Every favorite refrigerator store, Sears, declared Chapter 11 bankruptcy on Monday. That was no big surprise. Sears has closed more than a thousand stores in the past decade, and the company plans to shut down 142 out of the 700 stores that are still trying to thwart the $ 5.6 billion debt plaguing the legendary retailer. There are many reasons why Sears got into this impossible situation. America is a wonderful place and is not one of them.
To understand Sears' long, laborious demise, one really needs only a loose understanding of 20th-century American history. Although Richard Warren Sears was founded in 1
But in the early days of the Internet, Sears began to suffer. In 1993, the shipping of catalogs was discontinued, and ten years later bought the parent company of Kmart Sears Roebuck & Co. for 11 billion dollars. Today, hedge fund billionaire Edward Lampert is chairman of Sears Holdings and one of the largest shareholders in the company. Lampert was also the company's CEO, but resigned from the role after announcing bankruptcy.
It's hard to underestimate Lampert's control over Sears. He personally owns 31 percent of Sears Holdings, and his hedge fund, ESL Investments, owns another 19 percent. While he was CEO, Lambert did his best to hack the company and sell its most valuable real estate to other companies, many of which he owned. Meanwhile, the shops are closing and the workers of Sears are losing their jobs. It looks as if Lampert richer in the sales of fire. His influential friends are also involved. Treasury Secretary Steven Mnuchin, who spent hundreds of thousands of government travel taxpayers on personal travel, spent eleven years on the board of directors of Sears Holdings before joining the Trump administration in 2016. He was also Lampert's roommate in Yale.
"Sears Roebuck, when I was growing up, was a big deal," President Trump said when asked about bankruptcy on Monday, which he called a "very, very sad" moment. Trump added that Sears had "obviously been misled for many years".
If you think about it, the Sears a century ago and the Sears of now represent two divergent versions of the American Dream. It's easy to think about the sears of our grandparents' generation as a symbol of the diligence and ingenuity that has built the nation. The Sears House Kit is a perfect example. From 1908 to 1940, Sears sold 75,000 of these homes. Customers could choose from 447 different designs, from the Craftsman style to the Cape Cod. It was like Ikea furniture on a much larger scale. By the time the majority of these kits were sold, many of the new homeowners were getting electricity and indoor installations for the first time. And they did everything themselves. After the house was built, of course, Sears would like to sell furniture and everything else they needed to fill it. Everything was catalog order.
Sears stopped selling house kits after the end of the Great Depression. Tractor fans were cheaper to build, and in the decades following the Second World War, millions of Americans fled to those biscuit houses in suburban areas across the country. As retail sales surpassed catalog sales, Sears became a fixture in shopping malls, and the company now developed iconic brands such as Kenmore, Craftsman, DieHard, and the already established Lands & # 39; end Sears bought in 2002. (Fun fact: The online Prodigy was a joint venture between Sears, IBM, and CBS, so it's strange that Sears struggled to succeed in online trading, and was one of the first companies to get involved online! ) These are the brands of Lampert They have become indispensable for some years now and represent some of Sears Holdings' most valuable assets in addition to real estate. Instead of selling houses that they could build themselves, Sears now sells brands and empty stores.
Lands & # 39; End was the first to leave. After filling the board of Sears Holdings with wealthy investors, Lampert parted company with the apparel brand in 2013, and its hedge fund significantly contributed to the new company. Land's End shares opened at $ 15 a share on Monday, while Sears opened at 35 cents a share. In 2015, Sears Holdings sold $ 2.7 billion worth of property to Seritage Growth Properties, a company founded to clean up old Sears and Kmart markets. (There are two such companies.) Lampert has a large share of Seritage and benefits from the second lives of these old retail properties. Sears Holdings also sold Craftsman for $ 900 million in 2017, and next Lampert hopes to buy the Kenmore brand for $ 400 million from the company.
It's not so much that under Lampert's leadership, Sears keeps selling his brands and old stores afloat. It looks like Lampert Sears sells assets to himself and sets up new companies to consolidate wealth and power. This is the second American dream. In the absence of traditional methods of success-say, building a business that sells things to people who want to buy them-you can create your own wealth in this country with a few well-connected friends and a wealth of financial knowledge.
This is a game to spend the last drop of Sears until there's nothing left, "said Mark Cohen, former CEO of Sears in Canada, to the New York Times a few months ago when Lampert made his offer, "And it works."
But what else would we expect? Sears could not keep up with the changing retail landscape, and along came Amazon, which many say is the 21st century Sears can now buy house kits from Amazon – with a guy like Lampert in the lead, Sears never had a chance, instead of watching to save the company and bring back some of their former fame, it seems as if the current leadership really just blows up the Empire and want to sell the best parts to yourself, which somehow seems crooked.
The best parts of American experience have always been two-edged s country are developing innovation cycles, times of boom and busts. There are times when progress favors large sections of the population and leaves others behind. There are times when industrial titans create wealth instead of jobs. This is one of those moments and, for once, President Trump is right. It is very, very sad.
Explanation: Lands & # 39; end existed as a mail order company for nearly four decades before Sears bought the company in 2002. We updated the article to clarify his story before Sears