Sears Holdings, once the largest U.S. retailer, warned on Tuesday about its ability to continue as a going concern after years of losses and declining sales.
“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” Sears said in the annual report for the fiscal year ended Jan. 28.
Shares of the retailer were down almost 12 percent in premarket trade on Wednesday.
The company said an inability to generate additional liquidity might limit its access to new merchandise or its ability to procure services. Continued operating losses also could restrict access to new funds under its domestic credit agreement, according to the filing.
The warning comes less than six weeks after the company announced what it called the “next phase of its strategic transformation,” in which it hoped this year to reduce costs by $1 billion and cut its debt and pension obligations by at least $1.5 billion. Sears also is considering selling some of its businesses, such as the Kenmore appliances and DieHard car battery brands.