Sears vs. the United States – Who Has the Worst Credit Rating?

It might seem absurd, but that is a serious question. If either of these entities were an individual human being, that person would not be able to buy a house or a car. Hell, they would not be able to buy a sofa for 15 months interest free. Ironically, they would not be able to buy a monster flat screen at Sears SHLD unless they had the cash ready and available. You would think Sears would be more sensitive. On Thursday morning, Sears saw its stock decline after reports suggested suppliers will be unable to get loans from CIT Group going forward for their shipments to the retailer. That is huge. Sears is a giant of the industry, at least traditionally, and they are being refused shipping loans. It fell 9.7 percent to $29.71 at 7:46 a.m. EST. The shares dropped an astounding 56 percent last year. According to Bloomberg, CIT has already told clients it will no longer approve credit for orders. Experts believe that Sears has enough liquidity to weather this storm, and that orders will go out as per usual. But that is ignoring the bigger situation. Sears' financial condition has deteriorated to such a degree that CIT is not concerned about risking the company's business. Rivals like Macy's M are hardly having the time of their lives, but compared to Sears they are sleeping on a golden cloud. Sears spokesman Chris Braithwaite said in a statement that, “We disagree with their action. We point out that other factors are approving shipments to Sears. It's important to note, that Sears Holdings has more than adequate liquidity and ample resources at our disposal.” For their part, CIT said through spokesman Curt Ritter that, “We don't comment on specific customers.” Translation: Sears is calling CIT's bluff by acting as if they do not need them in the hopes that CIT will believe Sears is doing really, really well. CIT, meanwhile, is just ignoring them. It is kind of awkward, like a girl saying “I'm over you” to her ex, parading her new guy around the bars. The ex-boyfriend cares little for what she does and ignores the fact that she has a new wardrobe. Painful. In fairness, Sears does have a $3.275 billion credit facility, plus other assets and credit in Canada. But any unemployed person will tell you that this is a slippery slope. If your income is limited, do not get more credit cards to survive. That is Sears right now. It is the company-equivalent of a person whose bills are greater than the bi-weekly unemployment check, and the only way to eat and pay for gas is to get another Visa card and watch the bills mount up. Ted Nugent and Glenn Beck say the people are in those situations because of their own bad decisions. If that is true, something that is very debatable, then Sears must have made a lot of horrible decisions. How long before it is sleeping in one of its own cardboard boxes?