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Sears, the 125-Year-Old Iconic Retailer, Has 24 Hours To Survive (cnbc.com)
An anonymous reader shares a report: Sears, the employer of more than 68,000 filed for bankruptcy in October. Its last shot at survival is a $4.6 billion proposal put forward by its chairman, Eddie Lampert, to buy the company out of bankruptcy through his hedge fund, ESL Investments. ESL is the only party offering to buy Sears as a whole, people familiar with the situation tell CNBC. Without that bid or another like it, liquidators will break the company up into pieces. But as Lampert stares down a deadline of Dec. 28 to submit his offer, he is quickly running out of time. As of Thursday afternoon, Lampert had neither submitted his bid, nor rounded up financing, the people familiar said. Should Lampert submit a bid, Sears' advisors would have until Jan. 4 to decide whether he is a "qualified bidder." Only then, could ESL take part in an auction against liquidation bids on Jan. 14. It is possible Lampert, Sears' largest investor, secures financing in time to meet the deadline, these people said.
Everything dies in time.
Their stores seem way to big for the volume of traffic.
Sears has been out maneuved by the car and now the internet. They should have won the online race with their catalog history.
When Sears operated in the 19th century their business model was to provide a large catalog of merchandise that was ordered by the customer electronically (telegraph) for fulfillment via delivery (railroad) to the customer. They switched to brick and mortar when their business model became obsolete. Ironically they're going out of business because they've failed to adapt to the return of their original business model.
[Insert pithy quote here]
How Sears Was Gutted By Its Own CEO
Will be right behind them. Radio Shack led the way to show them how.
All those Craftsman tools I own with a lifetime warranty, appear to have just run out of life in the warranty...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
This is old news here in Canada where Sears keeled over a year or so ago.
From the sounds of it, the idiots in management basically skimmed all of the value out of Sears to pay their investment company, and left a pretty much burned out husk.
Yes, in part they failed to keep pace with the times, but make no mistake about it, this was all terrible management by a greedy asshole.
I say good riddance to Sears and the rich asshole who gutted it for his own profits.
Was it a failure of business model or business execution? Walmart, Target, Costco and other retailers have been able to succeed where Sears had the clear head start in brand recognition and supplier relationships. Sears had an online and catalog presence and experience that should have translated online. It seems that they just leveraged themselves into oblivion with debts they couldn't pay. With a very poor KMart acquisition that also saddled them with debt.
Seems the age old story of new management trying to reinvent the company over and over by incurring debt against revenue that never materializes. Yes companies need to change with the times, but if they can't save up enough money using existing profits to invest back into the company then they shouldn't be raiding speculative future profits on speculative investments. Large established companies should have reserves of capital not huge debt burdens.
... walk down to your local Sears and buy $5 billion of wrapping paper and socks.
When I was a kid, Sears was a cool store that sold Craftsman tools (most of my tools still are), and had a candy counter that was the only place to get Swedish Fish and chocolate covered orange candy.
Now it will be "back in my day there was a store called Sears..."
- Vincit qui patitur.
Eddie Lampert did.
He knew years ago the most valuable thing that Sears had was the land under the buildings. Sears, like many older companies owned the land on which their stores sat.
The long therm plan was always to milk the company of all its assets.
Sears performed a land leaseback deal in 2015 - essentially becoming a tenant on many of its own properties:
https://www.hbsdealer.com/news/sears-pulls-its-sale-leaseback-deal/
Once the retail business stopped spinning off cash, sale of the land assets is all that remains and the plunder of the company will be complete.
Sure, you can blame Amazon but Amazon is simply a fantastic cover for the enormous plunder of company assets pulled off by management in broad daylight.
Look at what happened with Maplin in the UK and you'll see parallels. If the hedge fund buys it, they will run it into the ground. It might last another 10-15 years at most.
they got bought out by a Bain Capital style "Vulture" capitalist, Eddie Lampert. He started off his tenure by mismanaging them in a crazy, Ayn Rand themed style where each department was pitted against the other, resulting in massive infighting. Meanwhile he was busy extracting anything of value from the company for his own personal gain. At the moment he's been loaning them money to set himself up as the primary creditor so he gets paid when they liquidate. That's how he's legally extracting the assets without running afoul of laws designed to protect shareholders in a publicly traded company.
The real problem is that in America you no longer make money by running successful companies. You make money by firing up a startup and waiting for a buyout or by buying up an existing, longstanding company and gutting it like a fish. That's the reason guys like Lampert go to school for business, they're learning how to legally do things that should be illegal.
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I'm 43 so I did grow up in an era where Sears, JCPenney and a couple of regional department stores were the source for everything that most middle class families bought. People forget how easy it is to find out about new products and buy them now, compared to even 20 years ago. Memories of Sears for me include the tail end of the catalog, and the place I saw home computers for the first time as well as video games. In those days, these stores were the way people found out about new things to buy, and in some respects were the tastemakers for the average non-fashionista crowd.
