Sears Holdings Corp. chairman Edward S. Lampert took to blogging on Tuesday to tout its Shop Your Way MasterCard.
The company in October inked an agreement with Citi Retail Services to power the Sears MasterCard, which next month evolves into a newly branded Shop Your Way card. Lampert blogged back then about the program as well, noting that more than five million current Sears MasterCard holders linked to the retailer’s loyalty program would begin earning points for many purchases on a complementary basis.
In Tuesday’s blog, Lampert said the program now has a “network of tens of millions of members” as well as enhanced values through “partnerships with thousands of businesses and innovative rewards programs.”
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The blog post didn’t talk about Sears’ stock price, which earlier in the week saw a 7.6 percent drop to $6.86, on top of a 20.5 percent decline a week earlier amid bearish reports from credit analysts. The drop now gives Sears a market capitalization of $737 million — that’s for a company that Fitch Ratings’ estimates peg at $25.2 billion in revenues for 2016.
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And while there had been some speculation that Sears might hit a wall late summer because of liquidity constraints — credit analysts have been concerned about Sears’ cash burn rate, now estimated at $1.8 billion — the recent financial maneuvers by Lampert have many now in the financial circle thinking that he has bought the company at least another year’s worth of time for its turnaround efforts.
On Tuesday, the leveraged finance group at credit agency Fitch Ratings issued a special report on major high-yield retailers. It concluded that mall-based, mid-tier apparel retailers are most challenged, given the lack of fashion momentum, share gains by online players and value-oriented retailers in fast-fashion and off-price segments. Fitch again noted Sears on its list of issuers with negative trajectory. The ratings agency in its most recent report also noted Sears’ declining liquidity year-over-year: $1.6 billion in 2016 versus $3.1 billion in 2015. It also said, “The magnitude of Sears’ decline in profitability and lack of visibility to turn operations around remains a significant concern.”
The opinions of credit analysts notwithstanding, a spokesman for Sears has maintained that the company has sufficient resources to support its operations and to meet its financial obligations.
Earlier this year, the company said it was closing 150 more stores on top of the more than 200 that were slated to close at the end of January to stem its losses. Sears also inked a deal with affiliates of Lampert’s hedge fund ESL Investments for a $500 million real estate backed loan. It also inked a deal with Stanley Black & Decker to sell its Craftsman tools brand for $900 million, although that transaction hasn’t closed yet.
Meanwhile in Tuesday’s blog Lampert focused on the 5-3-2-1 rewards program: 5 percent back in points on eligible purchases made at gas stations; 3 percent back in points on eligible purchases at grocery stores and restaurants; 2 percent back in points on eligible purchases made at Sears and Kmart and 1 percent back in points on all other eligible purchases.
Lampert concluded: “We look forward to building on this momentum as we continue to make Shop Your Way an even better program for our members and add new ways for our members to earn rewards that bring value to their lives every day.”