Credit-rating agency Fitch Ratings on Wednesday downgraded its rating for Sears Holdings to double-C from triple-C, citing the retailer’s declining profits and negative cash flow.
“The magnitude of Sears’ decline in profitability and lack of visibility to turn operations around remains a significant concern,” Fitch said in its report.
The rating agency said Sears’ funding options might not be enough to support the company operations beyond 2016.
In August, Sears Holdings reported a hefty second-quarter loss on another sales slump. The company, which operates Sears and Kmart, said it plans to do more cost-cutting to right the ship. That includes closing more stores beyond the 130 that it had announced earlier this year.
Sears, controlled by billionaire hedge fund investor Edward Lampert, lost $573 million, or $5.39 per share, for the period ended Aug. 2. That’s more than double the loss of $194 million, or $1.83 per share, a year earlier. It marked its ninth straight quarterly loss.
Revenue declined 10 percent to $8 billion from $8.87 billion.