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Sears Hires Advisers to Prepare Bankruptcy Filing
- godzillabrennus 8y agoThey died years ago. This is just the funeral.
- mc32 8y agoIt’s like one of those Garcia-Marquez stories. The facade is maintained long after the thing died —the facade was no longer necessary but it continued due to momentum.
- howard941 8y agoQuite the contrary. The facade was required until the clock ran out on Title 11's two year fraudulent conveyance presumption.
- village-idiot 8y agoTook longer than I expected, but unsurprising otherwise.
- uptown 8y agoNext up ... JCP.
- StreamBright 8y agoPlease no, my favorite clothing store in the US
- post_break 8y agoNot being snarky, but why? I'm curious why you shop there.
- relix 8y agoHardly. JCP's book value is actually positive and double the share price, versus SHLD's $-40 per share of $0,40; and JCP has no major debt due until 2022.
- arbitrage 8y agoBetter article from Forbes, that isn't behind a paywall https://www.forbes.com/sites/georgeschultze/2018/10/08/sad-sears-saga-stretches-on/ https://www.forbes.com/sites/georgeschultze/2018/10/08/sad-s... CEO Lampert is a conman, and would be the only person to benefit from this move. Sears shouldn't be given any more breaks, and should just die already.
- tyingq 8y agoIt is interesting how many fronts they failed on. Sears Credit could have spawned something like Paypal. They were successful with their Discover card, and the Sears card was often young people's first credit card. They were kings of catalog shopping, and had the logistics and product data to have had a decent online business. And, they had brand strength in several areas like Kenmore, Craftsman, Land's End and DieHard Batteries. I know they licensed all that out, but way after the brand had peaked.
- mbreese 8y agoAnd don’t forget their joint venture with IBM — Prodigy. Given their logistics and catalog, they could have owned online shopping.
- deleted 8y ago[deleted]
- sct202 8y agoI can find references to Prodigy having an online shopping portal, but I have had trouble finding any anecdotes of people actually buying things thru it. It was probably too early for it's time (early 90s graphics, internet speed and all) and it's failure probably soured Sears from future attempts by the time Amazon showed up.
- berbec 8y agoThe graphics were ahead of its time. RIP was a major step up from ascii.
- joezydeco 8y agoThis is the canonical eulogy for Sears, courtesy of Pastabagel@Metafilter: https://www.metafilter.com/62394/The-Record-Industrys-Decline#1742245 https://www.metafilter.com/62394/The-Record-Industrys-Declin... "By my estimates, Sears could have spent about $200 million in 1994-1996 to develop and promote retailing and financial services online, and they'd be reaping billions. Sears could still be a huge American company today, instead of a historical footnote."
- bruceb 8y ago(Eddie) Lampert rarely visits Sears Holdings headquarters, outside of Chicago—some say only once a year, for the annual board meeting. https://www.vanityfair.com/news/2018/03/the-strange-odyssey-of-hedge-fund-king-eddie-lampert-sears-kmart https://www.vanityfair.com/news/2018/03/the-strange-odyssey-... Company failing and he doesn't even show up.
- tyingq 8y agoIt gets even weirder than that. For example, he sold the Kenmore brand to his own hedge fund (ESL). https://searsholdings.com/press-releases/pr/2091 https://searsholdings.com/press-releases/pr/2091
- hotsauceror 8y agoI don't think this is unintentional. His own hedge fund has bought several of Sears' most valuable brands. But even more important, Sears has sold a lot of its real estate to ESL or Seritage or whatever Lampert's holding company is. I've read suggestions that he'll make out better in the long run by reselling that valuable real estate than lifting a finger to save Sears' retail operations. I'm not quite sure I see how buying large spaces in dying shopping malls is a huge value proposition for buyers, but that's the explanation I've read for why he's seemingly knowingly running Sears into the ground. He gets valuable assets for pennies on the dollar.
- tyingq 8y agoIt does feel like a sort of loophole for something very similar to insider trading. And, he gets to work both sides of the deal.
- hotsauceror 8y agoThat's the main thing, for me. Somewhere in here I feel like he's going to get burned by self-dealing. I don't know enough about these things but if the behavior seems obvious enough to boobs like you and me with no knowledge of finance, I'm pretty sure some of the other investors who stand to lose out are giving him the side-eye and scheduling lunch with their attorneys. OTOH, anyone who's still invested in Sears at this point, I feel like has to be a vulture. There can't possibly be value investors left in this turd.
