Sears

Sears

Introduction

Originally established as a mail-order catalog company, Sears, Roebuck and Co. (/sɪərz/ SEERZ), popularly known as Sears, is an American chain of department stores. It was founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck, and it was reincorporated in 1906 by Richard Sears and Julius Rosenwald. The company opened its first retail location in Chicago in 1925. The management of the American big-box discount chain Kmart purchased the business in 2005, and after the merger was complete, Sears Holdings was created. Sears was the biggest retailer in the US up until the 1980s. It was the thirty-first largest in 2018. On October 15, 2018, the parent company of Sears filed for Chapter 11 bankruptcy following a number of years of declining sales. On January 16, 2019, it made an announcement.
From 1973 until 1995, Sears was located in the Sears Tower in Chicago. From 1993 until 2021, when it made the announcement that it would be selling its Hoffman Estates headquarters complex, Sears was headquartered in Hoffman Estates, Illinois. Sears Authorized Hometown Stores, LLC, along with its affiliated debtor Sears Hometown, Inc., filed for Chapter 11 bankruptcy protection on December 12, 2022. The liquidation of the 115 Hometown stores, which are primarily operated by owners, was announced on December 26.
There are 13 Sears stores left as of January 2024; 12 are on the US mainland and 1 is in the US territory of Puerto Rico.

Sears

History

Born in 1863 in Stewartville, Minnesota, Richard Warren Sears was the son of a wealthy family that later relocated to the neighboring Spring Valley. His father passed away in 1879 not long after the family’s fortune was lost in a risky stock transaction. In order to work as a railroad station agent in North Redwood and later Minneapolis, Sears relocated across the state.
A jeweler refused to accept delivery of a shipment of watches while he was in North Redwood. To turn a profit, Sears bought them and then sold them to the station agents for a discounted price. In Minneapolis, he founded the R.W. Sears Watch Company in 1886 and began selling watches by mail.
He got to know watch repairman Alvah Curtis Roebuck that year. After moving the company to Chicago in 1887, Sears and Roebuck released Richard Sears’s first mail-order catalog, which included jewelry, watches, and diamonds.
In 1889, Sears made the $100,000 ($3 million in 2021 dollars) business sale and moved to Iowa with the intention of becoming a rural banker.In 1892, he made his way back to Chicago and founded a new mail-order business, the A. C. Roebuck watch company, where he once more sold jewelry and watches. Roebuck was a partner in this venture. They started to expand the product lines offered in their catalogs on September 16, 1893, and changed the name of the business to Sears, Roebuck, and Co.

Sears

Catalog  

The first Sears Christmas catalog, dubbed the “Sears Wishbook,” debuted in 1933 and was published separately from the company’s yearly Christmas catalog. It featured toys and gifts. It featured ready-to-assemble Sears Catalog Home kit homes from 1908 to 1940.

Spain and the Americas

In 1942, Sears established a modest store in Havana’s downtown. In 1947, Sears established its flagship store in Mexico City. Later, the Mexican locations spun off into Sears Mexico, which is currently owned by Grupo Sanborns, the billionaire Carlos Slim’s company, and which in 2020 had over 75 locations throughout Mexico.
In 1953, Sears’ sales in other territories totaled US$78 million. All of the Central American nations, as well as Cuba, Puerto Rico, Colombia, Venezuela, Ecuador, Peru, Brazil, and Spain, saw Sears’ expansion over time. At the moment, Sears has operations in Puerto Rico, Guatemala, El Salvador, and Mexico.

Sears

Nowadays, where is Sears?

