While Sears Holdings keeps trudging along its alleged “path to profitability,” Moody’s Investors Service has some doubts about the retailer’s prospects, and has downgraded its liquidity rating. That means that its analysts are concerned about the ability of Sears Holdings to keep its doors open and merchandise on the shelves.

The note put out by Moody’s today is officially about the Speculative Grade Liquidity rating for Sears Holdings falling to SGL-3 from SGL-2, but all that really means is that analysts are concerned that the chain won’t be able to stay open without borrowing more money (from its CEO) or selling more of its real estate portfolio.

Moody’s notes that Sears lost $836 million during fiscal year 2015, and the losses were that low only because the company sold stores, mainly to the publicly traded Seritage Growth Properties. The company has $3.5 billion in debt, along with unfunded pension liabilities for current and future retirees of $2.1 billion.

The note also mentions the dismal-looking future of the Kmart brand considering its “meaningful market share erosion” especially when compared with its main national competitors, Walmart and Target. While Kmart is trying to make a comeback, there isn’t any proof yet that customers are necessarily following the wider aisles and scrubbed floors.

Sears Holdings needs more cash, and they’re probably not going to raise it by selling merchandise to customers at a net profit.

Announcement: Moody’s downgrades Sears’ Speculative Grade Liquidity rating to SGL-3 [Moody’s]
(via Business Insider)

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