HOFFMAN ESTATES (dpa-AFX) - Shares of Sears Holdings Corp. (SHLD) fell sharply on Wednesday in reaction to potential risks outlined in the company's annual report, although the retailer said media reports did not include the actions being taken to mitigate those risks.
Sears tumbled by 12.3 percent after the department store operator's annual report said historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern.
A blog post from Sears chief financial officer Jason Hollar said the comments 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 'bricks and mortar' retailers, our disclosures reflected these developments,' Hollar wrote. 'While historical performance drives the disclosure, our financial plans and forecast do not reflect the continuation of that performance.'
Hollar said independent auditors have provided Sears with an 'unqualified audit opinion' that indicates the company remains a 'going concern' that can meet its financial and other obligations for the foreseeable future.
The CFO said the company is firmly focused on improving the operational performance and financial flexibility of Sears Holdings.
Hollar highlighted actions taken in recent months, including increasing liquidity by up to $1.0 billion through a Secured Loan Facility and a standby letter of credit facility.
Sears also recently initiated a restructuring program targeted to deliver at least $1.0 billion in annualized cost savings and completed the sale of its Craftsman brand for about $900 million.
'In line with these initiatives, despite the risks outlined we remain confident in our financial position and remain focused on executing our transformation plan,' Hollar wrote.
Copyright RTT News/dpa-AFX