20 ms·

Sears Hasn’t Fared Better After Bankruptcy

168 points by howard941 7y ago

gefh 7y ago
The real question is how much money did Eddie Lampert manage to take out?
claudeganon 7y ago
Grubstakers had a good deep-dive on how Lampert drove Sears into the ground with his half-cocked, self-enriching schemes. My favorite part was the mandatory internal social network he implemented, where he spent hours arguing with employees through sock-puppet accounts: https://soundcloud.com/grubstakers/episode-105-eddie-lampert-searsk-mart https://soundcloud.com/grubstakers/episode-105-eddie-lampert...
- dmix 7y ago
  The ones who are bad at business and gamed their way to the top are never just bad at business. They always have borderline personality issues and strange quirks. Reminds me of Ramesh Balwani from Theranos.
- skinnymuch 7y ago
  Grubstakers is great. Haha yes the internal social network is the silliest thing. The employees doing fake convo and knowing Eddy is posting are both amazing anecdotes.
- x0x0 7y ago
  What's amazing to me -- and I run a company -- is finding that many hours to argue with employees.
  - toomuchtodo 7y ago
    Because you run a company, not an asset stripping operation.
- folkhack 7y ago
  God this is outrageous - it's just a portrait of people who should never be in the powerful positions (that they don't deserve) screwing over thousands of people. They withheld wages, canceled insurance, etc. ... It's just disgusting and these folks should be ashamed for doing this. Listen to the podcast - it's outrageous.
  - deleted 7y ago
    [deleted]
- nkrisc 7y ago
  In my last few weeks there (some years ago), we were actually given a weekly quota of posts to make to it. I asked my manager multiple times if they were serious, they were and my understanding was that there was even reporting to see if their direct reports complied. It was bizarre.
zipwitch 7y ago
Sears biggest problem is that the now-former CEO had been looting it for years. https://www.reuters.com/article/us-sears-lawsuit/sears-sues-lampert-claiming-he-looted-assets-and-drove-it-into-bankruptcy-idUSKCN1RU1V3 https://www.reuters.com/article/us-sears-lawsuit/sears-sues-...
- drawkbox 7y ago
  The private equity leveraged buyout play by the cash and value extractors. Careful leaving too much cash or value creation lying around, the extractors will come seeking it, and take it if you aren't vigilant. Sears lost that battle long ago. In an alternate dimension, a value creator is in charge of Sears decades ago, and there is a nice competition of Amazon, Walmart and Sears in that place, making pricing even better for consumers. In our current dimension, Sears management got too comfortable counting the beans.
  - Scoundreller 7y ago
    My guess is that they tried to make money on it. Failed. And tried to minimize their losses.
    - drawkbox 7y ago
      That and risk taking was muted because they were scared to take a big hit. Typical HBS MBA-itis not risking enough in R&D and new markets, too comfortable counting the money in the current market while the road heads towards a cliff. Sears knew a major change was happening and did not become a top player in that change, it was inevitable. Amazon will never get lazy like that, Amazon is a pure R&D machine.
      - dmix 7y ago
        Which is interesting because Sears was closer to Amazon than Walmart was for a time. I’m starting to see Walmart delivery trucks everywhere now so they must be doing something right.
criley2 7y ago
I mean this seems obvious from a thousand miles away. Amazon changed the game fundamentally. The only two effective strategies are to challenge them directly (Wal-Mart and their logistics and their free 2 day shipping/no membership website competitor) or to effectively blend the store/online experience with a huge push towards mobile ordering and curbside pickup or gig-style personal shopping delivery. I'm not sure why Sears thought they could half-ass this transition and kind of do nothing to compete in today's market. Last time I was in a Sears, it was eerie and quiet, it smelled old, the prices were NOT GREAT and I ultimately priced the tools I wanted on Amazon for a good discount. Not like the old Sears Craftsman name and warranty mean much anymore anyway.
- dantheman 7y ago
  Best Buy seems to be thriving.
  - euvitudo 7y ago
    Amazon's showroom? Yeah, I was looking on Amazon for a specific bluetooth keyboard and saw the same one for the same price at BB. I purchased it at BB, as I could get it immediately, and I knew that it was new/unused. If b&m stores can be relatively competitive price-wise (even if a bit more), I'd much rather buy locally. Surely Home Depot and Lowe's (and others) benefit from each Sears store closed.
- ghaff 7y ago
  More upscale retail is mostly still doing OK. The well-documented decline of malls is mostly more rural, less upscale properties. (Some chains including, surprisingly, Best Buy are doing OK in spite of online.) Big Box home improvement also seems to be doing OK. Sears in particular really didn't know what it wanted to be. It did clothes (including buying Lands' End). It did tools, It did appliances. But it wasn't a discounter like Walmart. (Which drove a lot of regional discounters out of business.) In short, it didn't have a strategy and tried to focus on everything.
- newbrict 7y ago
  And Costco
nscalf 7y ago
I don't think I understand the financial system of bankruptcy very well, I always thought that bankruptcy was a hard end of the line---your assets are seized and sold off to pay back debts, etc. I've also heard business cases while in school about companies like Kodak where bankruptcy seemed to be the end. Can someone explain how bankruptcy often results in companies continuing to run? Edit: Thanks for the responses everyone. I'll do a bit more reading on chapter 7 vs chapter 11, very interesting stuff.
- howard941 7y ago
  There are two types of bankruptcy: Liquidation and reorganization. This was a reorg.
- gefh 7y ago
  There are different types of bankruptcy. For businesses, chapter 11 bankruptcy allows time for court supervised restructuring of debt, on the theory that there is often value in an insolvent business, if the cash flow can be re-arranged.
