Sears' Troubles Continue As Suppliers Shed Company

Sears Holdings Corp (NASDAQ: SHLD)'s stock plummeted 12 percent on Wednesday after the company acknowledged it now has "substantial doubt" over its ability to continue operating. Investors looking for a rebound in Sears' stock won't find it Thursday morning; Sears' stock fell another 4 percent following more troubled reports.

According to a Reuters report, some of Sears' suppliers are saying that they have no choice but to reduce shipments to the troubled retailer and ask for better payment terms.

For example, a Bangladesh-based textile firm told Reuters that the company will only allocate a handful of production lines towards Sears. Just last year, around half of the un-named production lines across four separate factories were allocated toward Sears.

Cramer Called It

CNBC's Jim Cramer said on Wednesday that the biggest takeaway from Sears announcement is that it sends a clear warning to suppliers.

The Reuters report cited Mark Cohen, who served as the CEO of Sears Canada and is now the director of retail studies at Columbia Business School. He suggested Sears is "pathetically" bad at managing inventories today, and the problem will merely get worse, especially as vendors will begin shipping Sears smaller quantities of products and demand payment in advance or upon delivery.

Nevertheless, Sears' management is brushing off concerns and maintains its business as usual. Jason Hollar, the company's chief financial officer, was quoted by Reuters as saying that the retailer is very much "a viable business that can meet its financial and other obligations for the foreseeable future."

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