Just in case it needs to be said again for those with too much on the line at Sears/KMart, the below warning was posted on SD yesterday. Pretty much sums it up: ALERT: Okay folks, for the first time Fast Eddie has issued a between the lines bankruptcy warning for Sears in his latest blog entry [searsholdings.com]. Quote However, should our efforts to complete the refinancing not be fully successful, the Company's Board will consider all other options to maximize the value of Sears Holdings' assets. This is Wall Street English that means the Board will declare bankruptcy to protect shareholder value by protecting assets from liens and seizures if it doesn't get additional lines of credit at reasonable terms. The problem is Sears is running out of assets (namely property) it can use to secure those loans, and the interest rate is growing higher on subsequent loans as the company's financial condition worsens. Unfortunately, Sears cannot cover all of its expenses now without borrowing more money. Note Lampert says "fully successful" when he could have said "successful" alone. That means the metrics for Sears' ability to continue in business depends on ALL of its needs being met, not just some of them. That quote alone will guarantee Sears' suppliers will panic and start pulling the company's credit lines, fearing they won't be paid. More will insist on full, upfront payment. Sears cannot afford to do that. Sears is also busily trying to refinance existing debt as interest rate increases continue. Almost all of Sears' major loans are variable interest. Sears and Kmart holiday sales were a total disaster, dropping 15-17% year over year at a time when other retailers gained 4-5%. The average dormant or new SYWR member received over $100 in FREECASH promotions in November and December with no minimum purchase requirement, and that failed to bring most into stores to spend it. This means a growing percentage of customers have completely written off both chains and have no intention of returning regardless of sales or promotions. The number of active SKU's - merchandise actually available for sale - achieved a new all-time low. Customers are not finding the products they want. Kmart's grocery department also cratered to a new worst-ever performance -- now too low for many soda, refrigerated food, and bread vendors to continue servicing Kmart on a weekly basis. Some are pulling out, others will switch to monthly replenishment. The percentage of spoiled/expired Kmart grocery items that were thrown out also reached the highest level ever seen by any national chain since records were first recorded in 1969. You have to pay $765 for the report to learn what that percentage was, but one can imagine. Kmart's pharmacy division will drop well below 100 stores in 2018 and will be de-certified in certain states. As a result of all of this, absolutely nobody other than Mr. Lampert in the business community expects Sears and Kmart will remain in business as it is now beyond this year. Many expect a bankruptcy protection filing in the spring or early summer, or another radical cost-cutting move to stall that for a few more months. One major investor liquidated more than a million shares of Sears stock, according to SEC filings. I've seen enough to recommend people who want to protect any gift cards or accrued points should consider liquidating them by the end of March to be safe. If you can accept increasing risk those could become worthless, you can wait until June. Be aware that Sears appliances are not a good investment to dump lots of points on. Parts vendors to service those appliances are fleeing Sears and are increasingly not filling parts orders, so if it fails, you cannot expect a prompt warranty repair from Sears, and Sears Canada screwed those with extended service plans up there after bankruptcy and the same is likely to happen down here.