Dive Brief:

• Sears Holding Corp. is disputing rumors that a major toy vendor suspended sales of products to its Kmart unit ahead of the holiday shopping season out of concerns that the struggling retailer won't pay its bills.

• Last week The Wall Street Journal reported that toy vendor Jakks Pacific has halted to one of its retail customers and cited unnamed sources claiming that the retailer in question was Kmart.

• But a blog post credited to Sears Chief Financial Officer Jason Hollar contends that Sears has “always paid our vendors for orders we have placed and as part of the normal negotiations between retailers and vendors,” although Hollar also said that there are “occasionally disputes over prices, allocations of product and other terms.”

Dive Insight:

Jakks CEO Stephen Berman said on a Thursday conference call that the toy maker halted shipments to a “major U.S. customer that is experiencing challenges” but declined to name the retailer. “This decision was difficult, but we felt it was the right thing to do,” Berman said on the call, according to a transcript published by Seeking Alpha. 

Hollar pushed back on the notion that Berman was referencing Kmart. “We can tell you that we have had a longstanding relationship with Jakks as we do with our tens of thousands of other suppliers and vendors,” he wrote.

Struggling Sears has had to rebut several rumors in recent weeks, especially about Kmart. Earlier this month Sears Holdings Corp. CEO Edward Lampert took to the company’s blog to deny rumors that the company is planning to shutter all Kmart stores.

"Recent reports have suggested that Kmart will cease its operations. I can tell you that there are no plans and there have never been any plans to close the Kmart format," Lampert wrote. "To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports.” Kmart President and Chief Member Officer Alasdair James and Gareth Glynne, head of Kmart Retail, wrote a blog post this summer rebutting reports that the retailer was holding a fire sale of its inventory. 

Sears Holdings did announce in April that it was closing 68 Kmart and 10 Sears stores nationwide in order to generate "a meaningful level of cash” as it liquidates store inventory and sells or subleases some of its real estate.  

Sears in August posted Q2 same-store sales declines of 3.3% at Kmart stores and 7% at Sears stores. Revenue fell 8.8% to $5.66 billion in what Lampert called “a challenging competitive environment.” The company said at that time it will receive $300 million of additional debt financing secured by a junior lien against inventory, receivables and other working capital, from Lampert’s ESL Investments, Inc. hedge fund.

This story is part of our ongoing coverage of the 2016 holiday shopping season. You can browse our holiday page for more stories.