Economy Sears in Chapter-11 Bankruptcy Protection, Lampert and Mnuchin Sued For Alleged "Theft" of Billions

[GearSolidMetal]

Sears looks like it'll be this decade's Blockbuster.

 

[Anung Un Rama]

It was the other way around buddy. K mart was the one who bought Sears out.

 

[m25105]

This is what blows my mind. If anyone should have understood shrinking physical footprints to stock that people want to physically touch to buy, and a order from home setup, it should have been Sears. I bet there were allot of people inside the Sears company that were screaming to move to a boxstore/online hybrid like Walmart, but the executives weren't interested in hearing that. That would increase costs and impact stock prices in the short term, and the people making that decision have no idea about online of retail anything. They worked in a totally different industry 5 years ago.

The bane of most industries honestly, incompetent management only concerned with short term profits..

 

[Henry Huggins]

Where am I going to buy my clothes now?

 

[Anung Un Rama]

I want to be mad at this guy as I'm sure greed and incompetence played a role, but ... but, sadly, and much to the chagrin of society (if not today then soon) the brick and mortar store has had a very difficult time dealing with Wal-Mart and e-commerce. Its a shame that a quality and long standing company can't live side by side with companies like Amazon the way bonobos and homo sapiens, do, but alas. RIP Sears, and you Robuck.

 

[ultramanhyata]

My friends mom worked there,26 years. Won’t see a dime of her pension or anything. It all went to pay the executives.

That is an obscenity.

 

[Fluffernutter]

Can I buy appliances on Amazon?

 

[ultramanhyata]

I want to be mad at this guy as I'm sure greed and incompetence played a role, but ... but, sadly, and much to the chagrin of society (if not today then soon) the brick and mortar store has had a very difficult time dealing with Wal-Mart and e-commerce. Its a shame that a quality and long standing company can't live side by side with companies like Amazon the way bonobos and homo sapiens, do, but alas. RIP Sears, and you Robuck.

Capitalism is a classic game of little fish, big fish, giant fish. Highly capitalized corporate retailers like Sears used to drive a lot of small, locally owned, mom-and-pops out of business back in the day. Now it's Amazon eating and shitting out Sears.

 

[Anung Un Rama]

Capitalism is a classic game of little fish, big fish, giant fish. Highly capitalized corporate retailers like Sears used to drive a lot of small, locally owned, mom-and-pops out of business back in the day. Now it's Amazon eating and shitting out Sears.

Everything in moderation. SEARs was great for society. Wal-Mart and Amazon are not. Not that their models are so different, but because of their size and power. Wal-Mart is actually closing stores because they've essentially destroyed the communities they operated in.

edit: maybe not "great" for society, but society was able to buttress and adapt to their model.

edit: and not "buttress" lol, lets go with contend.

 

[ultramanhyata]

Can I buy appliances on Amazon?

Yes. They fly them to your house attached to drones. It's pretty cool. Just make sure to not get too close when they're landing.

RIP, Peanut. Daddy misses you but knows you're having a blast in that big kennel in the sky now.

 

[genecop]

What about my lifetime warranty on tools?

 

[Arkain2K]

Owning Kmart was their first mistake.

It was the other way around buddy. K mart was the one who bought Sears out.

What the heck are you two rambling about...

Lampert bought K-Mart out of bankruptcy in 2003, he then he bought Sears in 2004, he merged them together in 2005.

This is not secret insider information. It all happened very publicly to much fanfare in the press.

 

[bobgeese]

What the heck are you two rambling about...

Lampert bought K-Mart out of bankruptcy in 2003, he then he bought Sears in 2004, he merged them together in 2005.

This is not secret insider information. It all happened very publicly to much fanfare in the press.

Someone informed me of that earlier.

It’s surprising because Kmart has been dead here almost 20 years.

 

[Thepaintbucket]

What the heck are you two rambling about...

Lampert bought K-Mart out of bankruptcy in 2003, he then he bought Sears in 2004, he merged them together in 2005.

