Shoppers hunting for this holiday season’s hot toy, the L.O.L. Surprise, may have trouble finding it at Sears or Kmart stores. Worried about the financial health of the retail chains, the company that makes the toy, a ball that children unwrap to reveal small dolls, has reduced shipments to Sears Holdings Corp.
“We cut their credit line and shortened payment terms,” said Isaac Larian, chief executive of toy maker MGA Entertainment Inc. “If they pay one day late, we will cut them off.”
Sears once dominated American retailing and helped build famous brands, including Whirlpool appliances, Craftsman tools, Schwinn bicycles and Allstate insurance. Now, bleeding cash and losing shoppers, the 124-year-old company is scrambling to keep suppliers—the lifeblood of any retail chain—from bolting.
To guarantee shipments from LG Electronics Inc. and Samsung Electronics Co. , Sears is paying them cash up front for some goods, said people familiar with the matter. Levi Strauss & Co. has stopped supplying women’s jeans to the chain, said another person. At Clorox Co. , “We have certainly adjusted our payment terms,” said CEO Benno Dorer.
A monthslong feud between Sears and Whirlpool Corp. burst into the open last weekwhen the sides couldn’t agree on terms to keep their century-old partnership going. Earlier in 2017, Sears sued two longtime manufacturers of its Craftsman tools to keep them shipping merchandise to stores.