- siberianbear 7y ago
  Bankruptcy can take two forms. The key question is, "if this company got out from under its debt and didn't have to service it, is it still a viable company?" If there is actually a viable business there, it makes sense to wipe out the shareholders, extinguish the debt, and make the former bondholders the new shareholders. If there is no viable business even with the debt, then liquidation is the right path. (I'm not a finance professional, just another person on the internet with an opinion.)
- Spooky23 7y ago
  At a high level, there are reorganization and liquidation type bankruptcies. Some companies get into trouble with debt, are victims of economic winds or otherwise get into trouble. But the business is fundamentally still viable. So the company declares chapter 11 bankruptcy, is able to break out of unsustainable contracts, and the suppliers take a haircut. Other companies are just done. So they declare chapter 7 bankruptcy, sell off anything of value, and pay out creditors based on the judge/bankruptcy trustees order.
bluedino 7y ago
Our Sears store is finally closing it's doors this month. It took long enough. 20 years ago I worked there, selling Packard Bell and Macintosh computers, as well as vaccums. Who decided those departments should be merged, I don't know. Once in a while I'd sub at a smaller store about 45 minutes away, and cameras got thrown into the mix. I always liked the Sears Auto Center for tires, service, and Diehard batteries. Craftsman hand tools were decent until the mid-2000's when they started changing warranty policies. The power tools and lawn equipment were never really any good. If you buy a 'Craftsman' mower, you're getting the same Chinese-engined lawnmower that you buy at the same price point at any other store. Just like any other product these days. They used to have an entire part of the store dedicated to flat-screen TV's. As they cheapened, the area got smaller and smaller, until it was 4-5 sad TV's hanging on a wall. Just this last year they decided to fill that part of the store with mattresses. I noticed the store filling up with Craftsman, Kenmore, and other Sears-branded junk. Just low end stuff like cheap shoes, plastic utensils, and pots and pans. I figured distributors weren't willing to give Sears enough credit to stock the stores with stuff of any value. The store itself hasn't been kept up in forever. Most of the ceiling tiles are stained from leaks. the carpets are probably as old as I am, everything is broken, and it doesn't even feel like they turn the heat on in the winter.
- JohnJamesRambo 7y ago
  I still have my parents’ riding Craftsman mower from over 20 years ago and it runs like a top, so maybe at some point they made good mowers. It has an engine with a spin on oil filter like a car and I attribute the engine longevity to that. My Mom has been through like three riding Craftsman mowers since then and each one seems more cheap and crappy than the last. The latest one is like a playskool mower with the dumbing down of the controls and big colorful plastic levers.
  - ganoushoreilly 7y ago
    Lowes recently started carrying The black and Decker version of Craftsman and they're pretty adamant about advertising the warranty is back. Then again, who knows if that's accurate. I try to pickup old craftsman tools (and matco / Snapon) when I go to garage sales. The older stuff was great.
swami26 7y ago
Artfully executed real-estate liquidation play
Jgrubb 7y ago
I don't follow this story closely, but I bet somebody here does: My sense is that yeah there's Amazon and all the other missed opportunities, but don't they also have some corporate raider type as CEO who's totally cashing in on running this chain into the ground?
- nkrisc 7y ago
  Oh yes. There is plenty to read about Eddie Lampert. He would like it to read like an Ayn Rand novel, but that's not the case (out maybe it is, but not in the way he was expecting).
  - shadowgovt 7y ago
    It reads like a Rand story if someone tried that economic philosophy in real life. Which, it seems, he did. To this effect.
    - magduf 7y ago
      I'm surprised that there aren't dozens and dozens of comments here lauding Lampert's behavior and business strategy here. After all, tech and HN are chock-full of libertarians and Ayn Rand lovers.
      - perl4ever 7y ago
        Are you being sarcastic to imply the stereotype is false, or genuinely surprised? I can't remember seeing anyone defend him much anywhere, and even though I don't think much of libertarianism and Rand these days, it would be interesting to read a defense by someone who was reasonably intelligent and had done some research beyond just listening to the stuff everyone repeats. I have a feeling that even though his management may have been destructive, the stories are greatly simplified and distorted to make good stories.
      - deleted 7y ago
        [deleted]
      - 7y ago
tim333 7y ago
The whole saga is an interesting tale of hubris from Eddie Lampert who was a very good hedge fund speculator who thought that would translate into being a good retail store operator but it didn't seem to work out. https://www.forbes.com/sites/michaellewitt/2018/11/07/do-not-resuscitate-the-saga-of-sears-hedge-fund-hubris-and-media-ignorance/#2a51ce2e2148 https://www.forbes.com/sites/michaellewitt/2018/11/07/do-not...
- lowercased 7y ago
  his "operation" process seemed to just be "sell off assets".
- rasz 7y ago
  It never seems to pan out. Jack Tramiel, of Commodore fame, burned all his retail partners so many times nobody wanted to carry Atari computers anymore. His 'genius' solution was paying $67m for a chain of malls https://www.nytimes.com/1987/08/25/business/atari-to-acquire-electronics-retailer.html https://www.nytimes.com/1987/08/25/business/atari-to-acquire... He ended up losing at least twice that amount in less than two years before writing it off.
lscotte 7y ago
Paywalled story, not free to read.
- RankingMember 7y ago
  https://outline.com/XqxGcf https://outline.com/XqxGcf
