Sears' total collapse 'is a matter of when not if'

One of the Only Analysts Still Covering Sears Says It Isn't Viable

 Excerpt:

Sears Holdings Corp., the department-store chain run by hedge-fund magnate Eddie Lampert, plunged 8.8 percent after analysts warned that the company is no longer “viable as a retailer in its current form.”

A shrinking cash pile and narrower gross margins will require the money-losing company to take on more debt this year, Evercore ISI analyst Greg Melich said in a report, which he co-wrote with Matt McGinley. Even if it gets through 2016, Sears faces a “larger liquidity event” -- a cash crunch requiring some action -- the following year, Melich said. His firm is one of the few still tracking Sears, which it rates a sell.

Earlier on Tuesday, Sears said it lost $50 million to $100 million in the fourth quarter on an adjusted basis before interest, taxes, depreciation and amortization. That’s compared with $125 million by the same measure a year ago.

“Sears margins were worse than we thought as a tough retail climate accelerated margin decline,” the analysts said in the report. “A liquidity event is a matter of when not if.”

Comment: Never shop there, nor does the wife (we used to). "Liquidity event" is techno-talk for "running out of money"