The company’s assets were sold to Lampert for $5.2 billion at a bankruptcy auction, with the approval of a bankruptcy judge. As of April 2019, about 425 stores and approximately 45,000 jobs were still in place. There were about 700 Sears stores open in the United States at the time of its Chapter 11 filing, as opposed to 3,500 when Sears and Kmart merged in 2005.
In 2017, the company discontinued offering Whirlpool appliances, which it had sold since 1916. Pricing disputes were reportedly mentioned in an internal company memo.
When the company failed to find other buyers, Lampert offered to purchase the Kenmore appliance brand in August 2018 for $400 million in cash through his hedge fund, ESL Investments. U.S. Securities and Exchange Commission “ESL Investments, EX-99.72,
In a statement announcing the bankruptcy petition, Lampert stated, “Over the last several years, we have worked hard to transform our business and unlock the value of our assets.” “Despite our progress, the plan has not yet yielded the desired results, and our efforts to become a more profitable and competitive retailer have been hampered by the need to address the Company’s immediate liquidity needs. Holdings will be able to fortify its balance sheet through the Chapter 11 process, which will allow the company to proceed with right-sizing its operating model, accelerate its strategic transformation, and achieve profitability again.

Sears

An Account of Retail Errors

Selling just one product category was its first move. However, there was nothing to stop the company from selling everything when it became apparent that a drowsy, overpriced retail sector would collapse before it. From the comfort of your home, you could place an order. You might be able to afford it. The products would be shipped directly to you. Sales skyrocketed, and you would never have to work again if you had purchased a sizable enough block of stock when the company went public.
That used to be true of Sears, Roebuck and Co., but these days it more accurately characterizes Amazon, the business that is held accountable for the company’s impending collapse. After acting as a fledgling retail giant in the 1890s.

Sears

Rising Sears: The Initial Ninety Years

Richard Sears was employed by the Minneapolis and St. Louis Railway in North Redwood, Minnesota, as a station agent in the middle of the 1880s. As a side gig, he would sell coal and lumber, gaining experience that would come in handy when, in 1886, a local jeweler turned away a shipment of watches loaded with gold from Chicago. After purchasing them for himself and turning a profit, Sears placed another order. After establishing the R.W. Sears Watch Company in Minneapolis, he relocated to Chicago in 1887 and formed a partnership with Indiana watchmaker Alvah C. Roebuck. They were both in their 20s.
The following year, they introduced a watch and jewelry catalog, and in 1893, they incorporated Sears, Roebuck, and Co. Julius Rosenwald, a Chicago-based clothing manufacturer, invested in the business two years later. By then, the mail-order business had expanded beyond watches. When sales hit $750,000, the famous Sears catalog grew to 532 pages. Farmers went to Sears because they were tired of general stores that were overpriced and ill stocked.In 1906, the company conducted the first initial public offering (IPO) for a retail company in the United States, which was handled by Goldman Sachs.
In the same year, it inaugurated a 40-acre logistics center in Chicago. Eventually, Henry Ford traveled to this “‘seventh wonder’ of the business world” to discover the secrets of its legendary productivity.
Ford was going to upend Sears’ business model because cars attracted customers away from mail-order catalogs and made chain stores more attractive. Sears made adjustments, opening retail locations in the 1920s and surpassing catalog sales by 1931. That year’s revenues came to a total of $180 million, or $2.8 billion in modern currency. In the 1920s, the company started launching its own brands, such as DieHard, Kenmore, and Craftsman. In 1931, it started offering insurance through its subsidiary Allstate.

Sears

The Fall of Sears: The Last 50 Years

The world’s biggest retailer, Sears, started building the tallest skyscraper in 1969. While the company’s dominance in retail did not reach its zenith with the completion of Sears Tower four years later, it did start to wane at that point. It started pursuing a “socks and stocks” approach in the 1980s, branching out from its insurance business into financial services. The company bought Coldwell, Banker & Co., a real estate broker, and the stockbroker Dean Witter Reynolds Organization Inc. in 1981. In 1985, it introduced the Discover Card through Dean Witter.
Collaborating with IBM (IBM) and CBS (temporarily), the organization developed Prodigy, an early web portal. It was different from the Internet but ahead of it in many ways, with email, games, news, weather, sports, and shopping all available on a private network.
When Sears’ sales hit $59 billion in 1992, the business revealed plans to streamline its organizational design. It sold off a portion of Allstate and Dean Witter to the public and gave investors the remaining shares. Sears and IBM invested more than $1 billion in the Prodigy project together, and after selling it in 1996, they took home less than $200 million. Coldwell Banker and other financial services subsidiaries were also sold by Sears.
It “returned to its retailing roots” by 1999, according to company archives.