I think the hedge fund vultures swooping in and loading up the companies with debt was the accelerator (Toys R Us would probably still be here if they weren't in so much debt.) But the big thing appears to be too much inward focus and not keeping up with competitors. I wonder if this will eventually happen to Amazon as well. Sears was the country's largest employer for quite some time, and I'm sure most people would have considered it foolish to start a retail business that directly competed since they were untouchable. I think I read somewhere that Sears executives didn't even consider Walmart a competitor until they got bigger and started selling similar things.
Companies can't go chase every new idea like an ADHD kitten chasing laser pointers. But, they do need to keep an eye on what's happening and respond to trends. Walking into my local Sears is like walking back into 1985 or 1990. Too agile and you're just chasing the next fad, but milking the cash cow too much will kill it eventually.
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I have a feeling it isn’t that simple. The people at Sears had experience and expertise in running stores and managing the logistics of such an enterprise. Whether they were the best people at that job or not, I would no more expect them to succeed at transitioning to an online retailer than I would expect an ENT to start performing heart surgeries. You might do it in a pinch if absolutely necessary, but you’d rather find the correct specialist.
Someone should put Sears on layaway. Then they can pay for it over time.
Sound about white
It is just the old retailers mentality. They still want physical stores to rule the roost. Just take a look at Boscov's (one of the financially 'healthy' retailers).... They couldn't be more confused... Physical stores vs Internet - https://www.readingeagle.com/m... . This article is about Cyber Monday... and yet all they can think about is their physical stores.
sears killed the catalog before the Internet took off.
Yes, only democrat "SJW" billionaires have souls.
Now finally Roebuck can console himself, "I knew it would go bankrupt, eventually. Glad I got out with my investment intact!".
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
That was THE store to go to when I was a kid at the mall....the sheer volume of stuff, the acres of floorspace, the huge display of lights at Christmas! Awesome times, awesome store.
They didn't adapt quickly enough, sadly.
Ferret
Sic gorgiamus allos subjectatos nunc
it's people's fault for listening to her. Basing an entire social system around selfishness in the face of all reason and research (multiple studies have shown how imprinting to your mother creates human empathy and how imprinting is essential to the survival of our species) is just plain bad juju.
But Lambert was only doing the Ayn Rand thing for fun. His real goal was, is and continues to be bleeding Sears dry in a legal manner.
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I would say he's an exceptionally competent swindler.
Just enough to pay the bonuses to the top execs that ran it into the ground...
“He’s not deformed, he’s just drunk!”
Little did I know, all those years ago, that the Craftsman mechanics' tools I bought, simply because I wanted high-quality tools, would become collectors' items.
Sears is the only place where I live that has an escalator. Now where am I going to go?
As always, US companies are interested in THIS QUARTER'S numbers. *Maybe* next quarter's. That's what US business schools teach: cut costs any way possible to increase profitability *now*. Planning for a year from now? That's unheard of in most big US companies. Adding an e-commerce website is trivial. They're turn-key. They can be set up by an individual. Sears should have been planning for e-commerce and been selling online 20 years ago. They should have been updating their stores constantly, but most haven't been updated in decades. A tremendous lack of planning on their part and a focus on immediate earnings did them in. Now the private equity vultures are just picking apart the scraps.
I don't respond to AC's.
"He's dead, Jim!"
I've abandoned my search for truth; now I'm just looking for some useful delusions.
...I needed a car battery. Looked at Sears.com, found one on sale that fit my car. Drove to Sears to buy that battery and found out that said battery was priced wayyyyy higher than online.
I asked how that could be. The answer was staggering: "[Brick and mortar] Sears and sears.com are owned and run by different entities with different pricing structures."
In other words, how to fail at both at one time as neither got my business.
Sears struggled for multiple obvious reasons - online competition, the hollowing out of the middle class, etc. - but Eddie Lampert sucked a lot of juice out of the body while Sears was still alive. And he stands to gain even more from its bankruptcy:
"As of now, Lampert’s ESL and a related fund called JPP own roughly $2.66 billion in Sears debt. The cash flow just on the interest on these notes is between $200 million and $225 million per year.
"This figure continues to grow—ESL announced on Monday another $300 million debtor-in-possession loan to support operations through the end of the year.
"Presumably, this debt would be significantly curtailed in bankruptcy. However, a fair bit of the debt is secured by Sears’s real-estate assets. For example, real-estate collateral on 46 Sears properties backs a $500 million loan ESL made in January 2017; the bankruptcy could lead to Lampert’s fund simply obtaining those property rights. In all, Lampert’s interests own around $1.5 billion in secured debt backed by real estate."
Won't somebody think of poor ole Moe Szyslak? Where will he get his catalogs to oogle?
I can firmly state they were always quite good at warranties, at least in the 1990s and 2000s, although the electronics department may have been run differently. The buyout by K-Mart changed things, but the cultural rot was already in place, not just there but at Macy's too. One of the store managers in training, who I worked with my first month there (and in fact would have transferred me if I wasn't still probationary) had come from Macy's stating the same sort of issues Sears was having at the time. Management didn't want to be there because their supervisors didn't want to be there, because somebody at the top was pushing unsustainable expectations with no attempts to modernize infrastructure.