jdlyga 7y ago
What you can get at Sears you can get better at Mavis Discount Tire (much faster tire replacement), Kohls (better, cheaper clothes), or Home Depot (bigger tool selection). The main problem with Sears is that they forgot to focus on keeping the quality up and customer service.
- kiterunner2346 7y ago
  Never heard of "Mavis Discount Tire"! I Google'd "Mavis Discount Tire vs Discount Tire" to find that the latter is suing the former for trademark violations: https://news.bloomberglaw.com/ip-law/discount-tire-lawsuit-claims-mavis-rebrand-treads-on-trademark-1 https://news.bloomberglaw.com/ip-law/discount-tire-lawsuit-c... Wheel retailer Discount Tire claims a rebrand by Mavis Tire Supply LLC—labeling its stores Mavis Discount Tire—violates its trademark rights. The company’s Dec. 26 lawsuit says Mavis started renaming stores after buying multiple chains located in the South and Midwest, where Discount Tire does business. Mavis intends to confuse customers and profit from goodwill built up in the Discount Tire trademark over decades, according to the complaint filed in the U.S. District Court for the District of Georgia. Mavis previously used Mavis Discount Tire branding only in northeastern states with no competing Discount Tire stores, according to The Renialt-Thomas Corp., Discount Tire’s corporate name. Looks like an interesting case!
  - perl4ever 7y ago
    Also in Mavis news, it was recently reported that a store falsified invoices for brake work that may have lead to the crash that killed 20 people in upstate NY last year: https://www.timesunion.com/news/article/Mavis-manager-Invoices-falsified-brake-work-not-14503357.php https://www.timesunion.com/news/article/Mavis-manager-Invoic... "The alleged falsification of the records and the shop's purported failure to perform work on the 2001 Ford Excursion were part of a systemic practice at the auto service outlet as it tried to meet corporate sales quotas, according to court records."
RosanaAnaDana 7y ago
There's a great book to be written about technology, leadership, and time hidden in this story regarding Sears collapse. Think about it: they were the original Amazon with catalog sales. Distribution, warehousing, they did it all. It was revolutionary and the dominated the market because of it. If they had real leadership in the early 2000's, they could have been Amazon again. But what happened?
- braythwayt 7y ago
  I think it has already been written: https://en.wikipedia.org/wiki/The_Innovator's_Dilemma https://en.wikipedia.org/wiki/The_Innovator's_Dilemma ;-) You are correct, a specific dive into what went wrong at Sears and why they aren't Amazon today would be incredibly valuable. But re-reading "The Innovator's Dilemma" sheds some light as to why they not only didn't, but really couldn't catch the Internet wave. Incumbents need to recognize when a disruptive, extinction event is looming, and everything in their culture works against that. Typically, when one of these things comes along, sales are robust, the incumbents have cemented the value of their brands, and their margins are industry-leading. It's very difficult for incumbents to even see the disruption as a threat, much less to pivot, embrace the disruption, and disrupt themselves. When you're running a successful business, it is nearly impossible to decide to go all-in on a new business that will cannibalize your existing business at lower margins. If you're a public company, your stock will head right down into the sewer to be gnawed upon by short-selling Norwegian Rats.
  - RosanaAnaDana 7y ago
    Thanks for that recommendation!
    - braythwayt 7y ago
      "Well, Jane, it just goes to show you, it's always something—if it ain't one thing, it's another."
  - perl4ever 7y ago
    A company is not a person or a country though. Why should it pivot to something new? All the employees and shareholders are perfectly free to go do something else.
griffinkelly 7y ago
Wonder what's going to happen to the Guam Kmart...Its a lifeline to the island.
vermontdevil 7y ago
Sears is basically a REIT owned by Eddie Lampert [1] [1] https://www.institutionalinvestor.com/article/b1c33fqdnhf21s/Eddie-Lampert-Shattered-Sears-Sullied-His-Reputation-and-Lost-Billions-of-Dollars-Or-Did-He https://www.institutionalinvestor.com/article/b1c33fqdnhf21s...
etxm 7y ago
They should get back in the prefab home game[1] with the tiny house craze and the impending ADU boom in California. [1] - https://en.wikipedia.org/wiki/Sears_Catalog_Home https://en.wikipedia.org/wiki/Sears_Catalog_Home
- defterGoose 7y ago
  Hey that's a great idea! Unfortunately it sounds like Sears' management would be loath to consider any real "innovation" or "R&D".
exclusionzone 7y ago
Same thing is happening to all these retail chains who kept buying up physical real estate locations when the trend was clearly going against them. Sears had bad management for a long time and it clearly shows.
neonate 7y ago
http://archive.is/wFqbD http://archive.is/wFqbD
sxates 7y ago
I know there's a lot of commentary about the larger retail landscape being in decline and the shift to Amazon and all that... But what my theory presupposes is that Sears is committing suicide. Last May they rebranded with a new logo, that looks like a cross between AirBNB's logo and a natural gas flame. It looks like something they got from Fiver or a stock image site. They're throwing away decades of brand equity for this? I hadn't been in a Sears in a long time, but when I saw the new logo it made me go look at their site to see what they were up to. What I found was a website chock full of big promotions, but also chock full of complicated fine print. For example: The offer: $60 in CASHBACK points when you spend $60 The fine print: Offer valid 5/5/19–5/18/19. Members get $60 CASHBACK in points in 6 weekly installments when you spend $60 or more on qualifying purchases at select Sears stores and items sold by Sears on sears.com. First $10 in points issued within 48 hours and are valid for 7 days. Subsequent payments of $10 in points issued every Sunday starting 5/26/19. Offer valid 5/5/19–5/18/19. Maximum $60 CASHBACK in points