Sears is borrowing more money from CEO Eddie Lampert's hedge fund to stay afloat.
The company announced Thursday that it obtained a loan called a secured standby letter of credit facility for an initial cash infusion of $200 million, with the option to expand the amount to $300 million.
This particular kind of loan comes with a guarantee on behalf of the lenders that Sears' suppliers will be paid, should the company default on its debt.
The loan is being provided by JPP, LLC and JPP II, LLC, which are affiliates of Lampert's hedge fund, ESL Investments. Citibank is serving as administrative agent and issuing bank.
A decade after it was founded by then 22-year-old Sophia Amoruso in 2006, Nasty Gal filed for bankruptcy in November.
"Filing for bankruptcy is actually the most responsible decision for the business," Amoruso said at an event in Sydney, Australia when the news broke, the Independent reported.
The trendy fashion retailer had been through some tumultuous times in recent years. Amoruso stepped down as CEO in 2015. In her absence, the retailer laid off employees and former workers complained of a toxic environment.
After declaring bankruptcy, the retailer announced it would close 154 stores in the US and Canada.
"Back in the day, all of the cool kids had trendy brand names plastered across the front (or back) of their clothing. The trend has changed, and style today, perhaps encouraged by social media, embraces individualism and uniqueness," wrote Nicholas Rossolillo in finance publication The Motley Fool. "Online ordering and heavy discounting have also taken a toll on the industry, especially mall-based retailers. Aeropostale simply hasn't been able to adapt."
Kate Spade's sales have suffered in 2016 as tourists' visits declined and discounting grew more popular, making it harder to sell items at full-price.
"We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote.
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In a statement on the loan, Sears CFO Jason Hollar said: "As Sears Holdings has consistently shown, we will take actions to adjust our capital structure, generate liquidity, and manage our business to enable us to execute on our transformation while meeting all of our financial obligations. This new standby letter of credit facility further demonstrates that Sears Holdings has numerous options to finance our business strategy."
Over the past two years, Lampert and his hedge fund have loaned Sears more than $800 million — not including this most recent cash infusion — to keep the business in operation.
In the most recent quarter, Sears' revenue fell by 13% to $5 billion and losses widened to $748 million from $454 million in the period last year.
Same-store sales dropped 7.4%, including a 10% decrease at Sears stores and a 4.4% decrease at Kmart stores.