Sears

Archives of 20 Sears. “A Narrative History of Sears.”

In fact, it kept a sizable consumer credit segment, with 61% of the company’s $2.5 billion in operating income in 2002 coming from U.S. borrowers. Due to investor concerns that the credit card issue was too risky during the recession of the early 2000s, Sears sold the company to Citigroup in 2003.
Sears started using the internet seriously at the turn of the century. In July 2000, a press release claimed that cookware, baby products, school uniforms, computers, appliances, office supplies, and home electronics were all sold on sears.com.
In contrast, Amazon has only recently started to sell software, video games, and home improvement items in addition to books.Lampert Assumes Control
In his first year as chairman of the combined company—he also became CEO in 2013—Lampert garnered enthusiastic coverage from the press. In a 2004 cover story, he was referred to as “the next Warren Buffett” by Bloomberg Businessweek.

Sears

Lampert Assumes Control

In his first year as chairman of the combined company—he also became CEO in 2013—Lampert garnered enthusiastic coverage from the press. In a 2004 cover story, he was referred to as “the next Warren Buffett” by Bloomberg Businessweek.
Just as Buffett transformed a struggling textile company into a means of achieving extraordinary profits, Lampert would utilize Kmart as a means of generating cash for astute acquisitions. The average annual return of his hedge fund from the beginning to 2003 was 29%, which was encouraging.
These days, a little over 13 years later, the comparisons seem absurd. In 2006, the first full year as a combined company, Sears Holdings saw a rise in sales; however, over the next nine years, the company’s sales declined.

Sears

Kmart, Meet Sears

Nov. 2004 saw Kmart announce that it would acquire Sears for $11 billion. The combined businesses, to be known as Sears Holdings and with its headquarters located in Chicago, would have about 3,500 locations. The combination of the fading giants’ mainstays, cross-selling brands like Kmart’s Martha Stewart Everyday and Sears’ Craftsman, excited analysts. By 2007, management committed to saving $500 million annually, in part through store closures and employment reductions.
The brains behind the deal were Edward Lampert, chairman of Kmart, a former roommate of former Treasury Secretary Steven Mnuchin at Yale and alumnus of Goldman Sachs (GS). At the age of 25, Lampert left Goldman to launch a hedge fund in 1988. He later acquired Kmart’s debt after the retailer filed for bankruptcy in 2002.

Sears

Sears Reduces Staff and Spins Off Assets

However, investors started to show interest in Sears’ real estate as its prospects dwindled. In July 2015, a real estate investment trust (REIT) known as Seritage Growth Properties (SRG) was formed by Sears after the company spun off about 200 properties.
Additional assets, such as Sears Canada and Lands’ End, have also been split off. Craftsman was to be acquired by Stanley Black & Decker (SWK) in January 2017.
To save money, Sears reduced the hours, wages, and headcount of retail employees, which negatively impacted the stores’ and customers’ experiences. In August 2016, an employee wrote to Business Insider, saying, “We have a 17-year-old running the office and cash office.” “He is a warm body to fill the position, but he has no experience in either.

Sears

The Final Word

It would be simple to interpret this tale as an e-commerce success story or to consider the irony that Sears, through its early Internet joint venture Prodigy, was a pioneer in online shopping. However, Sears has led the way in that regard even as recently as recently. As Bloomberg reports, Lampert “showered” resources upon the online division while the others squabbled over dwindling share.

Sears


Nor did Sears’ demise stem solely from competition with Amazon. Other big-box retailers, especially Walmart, were doing well in the mid-2000s, when sales and profits started to decline. Walmart made $16.4 billion in 2011, the year Sears lost more than $3.1 billion.
Maybe the next might-have-been “Eddie is a very smart guy, but putting Kmart and Sears together is a tough hand,” the original investor told University of Kansas students in 2005. Warren Buffett should have paid more attention to this advice. It would be extremely challenging to turn around a retailer that has been struggling for a while. Is there a retailer that you can think of that was successfully turned around?

References

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