Montgomery Ward Holding Corp. expects its losses in the first and second fiscal quarters to total $248 million, four times more than it forecast in December, the retailer said in a letter to firms that help finance its suppliers.
The operator of department and electronics stores said it used a faulty methodology to develop the earlier estimates, according to three factors who received the letter. Factors buy accounts receivables from suppliers and assume the risks for collecting the payment.
The projection comes after the retailer reported a wider-than-expected loss of $249 million in 1996. The continuing losses are raising concerns among some factors about the Chicago-based company’s ability to keep paying its bills.
“We have put a hold on Montgomery Ward,” said Richard Posner, executive vice president of Credit Exchange, which advises suppliers on a retailer’s credit-worthiness. “We are advising our clients not to ship.”
Two other factors, who asked not to be identified, said while they are concerned about the retailer, they continue to advise clients to ship merchandise.
Subscribe to the Morning Review newsletter
Get the day’s top headlines delivered to your inbox every morning by subscribing to our newsletter.