This is not secret insider information. It all happened very publicly to much fanfare in the press.

Aka Kmart bought Sears.

On November 17, 2004, Kmart’s management announced its intention to purchase Sears for $11 billion.

 

[Arkain2K]

How One of America’s Oldest Retailers Unraveled
By Marisa Gertz and Melinda Grenier | October 12, 2018

Sears Holdings Corp. has seen a lot in its 125 years – the question now is whether it will live to see its 126th birthday. For much of the 20th century, value shopping in America was synonymous with Sears, which had its roots in mail-order. Each new edition of its catalog was like an update of the consumer bible -- essentially a pre-internet version of Amazon. Sears became the biggest U.S. retailer by revenue and was in the Dow Jones Industrial Average for 75 years, starting in 1924. But the consumer world has been overturned with the rise of the web, the decline of the shopping center and rapidly evolving buying habits. Now, the struggling U.S. chain is said to be nearing a bankruptcy, potentially ending in liquidation. Here’s a look back at how an American icon went from small-town retailer to leading department store to perhaps the next vacancy at a mall near you.

1880s

Richard Sears, an agent of the Minneapolis and St. Louis railway station in North Redwood, Minnesota, gets a shipment of watches in 1886 for a jeweler who doesn't want them. So he buys and sells them and decides to start the R.W. Sears Watch Company. In 1887, he moves the business to Chicago and advertises for a watchmaker. Alvah C. Roebuck answers the ad and is hired. Sears sells the company in 1889.

1890s

Sears and Roebuck, both in their twenties, get together again and form A.C. Roebuck Inc. in 1892. The name changes to Sears, Roebuck and Co. in 1893. Its mail-order business is increasingly popular with farmers as an alternative to rural stores. By 1895, the catalog includes women's clothing, wagons, stoves, furniture, firearms, buggies, bicycles and other goods. Roebuck leaves that year, and Chicago clothing manufacturer Julius Rosenwald buys in, becoming vice president.

1900s - 1920s

Sears expands rapidly and goes public in 1906. Richard Sears retires as president in 1908. The company adds home-building kits -- shipped mainly via railroad boxcars -- to its catalog offerings that year and drops patent medicines in 1913. In the early 1920s, Rosenwald personally supports the company through a financial crisis and becomes chairman in 1924. General Robert E. Wood joins the same year and remains involved for almost half a century, including serving as president and chairman. And 1924 is also when Sears is added to the Dow Jones Industrial Average. It opens its first retail store in 1925.

1930s - 1940s

Rosenwald dies in 1932 and his son, Lessing, becomes chairman. That same year, Sears opens its marquee hometown State Street store in Chicago. Many products are rationed during World War II, but by war's end in 1945, sales exceed $1 billion and Sears starts planning to build large stores in suburbs. The expansion reaches beyond the U.S., as the company opens a store in Mexico City in 1947, later adding more in Central and South America and Europe.

1950s - 1970s

Sears's suburban growth helps spur the creation of shopping malls. The company introduces its own credit card in 1953 and installs computerized cash registers and point-of-sale equipment in 1971. Two years later, it moves headquarters into Sears Tower, then the world's tallest building. The retailer introduces the DieHard battery line in 1967 and adds appliances to the Kenmore brand, which first appeared in 1913 on a sewing machine.

1980s

Sears has ruled as America's biggest retailer, but the seeds of its decline are already being sown. It ventures into financial services, expanding its Allstate Insurance business (which started in the 1920s as a tire brand), acquiring real-estate franchise Coldwell Banker and brokerage Dean Witter in 1981 and launching Discover Card in 1985. Meanwhile, it divests from many of its foreign retail operations.

990s

Sears closes its unprofitable general catalog business, once the cornerstone of its retail empire, in 1993 and in 1999 begins a major expansion of Sears.com. It pulls back from financial services to compete more on clothing and higher-end goods. Critics worry the shift will alienate the company's blue-collar base. One example is Circle of Beauty Cosmetics, which didn’t appeal to traditional Sears shoppers. In 1992, Sears posts its first quarterly loss since the 1930s. It's removed from the Dow Jones average in 1999. Walmart, which surpassed it in sales, had been added two years earlier.

