Sears owes these 7 suppliers — and many more — millions in payments
Vendors are reacting to Sears' bankruptcy filing through court motions, lawsuits and withholding of inventory, all of which could determine the fate of the floundering retailer.
A decade of falling revenues and store closures raised red flags for Sears’ suppliers.
"I suspect, but cannot confirm, it was risky for suppliers to sell their products through Sears," Peter Edlund, senior vice president at DiCentral, a supply chain software company, told Supply Chain Dive in an email. "Why would they sell their wares through a struggling brand?"
That was a question many vendors pondered and some acted on by scaling back inventory shipments to Sears or expanding their distribution to other outlets.
Still, a lot of money is left in the lurch, with the retailer owing millions of dollars to dozens of vendors.
|Supplier||Products||Amount owed from Sears|
|Whirlpool||Home appliances||$22.25 million|
|WiniaDaewoo Electronics America||Home appliances and electronics||$15.54 million|
|Electrolux||Home appliances||$13.74 million|
|Icon Health and Fitness||Fitness equipment||$12.10 million|
|Black & Decker||Home improvement products||$5.93 million|
|LG Electronics||Electronics||$4.75 million|
Data from Sears bankruptcy filing docket.
What does this mean for suppliers?
Some of the larger vendors will survive the bankruptcy with little disruption, in part because they've been forming contingency plans, anticipating a filing would come sooner or later.
Despite Sears owing Whirlpool more than $22 million, the appliance manufacturer said the bankruptcy filing will have "very limited impact" on operations. Sales to Sears represent less than 2% of Whirlpool’s total global sales, and Whirlpool and Sears ended their relationship last year.
When Black & Decker bought Sears’ Craftsman brand in January 2017, the purchase "was structured in a way to minimize exposure to Sears," a spokesperson for Black & Decker told Supply Chain Dive.
Electrolux said in a statement it "has been actively planning for various Sears’ contingencies while also growing the business with other customers."
But smaller suppliers may struggle if payments don’t arrive in a timely fashion. InGear Fashions, which began working with Sears in 2012, filed a lawsuit against the retailer, claiming $840,000 in unpaid invoices.
What does this mean for Sears?
How suppliers react to Sears’ bankruptcy filing will be crucial in determining whether the retailer survives a restructuring, or ultimately is forced to liquidate all of its stores.
Electrolux didn't rule out the "prospects of continuing its business with Sears," but the vendor started looking into other distribution channels long before Sears' filing last week.
Some suppliers filed court motions objecting to Sears' decision to close 142 stores as it restructures under Chapter 11. They claim Sears' plans for liquidation of those stores does not protect the suppliers of the products.
And other suppliers are keeping their distance after last week’s bankruptcy filing, refusing to ship inventory to Sears. Even before the filing, 200 vendors stopped shipping inventory to the retailer as rumors of a Chapter 11 filing circulated, and some requested cash payments on demand.
The timing of legal chaos and withheld inventory is critical for Sears as the holiday season nears.
If enough vendors continue to refuse to supply inventory to Sears, leading to empty shelves at stores, the future of the retailer won’t be bright, and liquidation of Sears' remaining stores could be looming on the horizon.
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