[PLUG-TALK] Sears doomed

Tomas K tomas.kuchta.lists at gmail.com
Sat Jun 2 15:48:23 PDT 2018


Notwithstanding the fact that most brick and mortar shops are getting
less and less shoppers these days - Sears story is not quite the
established stale business, "nobody gets fired for buying IBM",
narrative.
Sears downfall is classic textbook conflict of interest example - the
company's CEO owns ESL hedge fund which makes money of financing Sears.
So, Mr. Lampert cannot be dislodged from controlling the company
because he controls Sears's debt and at the same time ESL makes money
of financing Sears' downfall. The scheme is pretty simple in principle
- Sears gets a loan from ESL + other investors, secures it with real
stuff - cannot pay the loan - sells themselves bit by bit to pay ESL,
gets more loans, repeat.
In the end, Sears will own nothing, just a lot of institutional debt -
60-100 billion of it. This has been analyzed over and over for the last
two decades. If you'd go to Sears in the last decade - you'd find a
well stocked retail business without the sales people - good luck
finding someone to service you - the point of the business is not to
sell stuff to shoppers, but to ESL.
This is just my opinion based on reading about this in economy journals
and financial analysis articles - so, if Mr Lampert reads this email
list - I am not accusing him of anything, just speculating.
If you search "sears ceo" and pass over the most recent articles - you
will get pretty good pictures how long, and how, this downfall was
going on. It is a shame that this is possible.Some analysis
examples:2018 - https://www.investopedia.com/news/downfall-of-sears/201
6 - https://www.forbes.com/sites/adamhartung/2016/02/11/the-5-ways-ed-
lampert-destroyed-sears/#372b6ab47a162013 -
https://www.salon.com/2013/12/10/ayn_rand_loving_ceo_destroys_his_empir
e_partner/even Vanity Fair has wrote pretty decent article about this
particular matterhttps://www.vanityfair.com/news/2018/03/the-strange-
odyssey-of-hedge-fund-king-eddie-lampert-sears-kmart
Enjoy weekend reading - it is pretty grim take on corporate
indifference and responsibility.-T
On Sat, 2018-06-02 at 14:53 -0700, Ronald Chmara wrote:
> On Fri, Jun 1, 2018 at 11:45 AM, Aaron Burt <aaron at bavariati.org>
> wrote:
> > On 2018-06-01 11:02, Rich Shepard wrote:
> > 
> > <snip>
> > 
> > >   JC Penny is in the same leaky boat.
> > > 
> > > 
> > > 
> > >   The large, nationwide brick-and-mortar (or cinderblock)
> > > retailers didn't
> > > 
> > > respond to the likes of Amazon so it's not surprising that
> > > they're on the
> > > 
> > > close-out rack.
> > > 
> > > 
> > 
> > 
> > Sears was built on mail-order, and prospered on the spread and
> > decentralization of America.  The storefronts were originally an
> > adjunct to the core catalog-sales operation.
> > 
> > 
> > 
> > I remember when Sears abruptly shut down its catalog operation and
> > the distribution warehouse in Seattle.  It was one year before the
> > founding of Amazon.
> > 
> > 
> > 
> > Oops.
> 
> Amazon famously (perhaps infamously) "lost" money for decades (it's a
> 24 year "overnight success"), because their company was about growth
> first, and profit second. They could have put more profits into owner
> (later shareholder) pockets,, but instead they put huge amounts of
> resources into self-investing, and building and buying things. Some
> crappy things, some fabulous things, but always with an eye towards
> growth first, profits and stability later.
> 
> Sears was "established", "stable", and wanted to be seen as
> "reliable". There were not a lot of perceived risks in buying their
> products, (or their stock), because they weren't taking risks, they
> were "sticking to the things they knew well", "focusing on core
> products and services", "not getting distracted", and in the 1990's,
> this kind of thinking was management mantras (see also: "Nobody ever
> got fired for buying IBM").
> 
> I still hear echos of that thinking in established businesses today,
> and it has short term merits, but without wild-eyed and crazy ideas
> ("What if an internet bookstore started selling everything, including
> their spare computing cycles?", "What if a tired computer company
> made portable music players?", "What if we opened our college
> yearbook software to everybody, not just students?", "What if we made
> a marginally better way of looking for websites?"), companies
> atrophy, and decline, or get consumed by those who are taking the
> weird and unreliable risks. Companies that do take risks either
> because they *have* to, or have nothing to lose, manage to survive,
> or thrive (or die in utter messes), based on their risks.
> 
> 
> 
> 
> 
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