from the sale of three Sears full-line stores, one owned and two leased.
In line with these initiatives, despite the risks outlined we remain confident in our financial position and remain focused on executing our transformation plan.
Jason Hollar is Sears Holdings’ chief financial officer.
Cautionary Statement Regarding Forward-Looking Statements: Certain statements contained in this post contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that use words and phrases such as the company “anticipates,” “believes,” “continue,” “expects,” “intends,” “plans,” “transform,” “going to be” and similar expressions or future or conditional verbs such as “will,” “may,” and “could” are generally forward-looking in nature and not historical facts and are intended to identify forward-looking statements. Forward-looking statements are subject to various risks, assumptions and uncertainties, including risks, uncertainties and factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission, that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available, except as required by law.