Sears Holding Corp’s vendors in the U.S. have demanded speedier payment from the retailer as they fear for its long-term health amid a string of losses.
According to MarketWatch, some vendors have made a deal with Sears to get payment within 15 days in return for a price discount of three to five per cent on merchandise. The retailer typically pays suppliers within two months.
The U.S.-based Sears had an annual loss of $1.7 billion in 2014, up from $1.4 billion in 2013.
Sears Canada’s annual report released earlier this week reveals it is in no better shape. It lost $339 million in 2014, narrowed from $446 million the previous year.
Same-store sales, a key metric in the retail industry, declined by 8.3 per cent in Canada last year.
The faster payments tie up more of Sears’s cash and complicate its efforts to turn around its business by carving out a niche as a value retailer in suburban and rural markets.
In Canada, the retailer has struck a deal to sell three properties to real estate development firm Concord Pacific for $140-million, then lease the locations back under long-term deals. The stores at Metrotown in Burnaby, B.C., Cottonwood Mall in Chilliwack, B.C. and North Hill Shopping Centre in Calgary, are to remain open.
Analysts say the retail deals are a way for Sears Canada to get more cash in the face of its steep losses. The U.S. retailer sold most of the stake in the Canadian unit to company chair Eddie Lampert in a bid to raise cash.
But some Sears Canada landlords would like to push out the retailer, whose rents are often below market, in favour of more promising tenant.
Sears Lampert has moved quickly to ensure he can milk value from the retailer, selling off some real estate assets and moving other U.S. properties in a real estate investment trust.
If Sears has a Target-style shutdown, that could lead hundreds of vendors with unpaid bills and little of value to draw on.