Sears appoints second CFO as it faces major store closures and a potential default

By

Emily Jensen

Published
Apr 25, 2017

Financial struggles continue to mount for the long-running retailer, as the company loses its second CFO in six months. At the same time, financial experts speculate Sears could default on its debt within the year.

Sears has lost five members of its senior executive team in just four months, with Chief Financial Officer Jason Hollar the latest to leave the company. Hollar took on the position in October 2016 on the heels of Robert Schriesheim, who had been Sears’ CFO since 2011. According to Sears, Hollar has left the company to “pursue another career opportunity.” Rob Riecker, previously Sears’ controller and head of capital markets activities, will replace him.
 
Amidst these losses in leadership, S&P Global Market Intelligence has named the department store the most vulnerable public retail company in the United States. In order to pay off a $500 million debt to its lenders, Sears is contemplating selling some of its real estate. Financial experts however say this might be a short-term solution to its financial problems that will hurt the company’s standing in the long run.

This year has seen the closures of 150 Kmart and Sears stores, and Sears has already announced plans to close 50 of its Sears Auto Center locations and 92 pharmacies within Kmart stores.
 
Edward S. Lampert, the company’s CEO and chairman, has emphasized the need to cut non-profitable stores. “As we sharpen our focus on profitable areas of our business, we will also continue to closely evaluate the longer-term viability of stores where a clear path to return to profitability is not in sight,” he said in a statement.
 
Lampert also expressed confidence in the incoming CFO, who has worked with the company for 11 years. “Rob’s financial acumen, as well as his long-standing relationships with our vendor and lender partners make him highly qualified for the role,” Lampert said.
 
Among the other senior executives to exit the company in the past few months are Kmart president and chief member officer Alasdair James, executive vice president Jeffrey Balagna and president and chief member officer Joelle Maher.
 
In a company statement, Sears says it has already realized $700 million in annualized cost savings. However, the nationwide department store faces a 24 percent chance of defaulting within a year, according to S&P Global Market Intelligence.