(WINDSOR, ON) – A major tenant at Windsor’s Devonshire Mall is on very shaky financial ground. Sales at Sears Canada, during its most recent quarter, dropped by 15.2% compared to the same quarter a year earlier. Gross margin slipped to 22.6% compared to 28.2% for the same quarter last year, a decrease of 560bps.
This resulted in a loss of $133.9 million in the quarter compared to a loss of $75.4 million in last year’s quarter. The company has issued a statement saying it questions its ability, “… to continue as a going concern.”
Staying in business will be dependent upon additional sources of financing to implement its business plan. Management, the statement noted, expects cash and forecasted cash flows from operations will not be, “… sufficient to meet obligations coming due over the next 12 months.”
The company also reported it will not be able to borrow up to an additional $175.0 million secured against its owned and leased real estate as part of the second tranche of an existing term loan.
The cash it can borrow has been, “… reduced to an amount up to $109.0 million (before transaction fees). That, and the lack of available alternative sources of liquidity (through real estate monetizations, asset sales or otherwise), which may not be available in a timely manner, mean there are material uncertainties as to the Company’s ability to continue to satisfy its obligations and implement its business plan in the ordinary course.”
The Company traces its financial problems of recurring operating losses and negative cash flows from operating activities to 2014 when it began experiencing net losses.
Sears Canada is no longer directly owned by its US counterpart.