In its annual report released on Tuesday, the retailer, which owns Sears and Kmart, said that its years-long sales declines, "indicate substantial doubt exists related to the Company's ability to continue as a going concern." In other words, many think Sears will go under.
Sears Holdings sales have been imploding for years now, and the company has now lost a total of almost $10 billion in the last six years. Comparable sales at Kmart fell 7.4% last year, while at Sears they were down 9.3%, much bigger drops than at almost all other major retailers.
The cash bleed has been such that credit ratings agency Fitch earlier this year estimated the company would burn through $1.8 billion in the current fiscal year and estimated Sears would have to raise some $2 billion to get through the latest cash squeeze, even hinting at the possibility of bankruptcy.
The retailer has in recent years sold off many assets, from Lands' End to its Craftsman tool brand to some of its best stores, staving off liquidity crunches. Sears Holdings has also borrowed money from its chief executive, hedge fund manager Eddie Lampert, and refinanced much of its debt. Last month, it announced moves to cut costs by $1 billion. Sears has also cut its debt and pension obligations by at least $1.5 billion this year. And it is closing another 150 stores.
In its annual report, Sears said those moves will help in "mitigating the substantial doubt" but also "satisfying our estimated liquidity needs 12 months from the issuance of the financial statements."
"We want to be very clear that we're taking decisive actions to mitigate that doubt," a Sears spokesman told Fortune in an e-mail statement.
And last month, in an open letter to employees, Lampert said "we also have what it takes to move us forward. We are in a financial position to continue to fund our operating needs and meet our financial obligations."
Still, Lampert has been promising investors and employees a turnaround for years, saying Sears would become a leaner retailer focused on members. Yet comparable sales have kept declining and losses mounted, with no relief in sight.
And it's worth noting that last year's annual report didn't include mention of those "going concern" doubts.