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Sears files for bankruptcy after years of turmoil
- the_clarence 8y agoWhat happen to their shares? Should I sell them? Can I sell them? Am I screwed?
- nabaraz 8y agoWhy are you still holding them? To your question, Shares will be delisted to pink sheet under $SHLDQ.
- the_clarence 8y agoWhat does that mean? I just read the news so I'm not sure about my options. Who would buy them?
- avar 8y agoIf you don't already know the answers to these questions you should not be taking the high risk of investing in individual stocks. But yes, you're screwed. In general you might get some money back if the assets they can sell on a firesale exceed the debts, but that'll be pennies on the dollar. But if the company had more debts than assets you've lost your money, unless you're among the first in line for debt payout, but that'll go to "innocent bystanders" like the suppliers of Sears first, not investors who just made a bad investment decision.
- the_clarence 8y agoMeh. I'm investing peanuts and it looks like I'm going to learn something which I would have completely ignored if I had not bought these stocks.
- drdeadringer 8y agoWhat lead you to buy Sears stock in the first place? Was Sears a seemingly viable concern when you bought in?
- the_clarence 8y agoIt was the cheapest stock. Been buying small amounts of cheap stocks
- Urgo 8y ago"filed for bankruptcy ahead of a $134 million debt payment due Monday" wow "The company has roughly $5.6 billion in outstanding debt" wow! That got me to google. As it turns out, only 18 out of the 500 s&p 500 companies don't have ant dept. That is crazy to think about. https://www.retirebeforedad.com/debt-free-sp-500-companies/ https://www.retirebeforedad.com/debt-free-sp-500-companies/
- lordnacho 8y agoCorporate interest rates have scraped their historical bottoms in recent years, so it's not that surprising many firms have decided to borrow. Profits have also been healthy, so there's enough cash flow to pay the interest.
- nytesky 8y agoThere is a concern from many economists that with rising rates, they will need to either roll into higher cost debt or pay out of bottom libe — and the sheer magnitude is a problem. Not sure why, low rates weren’t expected forever.
- airstrike 8y agoThis happens every business cycle, though, and it's something the market already expects
- NeedMoreTea 8y agoIf that were so they wouldn't be bankrupt. Leverage works both ways, so to my old fashioned way of thinking there's a lot to be said for not getting over extended. Leaving some profit on the table beats shutting down.
- TheSpiceIsLife 8y agoIt depends. If the shareholders continually vote for a board that over extends, then the circumstances change and either a) profit! everyone retires early, or b) the share price collapses and everything turns to shit. Either way the board members will probably okay, and most of the shareholders probably didn't have their live savings all in that particular company. I guess this is why investing is a risk vs reward trade-off. If you're of the opinion that leaving some profit on the table beats shutting down, then you probably want to invest heavily in blue chip stocks. Others might have a different risk preference.
- sschueller 8y ago"More important, Lampert personally lent billions to Sears Kmart, increasing corporate debt. As in-store sales lagged, Sears sold off major assets like Craftsman brand tools and Land’s End outdoor equipment to service the loans. Lampert also split ownership of 266 Sears and Kmart buildings into a real estate investment vehicle called Seritage. Last year, Sears and Kmart stores paid $200 million in rent on these properties they once owned, eating up operating revenue. As Sears closes hundreds of stores and considers bankruptcy, Lampert will likely come out ahead. He enjoyed fees from all the lending to Sears, and he’ll recoup more money in any restructuring, even if Sears has to sell off inventory to do it. As a shareholder of Seritage, Lampert’s hedge funds can profit from higher rents charged to new retail outlets that move into the shuttered Sears locations." [1] [1] https://newrepublic.com/article/145813/cause-consequences-retail-apocalypse https://newrepublic.com/article/145813/cause-consequences-re...
- emiliobumachar 8y agoI wonder to what extent can Sears' creditors go after Seritage. It can't be as simple an algorithm as: 1. Buy a company 2. Spin off major assets into another company 3. Have the original take debt and pay the money to the spinoff 4. Bankrupt the original, but keep the healthy spinoff without paying any of the debt 5. Profit! ... can it?
- NeedMoreTea 8y agoWhy? It's a model that's worked successfully for decades, though you forgot 1a Have the company take on debt to pay for the takeover. It's also ridiculously destructive and abusive to all except the asset stripper.
- i_feel_great 8y agoWhy do others hang on when they see this coming, if they stand to lose?
