Shares of Sears Holdings were down sharply Wednesday afternoon after the beleaguered retailer revealed in its annual report that it could be on the brink of bankruptcy.
“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” the company said in its 10-K filing, released late Tuesday.
The revelation sparked fears among investors, sending the stock down 13 percent on Wednesday. The company, which owns Sears and Kmart, issued another statement Wednesday attempting to clarify its news.
“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,” said CFO Jason Hollar in the statement. “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.”
Hollar went on to say: “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 brick-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.”
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The company, which has lost $5 billion over the past three years, is just one major player facing major financial turmoil this spring. Payless is expected to file for bankruptcy in the coming days, while nine other major fashion firms have done so since the beginning of the year.