- poulsbohemian 8y agoMoments like this actually give me some hope. Perhaps younger generations will use this as an example of how corporate America is no ones friend. They don’t care about you as an employee, they don’t care about their customers, and they don’t care about politics unless it gives them an unbridled revenue stream. So much of what’s taught in B-schools is such a lot of malarky compared to real-world capitalism, which has nothing to do with the simple ideas of building a good product, containing your costs, etc. It’s all shenanigans and financial engineering, to the benefit of the few in power, where executives are replaced when they fall out of favor, rather than their obvious incompetence. As pointed out here, Sears could have been something akin to the juggernaut that is Amazon today - maybe even bigger. But that would have involved work, and greed always opts for cheap and fast. So, you want a lesson kids? If you aren’t freelancing, building your own company, seeking ways to be part of the financial engineering games, then you are really just one paycheque away from being out on the street. I’d like to think that with enough recessions, with enough pump-and-dump, with enough scheming, that eventually enough people will decide to create their own businesses, and maybe we’ll see small businesses, small towns, and real capitalism reborn.
- throwaway456321 8y agowhy is this comment grayed out? "shenanigans and financial engineering, to the benefit of the few in power, where executives are replaced when they fall out of favor, rather than their obvious incompetence" Right on the money!
- poulsbohemian 8y agoIt's ok, I've learned to just throw karma to the wind and speak my mind. Some will upvote, many with downvote. I find it fascinating from a sociological perspective which way the HN crowd will go on any given day. There are some really insightful folks here with amazing backgrounds and a lot to share, but there are also a lot of perspectives I can't quite put a finger on.
- amyjess 8y agoWhat kinds of regulation can the government pass to make it illegal for vulture capitalists to raid companies like this?
- AnimalMuppet 8y agoWhy should it be illegal? If Sears has more value being shut down than kept running, why shouldn't it be shut down?
- amyjess 8y agoBecause this kind of raiding is harmful to society.
- mikestew 8y agoHow is it harmful? Sears was an empty shell long before the raiders showed up. They'd pissed away brand goodwill for years. 1993, they shut down their catalog operation. A year later, Amazon is founded. That long air-horn sound? Yeah, that's the boat you just missed, Sears. I could go on, but for all his faults Lampert is an unpleasant symptom of an untreated disease Sears has had for a while, not the disease itself.
- philjohn 8y agoBecause it allows you to get out of paying things like pension liabilities, or suppliers.
- mikestew 8y agoSears was headed toward bankruptcy with or without private equity. My question is specifically addressed at the harm of private equity picking the bones of what is already some pretty sorry looking roadkill. Those pensions and suppliers weren't going to get paid no matter who owned Sears, not at the rate they were going before Lampert showed up.
- 8y ago
- 24gttghh 8y agoWhat do they usually do with all the assets of these companies when they go bankrupt? Would stuff like all their appliance stock get put up in a fire-sale for cheap? I need a new washing machine...
- chasedehan 8y agoThey will typically just restructure and continue without even closing down. They will probably end up closing a number of the low performing stores. Although they potentially could go the way of Kmart or Toys R Us if the bondholders hold the company hostage.
- stephengillie 8y agoA liquidation company buys the assets and sells them - down to the shelves and signs. That's why all the "Store Closing" signs are the same, because the same liquidation company shuts down many companies.
- darkarmani 8y agoA local bon-ton had just done something similar. i'm not sure if they were bankrupt, but the store went out of business at the mall and EVERYTHING was being sold for cheap. We got a $90 coffee table (reduced already) for $6 after they took off like 90% and some other discount for that day.
- stephengillie 8y agoDid they use the same Store Closing signs as your local Toys R Us?
- protomyth 8y agoOne of the hidden problems with Sears going under is that by and large they had some really good auto repair shops. They charged a fair price and really didn't try any funny stuff. They were the good "I don't know a mechanic in this town" place to go.
- intopieces 8y agoWhen did they stop having good auto repair shops? My experience in the past 5 years has been that the people who worked there seemed to be picking up a wrench for the first time the day I rolled in.
- protomyth 8y agoTook a car in two years ago and they did a good job. I get the feeling its been a bit of a slow decline depending on where you are.
- phakding 8y agoI have many friends who work for Sears corporate. Listening to them, it seemed like Lampert bet his company on his libertarian ideology. Turned out Ayn Randian ideology doesn't work in real life.
- howard941 8y agoYour friends shouldn't shed any tears for him, his proprietary entities will make out just fine. Better than just fine.
- pastor_elm 8y agoWhat does this mean for their pension payouts? Too bad the retirees are too old for a revolution. Liquidate all their holdings and payout to the pensioners.
- mattnewton 8y agoIf only :/
- walrus01 8y agoTelecom industry person here: About four years ago I was contacted by a real estate industry person, purporting to represent Sears, that was looking to get revenue from putting cellular carrier sites (other other monthly rental from telecom-related things) on the roofs of Sears' big box retail stores. They had a website marketing it and everything. I don't believe it ever went anywhere, because the nationwide big-4 cellular carriers would much rather pay a mall owner for a 15'x15' plot of land to put in a cabinet and monopole, than sublease a rooftop from Sears.