- parrellel 8y ago
- janvdberg 8y agoThis reads rather similar to a famous Dutch warehouse's demise: https://en.wikipedia.org/wiki/V%26D#Bankruptcy https://en.wikipedia.org/wiki/V%26D#Bankruptcy
- newnewpdro 8y agoIt's incredible that it took until 2018 for this to to arrive. Over a decade ago I was frustrated with the sharp decline in Craftsman's tool quality. At one point I had exchanged a malfunctioning .5" drive rachet using their famous lifetime warranty, only to have the noticably inferior replacement start malfunctioning months later. It was already clear to me back then Sears was done.
- parrellel 8y agoAh, like Toys'R'Us before it, the leveraged buyout destroys another company. Sometimes, I wonder what might have been if Sears had never gotten out of the mail order business, and had adapted reasonably to the advent of the Internet. I like to imagine they wouldn't have been as disgusting as Amazon.
- kposehn 8y agoI managed to get my craftsman table saw picked up from Sears (via Shop Your Way) a scant 48 hours before they declared. I have no doubt my local store will be closed and I expect the killer deals via Shop Your Way will be gone shortly. I’m genuinely saddened for the people at my local sears that are left. They always were kind. They’ll be looking for jobs as fast as they can I expect. I hope they get them.
- drfuchs 8y agoSears started as a mail-order company in 1892, with a catalog that quickly grew to more than 500 pages. It came in the mail yearly, and rural America quickly came to depend on it. It’s hard to convey what a huge success Sears was; its 1906 IPO (the first one ever handled by Goldman Sachs) qualifies it retrospectively as way beyond a Unicorn, as they raised more than $1 billion in 2018 dollars. They didn’t open their first brick-and-mortar store until 1925, but the catalog operation was still going strong for decades after that. However, they mis-judged the future, and shut it down in 1993. Amazon was founded in 1994. Sears had all the logistical knowledge of how to sell and deliver billions of dollars of consumer products at scale; they should have been Amazon, but pivoted away at exactly the wrong moment.
- avar 8y agoReading the NYT article about it written at the time[1] is painful with the benefit of hindsight. Some quotes: > "The mall is still an incredibly powerful draw," Mr. Martinez said. "Some of our better-performing stores are there." But the writing was already on the wall: > Traffic in malls has slowed somewhat in recent years, but analysts said the company had little choice but to focus on its mall stores, which are its most profitable. Arthur C. Martinez was head of Sears from 1992-2000[2] and known as "the person who saved Sears". Their stock price kept climbing until around 2007, and has been on a downwards trajectory ever since then. 1. https://www.nytimes.com/1993/01/26/business/sears-eliminating-its-catalogues-and-50000-jobs.html https://www.nytimes.com/1993/01/26/business/sears-eliminatin... 2. https://en.wikipedia.org/wiki/Arthur_C._Martinez https://en.wikipedia.org/wiki/Arthur_C._Martinez
- samatman 8y agoMore than that, Sears had Prodigy, an early and very successful online service. They had all the pieces in place and still dropped the ball.
- tim333 8y agoI guess it's yet another example of it all being about execution. It was easy at the time to predict that sales would move online but Amazon was the one that executed best.
- netcan 8y agoI realize that this is hard and disruptive to people who work for Sears. But, isn't corporate churn an important thing?
- nabaraz 8y agoHere is a good timeline on Sears. https://s.thestreet.com/files/tsc/v2008/photos/contrib/uploads/107b974c-011b-11e8-9c95-0f7dafbe68a7.png https://s.thestreet.com/files/tsc/v2008/photos/contrib/uploa...
- nimbius 8y agounrelated, but sears has had a lasting impact on american life in some of the strangest ways. Im an automotive engine mechanic, and to this day I still see old cars with "sears" style 'advanced' tire balancing. This was a service they offered back in the 90's and were subsequently litigated for it in some cases as they hadnt disclosed the full operational process to customers before the work was agreed upon. Basically a tire alignment at Sears also included wear leveling. Sears would pull your tires off, spin them in a special laser mapping machine on the wheel, and grind down high spots in the tire to "balance" it. this worked to remove flat spots in the tires but the technology could actually increase the chance of a bubble or blowout in certain conditions. Then theres Craftsman tools. Worthless garbage from 2000 onward, but if you managed to find yourself a set of genuine Craftsman sockets or wrenches from the good old days then you're officially the dreamiest grease monkey in the shop. These wrenches were practically strong enough to tear the hinges off St. Peters gates. They were the gold-standard that settled every east german/west german tool argument from an old timer.