Sears for example had only one shared T1 line (I was never clear if that was for the stores, or the ingress to the HQ) for uncached databases centralized at the Chicago headquarters. All of the backend services ran through there, and particularly for store pricing (which they changed three or more times a week!) involved going to each inventory section, checking the prices listed as well as the expiration date for the prices, and updating them. We had between 8 and 12 people exclusively dedicated to replacing price tags on shelves, with any excess time spent redoing clearance inventory tags, taking in unsold merchandise, and putting out new merchandise. They also balked at adjusting the schedule to give more time before the store opened so they could use us after store hours as floor associates, rather than ensuring sufficient time before store opening for price tag placement, which thanks to the slow computer systems and inability to print endcaps (being one of the original stores the store price tag templates didn't match the store layout and there was no way for us to produce a store template, which had been deemed too costly for hq to do themselves.)
Long story short: the writing was on the wall for sears 10-15 years ago, and has only grown as time went on. It is sad to see a company with such a long history unable to right itself, but that is economic evolution in action.
After reconstruction ended free black farmers turned to small scale crops that could be sold locally for small amounts of cash -- like watermelons. Recognizing this for what it was -- genuine enterprise -- would contradict the slavery narrative that blacks were too lazy to be allowed freedom. So instead the association of blacks with watermelons was used in popular (white) media to paint them as animal-like gluttons.
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Never heard of them before this.
It's not really Lampertâ(TM)s fault. He was brought in when Sears was effectively a corpse.
How Sears got there is the real question. Having both brick and mortar stores as well as a viable catalog sales division (easily shifted to on-line sales) should have been a no-brainer. They had stores, warehouses and a fleet of trucks delivering orders. The coexistence of mail/online orders and storefront cultures was a solved issue.
They should have ended up looking like Amazon.
Have gnu, will travel.
to a bloody pulp, douse it with gasoline, & set it on fire.
The penny should have dropped YEARS ago. Sears had reasonable goods but an AWFUL customer experience. It's just toxic - slovenly staff, slow checkout process. 24 hours will make no damned difference unless they intend to fix the business model. People should be able to pick an item and purchase it in minutes.
So what is going to happen to my Prodigy account?
Wif bizcut
If Richard Warren Sears and Alvah Curtis Roebuck (he founders of Sears & Roebuck) had still been alive and running the place when the internet arose, they would have immediately grasped it and adjusted their model - Amazon.com would never have beaten them.
If their heirs had been alive and running the company, and if they'd cared about their inheritance and paid attention tio the founders, they might well have understood the internet and re-oriented the company to rule online shopping. Amazon.com might well have never been able to compete with them.
As is so often the case, however, Sears is a publicly traded corporation living on the reputation and infrastructure created by its founders, but the board (none of whom had anything to do with creating or building the company) has over the decades hired a stream of idiots with MBA degrees each of whome lacked any good ideas but enjoyed a huge salary and a golden parachute upon leaving. Teams of managers came and went throughout the company, none of whom had any personal attachment to the company and its founders' legacies.
What sort of moron runs Sears and sells off the Kenmore and Craftsman lines? These were the primary attracters of repeat customers in much of the USA and those shoppers tended to buy other stuff while in the store.
The real problem with most brick-and-mortar stores these days is that they stopped selling unique stuff and switched to selling cheap imported crap from China. This means they're all selling the same stuff, and yet none of them have the capacity to buy as much as Bezos at Amazon can and therefore Amazon will always get the better quantity discount and therefore alway be able to under-price to capture the consumer sale.
home of the Craftsman tool line.
Sad to see this though; the product line was the main reason men shopped at Sears Every male relative of mine swears by Craftsman tools, and those lifetime warranties. While Lowes is now where you buy Craftsman, I have no idea if they will still honor the famous warranty, nor do I know if they are simply splashing the Craftsman logo onto cheap junk from China that is also sold under a dozen other brand names.
Die already.
sears f-uped there big chance.
long before amazon, like 100 years, sears was the amazon of america. their catalog biz sold everything from sowing machines and dresses, to full houses and farm equipment, all shipped accross america.
they became an outlet retailer, because mail order was going away.
the most obvious move in the world would have been for them to transition to the web when the internet came along, with the trust of a 100 year-old catalogue brand behind them. hell, there might not even be an amazon had sears taken the lead in that market.
just no vision.
Does the world really need ad-covered TP?
Shai Schticks:"You don't make peace with friends, you make peace with enemies"
And the public's role in this? How about no longer wanting to pay premium prices. The thing about slides to the bottom is they always have a top, and the buying public didn't want to remain there. People talk about quality, and better service, but they don't want to pay for it, and that makes them as shortsighted as the management they decry.
Shai Schticks:"You don't make peace with friends, you make peace with enemies"
Honestly, nothing wrong with that. I've known quite a few that have stated they were deliberately staying small.
Shai Schticks:"You don't make peace with friends, you make peace with enemies"