per member. So their website was plastered with $60 "cash back" offers, but they don't give you cash back, they give you "points" worth $10 in weekly installments that are only good for one week, so to get your $60 you have to come back and buy at least $10 worth of stuff for 6 weeks in a row! Also, almost everything worth buying is on the exemption list. This is the exemption list just for Bedding (there were a lot more!): Excludes Lands’ End, select mattresses (Chiswick, Chelsfield, Camberwell, Cavell, East Channel, Harlington, Harrowby, Isleworth, Kenney, Romford, Beautyrest Black, Sealy Conform Performance [High Spirits, Fondness and Thrilled], Sealy Conform Premium [Gratifying and Wondrous], Stearns & Foster, Serta iComfort, Serta iComfort Memory Foam, Serta iComfort Hybrid, Sealy Hybrid, Simmons Beautysleep, Tempur-Pedic, Tempur-Flex), Protect-A-Bed, SleepTracker, Mantua bed frames, adjustable bases (Beautyrest Smart Motions, Sealy Ease, Serta Motion [Essential, Custom and Perfect], and Tempur-Pedic [Tempur-Up, Tempur-Ergo Plus and Tempur-Premier]), Serta iComfort pillows, Tempur-Pedic Tempur pillows, Stearns & Foster Premium pillows, Sealy Premium pillows, Serta Premium pillows, Beautyrest Premium pillows. Items must be sold by Sears. Purchase requirement before taxes and after other discounts and must be made in a single transaction. By accepting Shop Your Way® member benefits and offers, you agree to the Shop Your Way terms and conditions, available at www.shopyourway.com/terms. Members earn points on qualifying purchases, excluding sales taxes and other fees. Extra points are inclusive of, and not in addition to, any base points earned on qualifying purchases. When extra point offers are combined, total points earned will be less than the combined point totals for each individual offer. I found this astonishing! I've never seen such a complicated promotional offer before, and it really feels like a big "fuck you" to anyone who would bother to shop at their stores. Nobody wants to do business with a shop that's trying to bait and switch them with deceptive "deals". No wonder they're having trouble turning things around...
AtlasBarfed 7y ago
The bad assumption of this article is that the goal of Kmart/Sears in bankruptcy is to get out of bankruptcy. That is completely false. The entire goal of the Sears/KMart management is to siphon shareholder value and money from the parent company into shadow companies that the executive team owns, while saddling the main company with increasing debt and passing it through various stages of bankruptcy. At each stage the maangement will pilfer real estate and other main corporate assets from the main company. Why this is tolerated, who knows.
- wahern 7y ago
  I was hoping something would come out during the bankruptcy proceedings. But it seems that Lambert's buyout bid didn't result in any challengers putting forth specific and substantive self-dealing claims, at least none that would persuade a court to reject Lambert's offer. Note: I can't read the WSJ article. I have subscriptions to NYT, FT, Bloomberg, and The Atlantic, but not WSJ.
  - Twixes 7y ago
    How much do you spend on subscriptions per month?
    - wahern 7y ago
      Way too much. I keep meaning to cancel FT, which is about to renew for $249.95/yr. I subscribed to Bloomberg intending to cancel FT. The regular FT subscription doesn't provide access to the premium content, and the lineup of non-premium commentators and journalists doesn't have anything substantive or informative to say. I've subscribed to the FT, with a brief interruption circa 2015, for well over 10 years. Lately Bloomberg just seems to have more talent (their cybersecurity reporting notwithstanding). Earlier this year I accepted the $0.99/week deal for The NY Times. I'll reconsider when it renews at the regular price next year. AFAIK, my Bloomberg and Atlantic subscriptions are at the regular listed price.
uoaei 7y ago
When did it become the norm that bankrupted corporations continue operations pretty much as normal? I'm sure there's a lot of activity on the back end navigating bankruptcy law, but I remember when companies would go bankrupt and then promptly shut everything down.
ranDOMscripts 7y ago
You mean Eddie Lampert's plan to pillage all of the valuable assets, pile on company debt to buy the shares he owned, sue suppliers to keep providing inventory(!) and enrich himself at the expense of the employees and other stakeholders worked exactly as planned?[0] ...And in other news, water is wet. [0]https://www.nytimes.com/2017/08/11/business/the-incredible-shrinking-sears.html https://www.nytimes.com/2017/08/11/business/the-incredible-s...
musicale 7y ago
I will be greatly surprised if Sears manages to come back from the dead after being largely gutted/looted by Edward Lampert. Toys R Us seems to have met a similar fate of acquiring massive debt (in its case via a leveraged buyout rather than a merger) and then having all of the money sucked out, but I still hope it might return somehow.
- dehrmann 7y ago
  I'm still undecided on how much to blame Bain, KKR, and Vornado for this. They did what private equity does: they bought the company and transferred the debt to it and tried to restructure the company. They failed. But they bought it because it had Toys R Us tried to remodel and relaunch in response to Walmart and Target, but it wasn't a success. This was 2005, so Amazon wasn't even a major player yet. I'm not sure if PE exasperated the situation, slowed the bleeding, or caused it to sink, but I doubt that Toys R Us 2005 was ready to face Amazon in the coming years if it was struggling with Walmart and Target.
kup0 7y ago
I remember reading a long-form article about the decline of Sears and Lampert's meddling and so forth that was really interesting, I believe this is it: https://www.wsj.com/articles/how-sears-lost-the-american-shopper-11552647601 https://www.wsj.com/articles/how-sears-lost-the-american-sho... Outline here because I think it's semi-paywalled. The first time I got to it, it was fine (maybe because I googled it): https://outline.com/84tyGU https://outline.com/84tyGU