2000s

Sears purchases apparel company Lands' End for $1.9 billion in 2002, banking on a preppy casual brand that isn't a natural fit for the department store. Three years later, hedge-fund magnate Edward Lampert forms Sears Holdings -- at the time, the biggest tie-up in the annals of retail -- by merging Sears with Kmart, another ailing company he brought out of bankruptcy in 2003.

2010s

Sears Hometown and Outlet Stores are spun off as a separate company to raise cash. As chief executives and other senior leaders cycle quickly through, Lampert becomes chief executive officer in 2013 -- in addition to his roles as chairman, lender and largest shareholder. Fundraising continues, and Lampert says in 2016 Sears will consider selling some of its crown-jewel brands: Kenmore, DieHard and Craftsman tools. Stanley Black & Decker buys the tool line, which debuted in the 1920s, and relaunches it. Lampert has used his own money to keep Sears afloat amid declines in store traffic and sales -- similar to Rosenwald's rescue in the 1920s.

Today

Sears has started adapting to changes in retail, launching a tire-install partnership with Amazon. It reopened its Oakbrook, Illinois, location in about one-third the footprint of the former store, selling more curated items for regional shoppers with everything else available on Sears.com. It continues to shutter unprofitable locations, including another 46 Kmart or Sears stores slated to close before liquidation rumors began. Lampert’s hedge fund, ESL Investments Inc., has been pushing a debt-restructuring proposal for weeks that would avoid a bankruptcy filing, but it's now reportedly preparing to file as soon as this weekend.

https://www.bloomberg.com/news/phot...eft-behind-as-walmart-amazon-took-over-retail

 

[Arkain2K]

Aka Kmart bought Sears.

On November 17, 2004, Kmart’s management announced its intention to purchase Sears for $11 billion.

You still don't get it, despite how simple all this is.

"K-Mart buying Sears" or "Sears buying K-mart" is something that only the people completely foreign to the business world would say, for they probably don't even know who K-mart's and Sear's "management" is.

K-mart didn't buy jack crap. They already went bankrupt in 2003 and have no money to speak of, much less $11 billion to buy anything.

"K-mart's management" here being K-mart Chairman and CEO Lampert and his ESL hedge fund, the one who bought K-mart's skeleton out of bankruptcy for cheap.

Lampert/ESL bought bankrupted K-mart, Lampert/ESL bought ailing Sears. Lampert/ESL then engineered the merger of these multi-billion dollars assets, both of which he controls.

The Sears/K-Mart merger is Lampert moving money and assets in his control from one pocket to another. Or as analysts now would say, "shuffling the deck chairs around on the Titanic".

 

[Thepaintbucket]

The Sears/K-Mart merger is Lampert moving money and assets from one pocket to another. "K-Mart buying Sears" or "Sears buying K-mart" is something that only the people completely foreign to the business world would say.

Sorry Mr Businessman. I didn't know you were running a fortune 500 company. I think it's wonderful you have enough time on you hands to inform us about the business world.

K-mart didn't buy jack crap. They already went bankrupt in 2003 and have no money to speak of much less buying anything.

"K-mart's management" here being Chairman and CEO Lampert and his ESL hedge fund.

He bought K-mart, he bought Sears. He then engineered the merger of these multi-billion dollars assets. And K-mart still had no money
.

Yes I know who Lampert is. Many of us do. But you are splitting hairs with ESL being the parent company of Kmart. I honestly think it's hilarious.

Thanks anyway tho.

Nice job on the edit btw.

 

[Arkain2K]

Sorry Mr Businessman. I didn't know you were running a fortune 500 company. I think it's wonderful you have enough time on you hands to inform us about the business world.