- selimthegrim 8y agoWhat do you mean by monopole?
- walrus01 8y agoGoogle "steel monopole", a type of free standing, low square footage footprint cellular tower.
- riffic 8y agohttps://en.wikipedia.org/wiki/Monopole_antenna https://en.wikipedia.org/wiki/Monopole_antenna
- walrus01 8y agonot really, no, that's for a type of antenna. I was referring to the structure which supports the antennas, which is something like this: https://www.pinterest.com.au/pin/562950022151065454/ https://www.pinterest.com.au/pin/562950022151065454/
- samfisher83 8y agoSears was Amazon before Amazon. He started by selling watches from mail order catalogs and then selling more stuff, and then opening stores.
- kaizendad 8y agoIt's amazing, Sears CEO Lampert has done so much self-dealing -- turning Sears assets into Sears cash + Sears debt, with the debt owned by Lampert's own companies -- that he'd be the only beneficiary in a bankruptcy. There's so little equity, other shareholders would be wiped out. It's hard to see how this doesn't end in a massive lawsuit, and, hopefully, some kind of consequences for rapacious capitalists. cites: https://www.usatoday.com/story/money/2017/03/22/sears-holdings-ceo-eddie-lampert/99487518/ https://www.usatoday.com/story/money/2017/03/22/sears-holdin..., https://www.cnbc.com/2018/04/23/eddie-lamperts-hedge-fund-esl-proposes-to-buy-kenmore-brand-sears-real-estate.html https://www.cnbc.com/2018/04/23/eddie-lamperts-hedge-fund-es...
- kirykl 8y agoa Sears fail anecdote: Tried to buy a vacuum once with a printed out Sears gift card (card # only) and cashier refused, manager told me they should call loss prevention just for me trying to use that. Brought up Sears website on my phone, typed in the card #, and selected store pickup. Walked over to the pickup area and left with the vacuum.
- rossdavidh 8y agoSo, does this have knockon effects for mall stores? Lots of malls with one less anchor, after the ripple effects go through. I realize bankruptcy does not always mean everything closes, but in this case I think a lot of it does pretty soon. Many malls are already on the edge, I think this could be a problem.
- anon4lol 8y agoI used to love to go to sears. As a kid I would spend hours thumbing through the Sears catalog, and circle Christmas gifts to give hints to my parents. At one point most of the appliances and tools in my house were Sears brands. Unfortunately, reading some of the comments to a story gives me headache. Especially the "corporations are evil" type comments. Sears was killed by two factors: 1) Lampert's self-dealing and attempt to extract personally enrich himself, and 2) optimizing everything to extract as much cash as possible, from every facet of the business. When I was younger, there was a classic business case presented in an MBA program regarding frozen pizzas. A food company sold frozen pizzas that was great and had a very strong customer loyalty. In search of more revenue, an MBA calculated the cost savings if they reduced the number of pepperoni. Unsurprisingly, they made more money and no one complained. Bonuses were handed out. Year after year, they started to "optimize" the pizza. After several years of this, sales tanked. Customers stopped buying. They hired consultants who performed focus groups and they found out that customers didn't want a cheese pizza with a few toppings. They never fully recovered revenue back to the original levels even after trying to win back customers. Once they broke the customer's inertia, customers started exploring other options and found better ones. The key take away is: don't be myopic and only focus exclusively on short term gain because you may run your customers off. I have seen this pattern repeated over and over. Amazon is the now biggest example. Every interaction I have with Amazon is getting more onerous. It used to be I would go online, search amazon and order. Now the product search results are festooned with ads, sponsored products, and the product that I want at higher prices, while the lower priced products are hidden. They arbitrage postage. New ads on prime video. I can go on and on. Eventually people aren't going to take it anymore, and when they do they will find better, cheaper options. I know I have. This happened at Sears. Every time I interacted with sears it was less enjoyable. The products became cheaper and lower quality. Recently, I wanted to purchase an olympic weight set. Heavy cast iron weights. Sears used to have home a large selection gym equipment. It is one of places where someone will go in to buy a barbell, and will return for more products like a curl bar, more weights, and pick up a few other items while you were there. Nope, they had determined it was more profitable to become a market place and take a commission and not hold inventory. They optimized the inventory to only hold items that sell well or have high mark-ups. Being a cynic, I really don't think Lampert cares. Although I don't think BK was the plan all along, he is obviously using it as a financial engineering tactic to shed obligations while he owns all the real estate. His self-dealing was so bad a number of investors were threatening lawsuits a few years ago. Ultimately, he will kill the company and still walk away with a dump truck full of money.