168 points by howard941 7y ago

gefh 7y ago

The real question is how much money did Eddie Lampert manage to take out?

Grubstakers had a good deep-dive on how Lampert drove Sears into the ground with his half-cocked, self-enriching schemes. My favorite part was the mandatory internal social network he implemented, where he spent hours arguing with employees through sock-puppet accounts: https://soundcloud.com/grubstakers/episode-105-eddie-lampert-searsk-mart https://soundcloud.com/grubstakers/episode-105-eddie-lampert...

dmix 7y ago
The ones who are bad at business and gamed their way to the top are never just bad at business. They always have borderline personality issues and strange quirks. Reminds me of Ramesh Balwani from Theranos.
skinnymuch 7y ago
Grubstakers is great. Haha yes the internal social network is the silliest thing. The employees doing fake convo and knowing Eddy is posting are both amazing anecdotes.
x0x0 7y ago
What's amazing to me -- and I run a company -- is finding that many hours to argue with employees.
- toomuchtodo 7y ago
  Because you run a company, not an asset stripping operation.
folkhack 7y ago
God this is outrageous - it's just a portrait of people who should never be in the powerful positions (that they don't deserve) screwing over thousands of people. They withheld wages, canceled insurance, etc. ... It's just disgusting and these folks should be ashamed for doing this. Listen to the podcast - it's outrageous.
- deleted 7y ago
  [deleted]
nkrisc 7y ago
In my last few weeks there (some years ago), we were actually given a weekly quota of posts to make to it. I asked my manager multiple times if they were serious, they were and my understanding was that there was even reporting to see if their direct reports complied. It was bizarre.

zipwitch 7y ago

Sears biggest problem is that the now-former CEO had been looting it for years. https://www.reuters.com/article/us-sears-lawsuit/sears-sues-lampert-claiming-he-looted-assets-and-drove-it-into-bankruptcy-idUSKCN1RU1V3 https://www.reuters.com/article/us-sears-lawsuit/sears-sues-...

drawkbox 7y ago
The private equity leveraged buyout play by the cash and value extractors. Careful leaving too much cash or value creation lying around, the extractors will come seeking it, and take it if you aren't vigilant. Sears lost that battle long ago. In an alternate dimension, a value creator is in charge of Sears decades ago, and there is a nice competition of Amazon, Walmart and Sears in that place, making pricing even better for consumers. In our current dimension, Sears management got too comfortable counting the beans.
- Scoundreller 7y ago
  My guess is that they tried to make money on it. Failed. And tried to minimize their losses.
  - drawkbox 7y ago
    That and risk taking was muted because they were scared to take a big hit. Typical HBS MBA-itis not risking enough in R&D and new markets, too comfortable counting the money in the current market while the road heads towards a cliff. Sears knew a major change was happening and did not become a top player in that change, it was inevitable. Amazon will never get lazy like that, Amazon is a pure R&D machine.
    - dmix 7y ago
      Which is interesting because Sears was closer to Amazon than Walmart was for a time. I’m starting to see Walmart delivery trucks everywhere now so they must be doing something right.

criley2 7y ago

I mean this seems obvious from a thousand miles away. Amazon changed the game fundamentally. The only two effective strategies are to challenge them directly (Wal-Mart and their logistics and their free 2 day shipping/no membership website competitor) or to effectively blend the store/online experience with a huge push towards mobile ordering and curbside pickup or gig-style personal shopping delivery. I'm not sure why Sears thought they could half-ass this transition and kind of do nothing to compete in today's market. Last time I was in a Sears, it was eerie and quiet, it smelled old, the prices were NOT GREAT and I ultimately priced the tools I wanted on Amazon for a good discount. Not like the old Sears Craftsman name and warranty mean much anymore anyway.

dantheman 7y ago
Best Buy seems to be thriving.
- euvitudo 7y ago
  Amazon's showroom? Yeah, I was looking on Amazon for a specific bluetooth keyboard and saw the same one for the same price at BB. I purchased it at BB, as I could get it immediately, and I knew that it was new/unused. If b&m stores can be relatively competitive price-wise (even if a bit more), I'd much rather buy locally. Surely Home Depot and Lowe's (and others) benefit from each Sears store closed.
ghaff 7y ago
More upscale retail is mostly still doing OK. The well-documented decline of malls is mostly more rural, less upscale properties. (Some chains including, surprisingly, Best Buy are doing OK in spite of online.) Big Box home improvement also seems to be doing OK. Sears in particular really didn't know what it wanted to be. It did clothes (including buying Lands' End). It did tools, It did appliances. But it wasn't a discounter like Walmart. (Which drove a lot of regional discounters out of business.) In short, it didn't have a strategy and tried to focus on everything.
newbrict 7y ago
And Costco

nscalf 7y ago

I don't think I understand the financial system of bankruptcy very well, I always thought that bankruptcy was a hard end of the line---your assets are seized and sold off to pay back debts, etc. I've also heard business cases while in school about companies like Kodak where bankruptcy seemed to be the end. Can someone explain how bankruptcy often results in companies continuing to run? Edit: Thanks for the responses everyone. I'll do a bit more reading on chapter 7 vs chapter 11, very interesting stuff.

