Remember when Sears planned to be a major financial services firm owned Allstate and then in the 80's expanded by acquiring Dean Witter, Coldwell Banker and starting up the new Discover card? They also did joint venture and founded Prodigy (how many recall that?). Along the way accumulated huge real estate holdings, including Sears Tower in Chicago.
Sears was truly the "Amazon" of that time with many stores to either buy direct and with huge catalog sales for pickup and then offering a wide array of services. They created Kenmore, Diehard and Craftsman brand, that used to stand for quality. I recall that many thought that Sears would be able to own a relationship from birth to death, going to crush everyone and everything.
So how do you go from that to the embarrassment they are today? Actually, they were dead back in the 90's, so their flame burned out in just over a few decades. Soon after KMart acquired them in 2004 (that was truly the embarrassment). Hard to believe that KMart after being BK could acquire a company like Sears that used to be the powerhouse of the of the 80's.
RIP
Well said...
I worked for and lived through the earlier years, as I became a Sears Catalog Store Manager after graduating from college. A proud experience at that time... from 1958 to 1966. Front edge of everything from merchandise to public relations, to employee benefits and everything that made the company number 1. It was the "Walmart" of the day... price, value and service.
My thinking is that they assumed they owned the market, and made an ill conceived move to upgrade... but mostly with prices... profit. Walmart began in the 1950's but grew through the '60's and 70's... with the kind of "new" that we see in Amazon today.
IMHO... Sears became overconfident and stodgy. I'd credit Sam Walton with the vision to outdistance Sears... Satisfy a new type of customer, and new approach with a newer type in-store, efficient management structure, while
Sears held with an outdated 1940's working staff and management plan
In 1966, I moved from Sears Management to Montgomery Ward, with an opportunity to see both companies struggle with profitability.
I think the same type of death spiral occurred with both companies... Sears joining with Kmart, and Mobil buying Wards. A mixed confrontational management battle fed by egoes... with bad results.
In my own case, sitting at the table with Wards/Mobil management battles, a successful energy company trying to use their "oil" strategy to run a retail company. A disaster from the outset.
My last position was Special Project Manager to close thousands of catalog stores and phone units. The retail stores were still open. My office was on the same floor as the retail store realty offices. The plan, while not stated, was to manage profitability by doing exactly what Sears is doing today. Closing those stores that were owned... in most cases, without regard to the store profitability.
In all of the articles I have read so far, it seems that the attention to closing stores has to do with passing the value on to realty based corporations... however that works with hedge funds, Buffet or anything in between. The missing link that doesn't get into the discussion is that Sears, like Wards, doesn't didn't own most of the real estate, but leased it, with some leases extending to 20 years. Buying out the leases is likely included in what the financial articles loosely call "selling". Yes... a small point perhaps, but one of those factors that gets lost when the market becomes unstable.
Better to look at the status of the Malls where Sears or Kmart are located. Bowing out of a 120K lease doesn't mean that the transferred value is backed by the true value.
Think of it this way... Back in the Freddie Fannie days, transferring a 300K mortgage didn't do much to reduce the National Debt.
Whether Sears as a penny stock or part of Lampert's ESL Investments, investing at this point? Takes a lot of nerve.
