Sears Holdings Corp.’s weakened financial position is putting stress on its supply chain.
Suppliers of tools and other goods have begun asking for sweetened payment terms to compensate them for the risk of shipping to the troubled retailer, people familiar with the situation said.
Sears has offered to pay some vendors within 15 days, in return for a discount of from 3 to 5 percent, one of the people said.
The faster payments tie up more of Sears’ cash, increasing the risk and complexity of basic functions needed to keep its business going. It has little choice but to bear those costs, however, after a dismal holiday season that rattled its vendors.
Carla Casella, a credit analyst with J.P. Morgan, said big department store chains typically pay their vendors in 30 to 60 days. Each day that Sears shaves off its payment cycle ties up about $48 million in capital, Casella said.
