Sears Rises on Report CIT Approving Orders as Early as Today
Sears Holdings Corp. (SHLD) advanced in New York trading following a report that CIT Group Inc. will approve financing for the retailer’s vendors as soon as today.
Sears rose 7.6 percent to $42.50 at 2:35 p.m., after earlier increasing as much as 11 percent. The shares dropped 56 percent last year.
CIT is looking for more detailed information on Sears’s financing and may require letters of credit for all orders, Women’s Wear Daily reported, citing unidentified people familiar with the plan. CIT is the largest U.S. company that provides what’s known as factoring.
Last week, two people familiar with the situation told Bloomberg that Sears’s suppliers were unable to get loans from CIT for their shipments to the retailer. CIT told clients it would no longer approve credit for orders after Jan. 11, according to the people, who declined to be identified because the information wasn’t public.
Chris Brathwaite, a Sears spokesman, and Curt Ritter, a CIT spokesman, both declined to comment.
Goods factored by CIT represent less than 5 percent of the company’s inventory, Sears has said. Factoring companies such as New York-based CIT provide money on a short-term basis for manufacturers to produce goods for retailers. In return, they get a fee based on a percentage of the total order.
Sears has lost customers and market share to discounters such as Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT), which are attracting budget-minded consumers. Chairman Edward Lampert, who along with his hedge fund owns about 60 percent of the U.S. department store chain, has presided over four years of declining sales since merging Sears Roebuck with Kmart in 2005.
Last month, Sears announced plans to close as many as 120 stores. Same store sales fell 5.2 percent in the eight weeks ended Dec. 25.
Sears rose 9.5 percent Jan. 17 amid speculation that the company will go private. Lampert bought 4.46 million shares from his ESL hedge fund at $29.20 per share, according to a regulatory filing last week.
Sears is scheduled to report fourth-quarter earnings on Feb. 23.
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