Sears — The Other Shoe Falls
The recent sale of the Craftsman brand by Sears Roebuck for some $900 million, in an effort to save the Company, proffers a strategic lesson in self-administered suicide.
As most people who follow the subject know, financier Edward Lampert bought a controlling interest in Sears a decade ago and ultimately consolidated his interest in Sears with those of Kmart.
Mr. Lampert may be a brilliant financial strategist and, even more substantially, he may very well have leveraged the acquisition of both of those companies with very little personal equity. But, at the end of the day, what the last decade has reflected is the ultimate demise of Kmart (I called it “Kmart’s Last Hurrah” in an April 26, 2006 Blog Post), followed by that of Sears.
When Hedge Fund Manager, Mr. Lampert, initially took control of Kmart out of bankruptcy and later merged it with Sears, he was certainly viewed as a brilliant financial strategist, although he ultimately proved himself to be a very weak operator and even weaker retailer. He attempted several tactical steps to re-envision both Kmart and Sears — none of which were successful — and, in the process, shed valuable assets such as their real estate and brand recognition in order to keep the enterprise alive.
To the extent that Mr. Lampert’s firm owns some 50% of the consolidated company shares and is the largest creditor, it is unlikely that Mr. Lampert and his company will ultimately suffer from the demise of these iconic American brands. What will ultimately suffer, however, are the brands themselves. Having closed some 2,000 stores and jettisoned dozen of brands along the way over the past decade, the remaining organism is approaching end-of-life support.
It is time to put an end to both Kmart and Sears.
For reasons that are obvious, their time has come . . . and gone!