For my first post what would be more appropriate than looking into one of the greatest retail downfalls
of our time - Sears Holdings. But before we get to the downfall lets take it back to the beginning.
of our time - Sears Holdings. But before we get to the downfall lets take it back to the beginning.
In 1863 Sears Roebuck and Company started as mail order business out of Chicago, Illinois. Sears grew and grew and in the postwar boom was an innovator of building stores in suburban shopping centers. Sears had their brands such as Craftsman tools and Kenmore Appliances. They also owned Discover Card, Coldwell Banker, and Allstate. At one point Sears opened the tallest building in the world in Chicago, Illinois.
However the story of the downfall really begins in 2002 when the Kmart Corporation of Troy Michigan
declared bankruptcy. A young upstart stock trader named Eddie Lampert purchased the chain with
his investment firm ESL. He steered Kmart out of bankruptcy by selling unprofitable stores to
Home Depot and Sears. By 2003 Kmart re emerged from bankruptcy as a slimmer company. In
2005 Lampert announced that Kmart Holdings would purchase Sears and take the name Sears
Holdings.
declared bankruptcy. A young upstart stock trader named Eddie Lampert purchased the chain with
his investment firm ESL. He steered Kmart out of bankruptcy by selling unprofitable stores to
Home Depot and Sears. By 2003 Kmart re emerged from bankruptcy as a slimmer company. In
2005 Lampert announced that Kmart Holdings would purchase Sears and take the name Sears
Holdings.
Around this time Sears was trying out a new format of stores known as Sears Grand, along with Sears Essentials. These were off-mall concepts that sears wanted to use to extend their brand. The Grand concept was closer to a Walmart Supercenter but with a slimmer selection of groceries and Essentials was a Walmart D1 Style store (a Walmart without groceries). After the merger some Kmart stores would be painted and switched to the Sears brand. This was not the only synergies that were seen within the stores. Kmart brands such as Joe Boxer were being carried at Sears and Kmart would start to carry Sears legacy brands of Craftsman, DieHard, and Kenmore.
By Fiscal Year 2010 the combined company was no longer profitable - and would continue to lose money for the majority of the next decade. Sears announced that it would spin off it’s Lands End brand of mid-tier mail order products along with selling its stake in the Canadian subsidiary Sears Canada. In 2015 a company known as Seritage Growth Properties was spun off from Sears Holdings. This company would buy Sears more valuable real estate and lease back the stores to Sears or redevelop them. In 2017 Craftsman Tools was sold to Stanley Black and Decker to raise funds. Lampert saw divesting stores and assets as a way to drive the company back to profitability. Store closings were announced nearly every quarter at this point. Between 2010 and 2018 Sears went from 3,500 stores to just 695. Sears also lost an important partnership with Whirlpool appliances.
In late 2018 the inevitable happened - Sears Holdings filed for bankruptcy protection. The company announced 505 profitable stores that they wanted to remain open. In January the bidding for the assets began and it was announced that ESL investments - yes Eddie Lampert would reacquire the company with a slimmed down 400 locations.
Now what’s next for sears? Well the company still has the same problems that it had heading into bankruptcy with makes me worried about if the company will be sustainable or if Lampert is just picking at the scrap to make some cash. He has put out a new vision of a slimmer Sears focused on hardlines as opposed to clothes which may work out - in fact Sears is opening three new stores this spring. But what do you guys think? Perhaps Sears and Kmart will come out of this and be stronger than ever. After all I just ramble to no one on the internet - so what do I know?
