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.

Comments

Business Model

[rlp]

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.

Re:Business Model

[squiggleslash]

Let me guess, you think Toys R Us died for the same reason?

There are plenty of brick and mortar companies that still exist and are doing well (at least as well as they were doing twenty years ago.)

The issue with Sears boils down exclusively to mismanagement. Lambert is an ideologue, and insisted on breaking it up into parts that, for no good reason, compete with one another. That means the appliance department competes with the clothing line. There's no good reason for this, and it's impossible for the company to benefit from the synergy of having a wide range of products.

The first warning signs were about a decade or so ago. You may remember that its K-Mart stores turned into "Sears Essentials" (which was fine, it was just a marketing exercise), but then suddenly half the SE stores disappeared. Why? Because of a fiasco where none of the stores had extended hours in the run up to the Holidays, which traditionally is when most stores do most of their business.

Why was this? Well, because in order for that to happen, one division would have had to propose the stores open for longer. That division would then have been on the hook for the costs of all of the stores staying open. The divisions couldn't jointly propose this and share the costs, because Lambert had banned cooperation between them. So nobody proposed extended store openings, and the stores had normal opening times in the run up to Christmas.

Result? The first round of massive cost cuttings. Sears underperformed, and the entire network was pruned. Most Sears Essentials were within ten miles of a mall, which also had a Sears, so they were closed as redundant. This lead to increased losses because not everyone wants to shop at a fucking mall, Sears Essentials was a good idea.

Why does Lambert think this is a good way to run a company? Because this is his reading of Ayn Rand. Never mind the fact that businesses are a thing because people and entities achieve results when they work together, he really thinks that if womens lingerie competes for resources with appliances then somehow they'll both compete better with Macys.

Fuck Lambert. He's destroyed a once great company.

Quit it with the Bricks and Mortar obsolete bullshit. If they were obsolete they would have died long ago, Almost all B&Ms have always been a low margin business. I've heard of store chains actually selling goods at below cost, surviving by paying their suppliers three months late and making money from the Interest. If B&M was obsolete EVERY CHAIN WOULD BE DYING RIGHT NOW. Malls would be deserted. The Thanksgiving parade in New York would now be named "The NBC/Amazon.com Thanksgiving Parade." Walmart, one of the lowest margin companies on Earth, would be a punchline, not an ever growing threat to the economy.

Retail's fine. Businesses go bust from the time to time, even old ones. Lambert is terrible.

Re: Goodbye Sears

[Anonymous Coward]

The downfall of Sears is a consequence of the migration of commerce from brick-and-mortar to online

Well, it's also a result of Eddie Lampert's management.

He bought it, skimmed off the value and directed to his own company, and then left a failing business behind him.

This really is a story about how predatory capitalism can strip the value out of a large business, and lead to the failure of that business. This was a transfer of wealth out of one corporation and into another, to the detriment of the corporation being sucked dry.

One might argue that the fiduciary duty to the shareholders of Sears took a back seat to Lampert's holding company. I would argue this was theft on a large scale by a vulture capitalist.

Here in Canada they basically did this, and left all of the employees with no pensions.

This shit really is the most awful aspect of capitalism, rich assholes only looking out for their own profits can destroy large corporations.

You think all those jobs at Sears are coming back? The societal cost of this shit is staggering.

Re: Goodbye Sears

[LordKronos]

It's actually a combination of competition from many faces. Clothing is a major item for Sears, and yes Walmart and Target (and Kohls) are competion for thier price point. But another big item for Sears is appliances (at least in my mind, that is what they are best known for, but I'm not sure if that's the biggest part of their bottom line). In that area they've faced competition from Best Buy, Home Depot/Menards/Lowes, Costco, and others.

Along with clothing and appliances, tools is the one other thing that comes to mind when I think Sears. And again, Home Depot/Menards/Lowes is big competition here, but I really feel like (and I may be way off) Harbor Freight is a huge source of competition for them here. Yes there is a bit of a quality difference (though that is a bit diminished as I don't think craftsman quality is quite what it used to be), but honestly for most people the cheap Harbor Freight tool is sufficient 9 out of 10 times, and for the price of the craftsman tool you can just replace the harbor freight tool 5 times (and that's not even considering most of the HF non-power tools have a lifetime replacement warranty anyway)

Of all the things out there, I really feel like Amazon is one of the smallest contributors to Sears' demise.