Reports claim that U.S. vendors are demanding faster payments from Sears (NYSE:SHLD) as they fear for the long-term health of the company. But Sears is defending the normalcy of the expedited payments, saying the deals are a smart business move for both the retailer and the vendor.
Reports say that vendors have made a deal with Sears to receive payment within 15 days in exchange for a price discount of three to five percent on items, reported CBC News.
But the retailer shot back by reaffirming that it is meeting its financial obligations, which include paying vendors. Sears Holdings CFO Rob Schriesheim answered the reports on the company's blog by stating that paying back suppliers in a shorter time frame, and negotiating a discount, was actually a positive move.
He added that the company will continue with its plan to convert 200 to 300 stores into a real estate investment trust to provide the retailer with more than $2 billion in cash. News of the REIT was confirmed last month by CEO Edward Lampert and is set to be completed by June 1.
"We have 50,000 suppliers and vendors. Providers of insurance have never had to pay a claim to any vendor tied to SHC's business," Schriesheim wrote on the Sears Holdings blog. "What does that mean? We are paying our vendors and meeting our obligations as we always have. Vendors who spent their own money to hedge against non-payments did nothing more than decrease their profits."
Schreisheim suggests at the end of the post that readers "look closer" and carefully digest the information that is made public to understand what is really happening in the company.
In 2014, Sears reported a loss of $1.7 billion, up from $1.4 billion in 2013. In the same year, the retailer announced the closure of 80 stores and was forced to take a $400 million loan from Lampert's hedge fund.
-See this CBC News article
-See this CNBC article
-See this Sears Holdings blog
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