howard941 7y ago
There are two types of bankruptcy: Liquidation and reorganization. This was a reorg.
gefh 7y ago
There are different types of bankruptcy. For businesses, chapter 11 bankruptcy allows time for court supervised restructuring of debt, on the theory that there is often value in an insolvent business, if the cash flow can be re-arranged.
siberianbear 7y ago
Bankruptcy can take two forms. The key question is, "if this company got out from under its debt and didn't have to service it, is it still a viable company?" If there is actually a viable business there, it makes sense to wipe out the shareholders, extinguish the debt, and make the former bondholders the new shareholders. If there is no viable business even with the debt, then liquidation is the right path. (I'm not a finance professional, just another person on the internet with an opinion.)
Spooky23 7y ago
At a high level, there are reorganization and liquidation type bankruptcies. Some companies get into trouble with debt, are victims of economic winds or otherwise get into trouble. But the business is fundamentally still viable. So the company declares chapter 11 bankruptcy, is able to break out of unsustainable contracts, and the suppliers take a haircut. Other companies are just done. So they declare chapter 7 bankruptcy, sell off anything of value, and pay out creditors based on the judge/bankruptcy trustees order.

bluedino 7y ago

Our Sears store is finally closing it's doors this month. It took long enough. 20 years ago I worked there, selling Packard Bell and Macintosh computers, as well as vaccums. Who decided those departments should be merged, I don't know. Once in a while I'd sub at a smaller store about 45 minutes away, and cameras got thrown into the mix. I always liked the Sears Auto Center for tires, service, and Diehard batteries. Craftsman hand tools were decent until the mid-2000's when they started changing warranty policies. The power tools and lawn equipment were never really any good. If you buy a 'Craftsman' mower, you're getting the same Chinese-engined lawnmower that you buy at the same price point at any other store. Just like any other product these days. They used to have an entire part of the store dedicated to flat-screen TV's. As they cheapened, the area got smaller and smaller, until it was 4-5 sad TV's hanging on a wall. Just this last year they decided to fill that part of the store with mattresses. I noticed the store filling up with Craftsman, Kenmore, and other Sears-branded junk. Just low end stuff like cheap shoes, plastic utensils, and pots and pans. I figured distributors weren't willing to give Sears enough credit to stock the stores with stuff of any value. The store itself hasn't been kept up in forever. Most of the ceiling tiles are stained from leaks. the carpets are probably as old as I am, everything is broken, and it doesn't even feel like they turn the heat on in the winter.

JohnJamesRambo 7y ago
I still have my parents’ riding Craftsman mower from over 20 years ago and it runs like a top, so maybe at some point they made good mowers. It has an engine with a spin on oil filter like a car and I attribute the engine longevity to that. My Mom has been through like three riding Craftsman mowers since then and each one seems more cheap and crappy than the last. The latest one is like a playskool mower with the dumbing down of the controls and big colorful plastic levers.
- ganoushoreilly 7y ago
  Lowes recently started carrying The black and Decker version of Craftsman and they're pretty adamant about advertising the warranty is back. Then again, who knows if that's accurate. I try to pickup old craftsman tools (and matco / Snapon) when I go to garage sales. The older stuff was great.

swami26 7y ago

Artfully executed real-estate liquidation play

Jgrubb 7y ago

I don't follow this story closely, but I bet somebody here does: My sense is that yeah there's Amazon and all the other missed opportunities, but don't they also have some corporate raider type as CEO who's totally cashing in on running this chain into the ground?

nkrisc 7y ago
Oh yes. There is plenty to read about Eddie Lampert. He would like it to read like an Ayn Rand novel, but that's not the case (out maybe it is, but not in the way he was expecting).
- shadowgovt 7y ago
  It reads like a Rand story if someone tried that economic philosophy in real life. Which, it seems, he did. To this effect.
  - magduf 7y ago
    I'm surprised that there aren't dozens and dozens of comments here lauding Lampert's behavior and business strategy here. After all, tech and HN are chock-full of libertarians and Ayn Rand lovers.
    - perl4ever 7y ago
      Are you being sarcastic to imply the stereotype is false, or genuinely surprised? I can't remember seeing anyone defend him much anywhere, and even though I don't think much of libertarianism and Rand these days, it would be interesting to read a defense by someone who was reasonably intelligent and had done some research beyond just listening to the stuff everyone repeats. I have a feeling that even though his management may have been destructive, the stories are greatly simplified and distorted to make good stories.
    - deleted 7y ago
      [deleted]
    - 7y ago

tim333 7y ago

The whole saga is an interesting tale of hubris from Eddie Lampert who was a very good hedge fund speculator who thought that would translate into being a good retail store operator but it didn't seem to work out. https://www.forbes.com/sites/michaellewitt/2018/11/07/do-not-resuscitate-the-saga-of-sears-hedge-fund-hubris-and-media-ignorance/#2a51ce2e2148 https://www.forbes.com/sites/michaellewitt/2018/11/07/do-not...

lowercased 7y ago
his "operation" process seemed to just be "sell off assets".
rasz 7y ago
It never seems to pan out. Jack Tramiel, of Commodore fame, burned all his retail partners so many times nobody wanted to carry Atari computers anymore. His 'genius' solution was paying $67m for a chain of malls https://www.nytimes.com/1987/08/25/business/atari-to-acquire-electronics-retailer.html https://www.nytimes.com/1987/08/25/business/atari-to-acquire... He ended up losing at least twice that amount in less than two years before writing it off.

lscotte 7y ago

Paywalled story, not free to read.