Consider that pretty much everyone else in this thread understood that simple merger deal, I'd say one only needs to be able to read/comprehend at the High School level and above to comprehend what happened to K-mart and Sears.

 

[JudoThrowFiasco]

They overbought on stock and did fuck all to compete with the rise of ecommerce. Walmart spanked them with pricing and then didn't adapt business models, no sympathy.

 

[Arkain2K]

Sears, the Original Everything Store, Files for Bankruptcy
By Michael Corkery | Oct. 14, 2018

Founded after the Civil War, the original Sears, Roebuck & Co. developed a catalog business that sold the latest dresses, toys, build-it-yourself houses and even tombstones.
The company was, in many ways, an early version of Amazon.
​

Sears, which more than a century ago pioneered the strategy of selling everything to everyone, filed for bankruptcy protection early on Monday.

The company had long ago given up its mantle as a retail innovator. It was overtaken first by big box retailers like Walmart and Home Depot and then, by Amazon as the go-to shopping destinations for clothing, tools and appliances.

In the last decade, Sears had been run by a hedge fund manager, Edward S. Lampert, who sold off many of the company’s valuable properties and brands but failed to develop a winning strategy to entice consumers who increasingly shopped online.

The result has been a long painful decline. A decade ago, the company employed 302,000. Today, there are about 68,000 people working at Sears and Kmart, which Mr. Lampert also runs.

Now, the retailer is aiming to use a Chapter 11 bankruptcy filing in federal court in New York to cut its debts and keep operating at least through the holidays.

As part of the reorganization plan, Sears has negotiated a $300 million loan from Wall Street lenders to help keep its shelves stocked and employees paid.

The company said it was still negotiating with Mr. Lampert’s hedge fund, ESL Investments, for an additional $300 million loan. Mr. Lampert will step down as Sears chief executive, but will remain the company’s chairman. Three other Sears executives will serve in a newly created role, the office of the C.E.O., overseeing daily operations.

“ESL invested time and money in Sears because we believe the company has a future,” Mr. Lampert said in a statement on Monday.

The company — which listed $11.3 billion in liabilities and $7 billion in assets — is also planning to close 142 more stores as it tries to reduce costs and find some way forward.

“It’s a sad day for American retail,” said Craig Johnson, president of Customer Growth Partners, a retail research and consulting firm. “There are generations of people who grew up on Sears and now it’s not relevant. When you are in the retail business, it’s all about newness. But Sears stopped innovating.”

Founded shortly after the Civil War, the original Sears, Roebuck & Company built a catalog business that sold Americans the latest dresses, toys, build-it-yourself houses and even tombstones. In their heyday, the company’s stores, which began to spread across the country in the early 20th century, were showcases for must-have washing machines, snow tires and furniture.

More recently, Sears became known for another distinction — Mr. Lampert’s audacious feats of financial engineering. He has spun off numerous assets from the retailer into separate companies that his hedge fund invests in.

While many of these spinoffs have flourished, Sears slid toward insolvency.

Over the last five years, the company lost about $5.8 billion, and over the past decade, it shut more than a thousand stores.

Many of the 700 stores that remain have frequent clearance sales, empty shelves and handwritten signs.

Sears stores remain the centerpiece of hundreds of shopping centers across the United States and their decline has reduced traffic to many of those malls.

Running low on cash, the company had a $134 million debt payment due on Monday. Its total bank and bond debt stood at about $5.6 billion in late September.

Reorganizing Sears will not be easy. The company’s e-commerce business has only a tiny fraction of the sales of Amazon, one of the world’s most valuable companies. And bringing back customers to Sears stores will take investment that Sears probably cannot afford.

The rise of e-commerce has contributed recently to a record number of stores closings and retail bankruptcies, including Sports Authority, Payless Shoes and Toys “R” Us. Like Sears, Toys “R” Us had tried to reorganize, but the company eventually shut down and laid off all of its employees in June when its lenders concluded that the business was no long viable.

Although Sears lost its competitive edge long ago, its bankruptcy still represents a significant moment for its industry. No other large retailer has endured as long or played as important a role in American life as Sears.