- village-idiot 8y agoIn how many malls is Sears the remaining anchor store? This is going to be painful for suburban America.
- AnimalMuppet 8y agoSears stores have become really depressing places. There's very few workers and very few customers, and the workers have no energy or enthusiasm. There's no life in the place. So if a mall has a Sears as the one anchor store, the mall is already in trouble, because Sears isn't pulling its weight as an anchor store.
- RcouF1uZ4gsC 8y agoFrom an old comment in https://www.metafilter.com/62394/The-Record-Industrys-Decline#1742245 https://www.metafilter.com/62394/The-Record-Industrys-Declin... previously referenced by https://news.ycombinator.com/item?id=13135620 https://news.ycombinator.com/item?id=13135620 just a reminder of what Sears could have been if they had not taken the short sited decision in the early 90's. Sears was started in the 1890's as a mail order business to compete against local general stores (think of all those westerns with "General Store" on one of the buildings - they were Sears competition). The guys Sears worked on railroads, and he saw all the middlemen tacking on markup as products moved west in the distribution chain until they go to the stores. So he started a catalog, the famous Sears catalog in 1893. It was 300 pages, and had everything. Now think about this for a second. In 1893, you had a mail order catalog that sold pretty much everything that was for sale in 1893 - machinery, bikes, toys, dry goods, etc. Does this sound like another business you know? So every year the catalog comes out, and after a few decades it becomes an American institution. For much of the population, the Sears catalog includes a decent quality, low cost version of every mass market nonperishable consumer product in the United States that wasn't a car (they did sell those at one point very early on. They also sold mobile homes too, up to the 1940's). You could pick anything from the catalog, mail in your order with a check, and in a few days/weeks you'd get it. If you didn't like it, for any reason, Sears had a "satisfaction guaranteed" policy that you could return it at anytime for a full refund. Now pay attention, because here's where it gets good. In 1931, Sears starts an insurance company - Allstate. It buys financial investment firm Dean Witter and real estate broker Coldwell Banker in 1981. In 1984 it starts a joint venture with IBM called Prodigy, an online computer service, sort of a prototype AOL. In 1985, Sears launches a new major credit card, the Discover card. For the next eight years, the only credit card you can use at Sears is Discover. At this time, the early 80's Sears is the largest retailer in the U.S. By 1993, the 100th anniversary of the Sears Catalog, Sears had built up considerable goodwill in the mind of consumers. They weren't the lowest price, but they had what you needed at good prices and the service was second to none. They had real estate, insurance, financial planning, and all at good prices with top customer service. This is 1993. In quite possibly the greatest example of corporate shortsightedness, Sears shut down it's mail-order business in a cost cutting measure. It spins off Allstate that same year, and soon dumps Dean Witter and Coldwell Banker. In 1993, Sears had the most extensive and sophisticated mail-order retail operation on the planet and they closed it. Two years later, Amazon.com launched, and was soon selling everything that sears sold through it's catalog. By the late-90's Walmart's push of low-cost China imports killed Sears retailing. Online banking takes off. Credit card use surges as mail order and retail purchases are shifted online. Sears had its own computer network in 1993. They had access to IBM, they should have understood the power of the internet. All they had to do was shift the catalog online instead of killing it off, promising in store returns and the same Sears satisfaction guaranteed. Discover could have been the credit card of choice for security and protection online. Dean Witter could have been what Schwab, E-Trade and Ameritrade became. Back in the mid-late 90s when many people were hesitant to use credit cards online, Sears could have been a familiar face online. Sears could have used the Catalog to create searscatalog.com or wishbook.com and owned online retailing, owned amazon's business, owned online brokerage and banking, but they blew their chances to save a few bucks in 1993. They could have made huge profits in the early 2000s real estate boom by leveraging that success with their real estate arm (imagine if Amazon sold houses). 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.
- kup0 8y agoEven 5-10 years ago both our Sears and KMart stores in the area were very run-down, poorly lit, with really no upkeep at all. Both our family and someone else's we know got really screwed on new sets of tires from Sears Auto that were faulty and that they did not want to fix. The service was terrible. Every now and then you could find an okay product at a decent price in KMart, but the writing has been on the wall for the longest time. Now both of these stores are gone from our area. I can remember how different these places were when I was a kid/teen, though, and interesting to watch, as the person quoted in the article says a "slowest train-wreck" happen to what used to be popular brands (at least Sears, not sure if KMart really had the same status or not)
- unstuckdev 8y agoHeading down to the Sears Outlet to buy a scratched but perfectly functional version of the company for 90% off.