RankingMember 7y ago
https://outline.com/XqxGcf https://outline.com/XqxGcf

jdlyga 7y ago

What you can get at Sears you can get better at Mavis Discount Tire (much faster tire replacement), Kohls (better, cheaper clothes), or Home Depot (bigger tool selection). The main problem with Sears is that they forgot to focus on keeping the quality up and customer service.

kiterunner2346 7y ago
Never heard of "Mavis Discount Tire"! I Google'd "Mavis Discount Tire vs Discount Tire" to find that the latter is suing the former for trademark violations: https://news.bloomberglaw.com/ip-law/discount-tire-lawsuit-claims-mavis-rebrand-treads-on-trademark-1 https://news.bloomberglaw.com/ip-law/discount-tire-lawsuit-c... Wheel retailer Discount Tire claims a rebrand by Mavis Tire Supply LLC—labeling its stores Mavis Discount Tire—violates its trademark rights. The company’s Dec. 26 lawsuit says Mavis started renaming stores after buying multiple chains located in the South and Midwest, where Discount Tire does business. Mavis intends to confuse customers and profit from goodwill built up in the Discount Tire trademark over decades, according to the complaint filed in the U.S. District Court for the District of Georgia. Mavis previously used Mavis Discount Tire branding only in northeastern states with no competing Discount Tire stores, according to The Renialt-Thomas Corp., Discount Tire’s corporate name. Looks like an interesting case!
- perl4ever 7y ago
  Also in Mavis news, it was recently reported that a store falsified invoices for brake work that may have lead to the crash that killed 20 people in upstate NY last year: https://www.timesunion.com/news/article/Mavis-manager-Invoices-falsified-brake-work-not-14503357.php https://www.timesunion.com/news/article/Mavis-manager-Invoic... "The alleged falsification of the records and the shop's purported failure to perform work on the 2001 Ford Excursion were part of a systemic practice at the auto service outlet as it tried to meet corporate sales quotas, according to court records."

RosanaAnaDana 7y ago

There's a great book to be written about technology, leadership, and time hidden in this story regarding Sears collapse. Think about it: they were the original Amazon with catalog sales. Distribution, warehousing, they did it all. It was revolutionary and the dominated the market because of it. If they had real leadership in the early 2000's, they could have been Amazon again. But what happened?

braythwayt 7y ago
I think it has already been written: https://en.wikipedia.org/wiki/The_Innovator's_Dilemma https://en.wikipedia.org/wiki/The_Innovator's_Dilemma ;-) You are correct, a specific dive into what went wrong at Sears and why they aren't Amazon today would be incredibly valuable. But re-reading "The Innovator's Dilemma" sheds some light as to why they not only didn't, but really couldn't catch the Internet wave. Incumbents need to recognize when a disruptive, extinction event is looming, and everything in their culture works against that. Typically, when one of these things comes along, sales are robust, the incumbents have cemented the value of their brands, and their margins are industry-leading. It's very difficult for incumbents to even see the disruption as a threat, much less to pivot, embrace the disruption, and disrupt themselves. When you're running a successful business, it is nearly impossible to decide to go all-in on a new business that will cannibalize your existing business at lower margins. If you're a public company, your stock will head right down into the sewer to be gnawed upon by short-selling Norwegian Rats.
- RosanaAnaDana 7y ago
  Thanks for that recommendation!
  - braythwayt 7y ago
    "Well, Jane, it just goes to show you, it's always something—if it ain't one thing, it's another."
- perl4ever 7y ago
  A company is not a person or a country though. Why should it pivot to something new? All the employees and shareholders are perfectly free to go do something else.

griffinkelly 7y ago

Wonder what's going to happen to the Guam Kmart...Its a lifeline to the island.

vermontdevil 7y ago

Sears is basically a REIT owned by Eddie Lampert [1] [1] https://www.institutionalinvestor.com/article/b1c33fqdnhf21s/Eddie-Lampert-Shattered-Sears-Sullied-His-Reputation-and-Lost-Billions-of-Dollars-Or-Did-He https://www.institutionalinvestor.com/article/b1c33fqdnhf21s...

etxm 7y ago

They should get back in the prefab home game[1] with the tiny house craze and the impending ADU boom in California. [1] - https://en.wikipedia.org/wiki/Sears_Catalog_Home https://en.wikipedia.org/wiki/Sears_Catalog_Home

defterGoose 7y ago
Hey that's a great idea! Unfortunately it sounds like Sears' management would be loath to consider any real "innovation" or "R&D".

exclusionzone 7y ago

Same thing is happening to all these retail chains who kept buying up physical real estate locations when the trend was clearly going against them. Sears had bad management for a long time and it clearly shows.