The company started out selling watches to railroad agents in 1886 and soon expanded into a vast mail order business that sold clothing, tools, shoes, at one point even cocaine and opium, through catalogs that ran as long as 1,000 pages.

Sears Roebuck was, in many ways, an early version of Amazon. It used the Postal Service to reach the most remote parts of a growing nation and sorted and shipped products from a three million-square-foot warehouse in Chicago.

After World War II, Sears stores served the needs of the country’s expanding middle class. Families came to have their children’s’ portraits taken, to get their tires rotated and oil changed, and to buy Kenmore refrigerators.

“Sears is where you went to shop,” said Barbara E. Kahn, a retail expert and marketing professor at the University of Pennsylvania’s Wharton School. “They sold fundamental products that consumers needed.”

Through the 1960s and 1970s, Sears shared its success with employees at all levels of its corporate hierarchy. Cashiers, janitors and executives alike took part in profit-sharing and received options in the company’s soaring stock.

As many as 100,000 retired Sears employees still receive pensions, which are expected to emerge largely unscathed in the bankruptcy. As the company was bleeding cash and selling off assets in recent years, federal regulators required Mr. Lampert to inject cash into the pension plan. Other benefits for retirees like life insurance, however, could be in danger.

“It is sad to see the company you really loved go down the tubes,” said Ron Olbrysh, 77, who worked in Sears’ legal department for 24 years and now heads an association of retired workers.

By the 1990s, Sears was struggling to find its place. Walmart was plopping its super centers across the United States. Home Depot was taking away market share on appliances and power tools, but Sears had valuable brands like Kenmore, DieHard and Lands’ End, and stores in prime locations.

Things changed dramatically when Mr. Lampert arrived on the scene.

A hedge fund manager, who got his start at Goldman Sachs and had little experience running a large retail chain, Mr. Lampert took control of Kmart after it came out of bankruptcy in 2003 and then acquired Sears a year later. The company’s board came to be dominated by other wealthy investors, including Steven Mnuchin, the current Treasury secretary who had been Mr. Lampert’s roommate at Yale.

Mr. Lampert says his strategy was to move the company away from its brick-and-mortar legacy into the digital era.

His plan was to use the money saved from closing stores and selling off assets to reinvest in the business. But the company never gained traction online.

The company’s decline has also exacted a toll on its workers. Peggy Mitchell, 55, who works full time unloading delivery trucks at the Sears in Chicago Ridge, Ill., said she barely makes enough to make ends meet.

Ms. Mitchell, who has four children, earns $10.75 an hour and cannot afford the company’s health plan. “Walmart pays more than that,” she said.

Sears remains a publicly traded company, but Mr. Lampert exerts an enormous amount of control.

He orchestrated a series of deals that generated cash for Sears in the near term, but stripped out many of the company’s most valuable assets — often selling them to companies that he also has a stake in.

Sears’ shares, which topped $120 as recently as 2007, closed on Friday at 40.7 cents.

Sears spun off Lands’ End, the preppy clothing brand, into a separate company, which Mr. Lampert’s hedge fund took a large stake in. Lands’ End market value now dwarfs that of Sears.

In 2015, Sears sold off stores worth $2.7 billion to a real estate company called Seritage. Mr. Lampert is a big investor in that company as well as its chairman. Seritage is converting many of the best locations into luxury offices, restaurants and apartments.

Mr. Lampert is also seeking to buy the Kenmore brand from Sears for $400 million.

Even in bankruptcy, Mr. Lampert will have great sway over the company’s fate. His hedge fund owns about 40 percent of the company’s debt, including about $1.1 billion in loans secured by Sears and Kmart properties. As a result, he could force Sears to sell the stores or transfer them to him to repay that debt.

“Lampert will make out,” said Mr. Olbrysh, the retired Sears worker. “There is no question about that.”

https://www.nytimes.com/2018/10/14/business/sears-bankruptcy-filing-chapter-11.html