Sears Issues Response To Report That Made Its Stock Crash

Shares of Sears were down as much as 15% on Wednesday after a report from Bloomberg’s Lauren Coleman-Lochner said that at least one “medium-sized” vendor had halted shipments to the store.

Coleman-Lochner, citing people with knowledge of the matter, reported that insurance firms for the retailer’s vendors were seeking to reduce coverage of orders to the company.

As Coleman-Lochner writes, “Suppliers rely on credit insurance to protect themselves against not getting paid for products they ship to retailers,” adding that, “Under the terms of most policies, insurers are allowed to cancel if a retailer’s operations deteriorate enough that its viability is in doubt.”

Vendor insurers took similar measures on J.C. Penney Co. last year but resumed coverage as the company’s sales rebounded, Coleman-Lochner reported, noting that while this action from insurers was a “red flag,” retailers could recover.

12:45 pm ET update

Sears issued a statement following Bloomberg’s report, saying that, “In response to a misleading article recently published, we want to make sure our vendors and the marketplace know all the facts and understand that Sears Holdings has significant financial flexibility to execute our transformation and meet our obligations.”

The company said it has “significant financial flexibility” and that it “continues to meet all of [its] obligations.”

Here’s the full statement from Sears spokesman Howard Riefs:

In response to a misleading article recently published, we want to make sure our vendors and the marketplace know all the facts and understand that Sears Holdings has significant financial flexibility to execute our transformation and meet our obligations.

Here are the facts:

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