neonate 7y ago

http://archive.is/wFqbD http://archive.is/wFqbD

sxates 7y ago

I know there's a lot of commentary about the larger retail landscape being in decline and the shift to Amazon and all that... But what my theory presupposes is that Sears is committing suicide. Last May they rebranded with a new logo, that looks like a cross between AirBNB's logo and a natural gas flame. It looks like something they got from Fiver or a stock image site. They're throwing away decades of brand equity for this? I hadn't been in a Sears in a long time, but when I saw the new logo it made me go look at their site to see what they were up to. What I found was a website chock full of big promotions, but also chock full of complicated fine print. For example: The offer: $60 in CASHBACK points when you spend $60 The fine print: Offer valid 5/5/19–5/18/19. Members get $60 CASHBACK in points in 6 weekly installments when you spend $60 or more on qualifying purchases at select Sears stores and items sold by Sears on sears.com. First $10 in points issued within 48 hours and are valid for 7 days. Subsequent payments of $10 in points issued every Sunday starting 5/26/19. Offer valid 5/5/19–5/18/19. Maximum $60 CASHBACK in points per member. So their website was plastered with $60 "cash back" offers, but they don't give you cash back, they give you "points" worth $10 in weekly installments that are only good for one week, so to get your $60 you have to come back and buy at least $10 worth of stuff for 6 weeks in a row! Also, almost everything worth buying is on the exemption list. This is the exemption list just for Bedding (there were a lot more!): Excludes Lands’ End, select mattresses (Chiswick, Chelsfield, Camberwell, Cavell, East Channel, Harlington, Harrowby, Isleworth, Kenney, Romford, Beautyrest Black, Sealy Conform Performance [High Spirits, Fondness and Thrilled], Sealy Conform Premium [Gratifying and Wondrous], Stearns & Foster, Serta iComfort, Serta iComfort Memory Foam, Serta iComfort Hybrid, Sealy Hybrid, Simmons Beautysleep, Tempur-Pedic, Tempur-Flex), Protect-A-Bed, SleepTracker, Mantua bed frames, adjustable bases (Beautyrest Smart Motions, Sealy Ease, Serta Motion [Essential, Custom and Perfect], and Tempur-Pedic [Tempur-Up, Tempur-Ergo Plus and Tempur-Premier]), Serta iComfort pillows, Tempur-Pedic Tempur pillows, Stearns & Foster Premium pillows, Sealy Premium pillows, Serta Premium pillows, Beautyrest Premium pillows. Items must be sold by Sears. Purchase requirement before taxes and after other discounts and must be made in a single transaction. By accepting Shop Your Way® member benefits and offers, you agree to the Shop Your Way terms and conditions, available at www.shopyourway.com/terms. Members earn points on qualifying purchases, excluding sales taxes and other fees. Extra points are inclusive of, and not in addition to, any base points earned on qualifying purchases. When extra point offers are combined, total points earned will be less than the combined point totals for each individual offer. I found this astonishing! I've never seen such a complicated promotional offer before, and it really feels like a big "fuck you" to anyone who would bother to shop at their stores. Nobody wants to do business with a shop that's trying to bait and switch them with deceptive "deals". No wonder they're having trouble turning things around...

AtlasBarfed 7y ago

The bad assumption of this article is that the goal of Kmart/Sears in bankruptcy is to get out of bankruptcy. That is completely false. The entire goal of the Sears/KMart management is to siphon shareholder value and money from the parent company into shadow companies that the executive team owns, while saddling the main company with increasing debt and passing it through various stages of bankruptcy. At each stage the maangement will pilfer real estate and other main corporate assets from the main company. Why this is tolerated, who knows.

wahern 7y ago
I was hoping something would come out during the bankruptcy proceedings. But it seems that Lambert's buyout bid didn't result in any challengers putting forth specific and substantive self-dealing claims, at least none that would persuade a court to reject Lambert's offer. Note: I can't read the WSJ article. I have subscriptions to NYT, FT, Bloomberg, and The Atlantic, but not WSJ.
- Twixes 7y ago
  How much do you spend on subscriptions per month?
  - wahern 7y ago
    Way too much. I keep meaning to cancel FT, which is about to renew for $249.95/yr. I subscribed to Bloomberg intending to cancel FT. The regular FT subscription doesn't provide access to the premium content, and the lineup of non-premium commentators and journalists doesn't have anything substantive or informative to say. I've subscribed to the FT, with a brief interruption circa 2015, for well over 10 years. Lately Bloomberg just seems to have more talent (their cybersecurity reporting notwithstanding). Earlier this year I accepted the $0.99/week deal for The NY Times. I'll reconsider when it renews at the regular price next year. AFAIK, my Bloomberg and Atlantic subscriptions are at the regular listed price.

uoaei 7y ago

When did it become the norm that bankrupted corporations continue operations pretty much as normal? I'm sure there's a lot of activity on the back end navigating bankruptcy law, but I remember when companies would go bankrupt and then promptly shut everything down.

ranDOMscripts 7y ago

You mean Eddie Lampert's plan to pillage all of the valuable assets, pile on company debt to buy the shares he owned, sue suppliers to keep providing inventory(!) and enrich himself at the expense of the employees and other stakeholders worked exactly as planned?[0] ...And in other news, water is wet. [0]https://www.nytimes.com/2017/08/11/business/the-incredible-shrinking-sears.html https://www.nytimes.com/2017/08/11/business/the-incredible-s...

musicale 7y ago

I will be greatly surprised if Sears manages to come back from the dead after being largely gutted/looted by Edward Lampert. Toys R Us seems to have met a similar fate of acquiring massive debt (in its case via a leveraged buyout rather than a merger) and then having all of the money sucked out, but I still hope it might return somehow.

dehrmann 7y ago
I'm still undecided on how much to blame Bain, KKR, and Vornado for this. They did what private equity does: they bought the company and transferred the debt to it and tried to restructure the company. They failed. But they bought it because it had Toys R Us tried to remodel and relaunch in response to Walmart and Target, but it wasn't a success. This was 2005, so Amazon wasn't even a major player yet. I'm not sure if PE exasperated the situation, slowed the bleeding, or caused it to sink, but I doubt that Toys R Us 2005 was ready to face Amazon in the coming years if it was struggling with Walmart and Target.

kup0 7y ago

I remember reading a long-form article about the decline of Sears and Lampert's meddling and so forth that was really interesting, I believe this is it: https://www.wsj.com/articles/how-sears-lost-the-american-shopper-11552647601 https://www.wsj.com/articles/how-sears-lost-the-american-sho... Outline here because I think it's semi-paywalled. The first time I got to it, it was fine (maybe because I googled it): https://outline.com/84tyGU https://outline.com/84tyGU