Companies/ Industries
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Companies/ Industries June 6 — June 12, 2016 • After years of red ink, the retailer may sell its best-known brands • "Leaner, meaner, but with no reason to walk through the door" Once upon a time, Sears was the trading above $100, closed at $13-30 in decline as Americans spend differ• Amazon.com and Walmart of U.S. mer• late May. Some mall owners are eager ently and on different things. People are chandising. Customers could order just to replace its stores with those of more buying fewer clothes, spending more about anything for delivery-even a kit vibrant tenants. And on May 26, the on dining and other experiences, and to build a 10-room colonial-style house- company said it would consider selling saving more. In the mid-'8os, 45 percent from the Sears catalog, a compendium some of its crown jewels: the Kenmore of consumer spending went to goods, of the American dream with a reach appliance, DieHard battery, and the remainder to services. Today those into the rural parts of the country that Craftsman tool brands. figures are 31 percent and 69 percent, helped make Sears, Roebuck America's "They have been in a desperate respectively, according to Customer largest merchant. Sears helped create state for a number of years," says Matt Growth's Johnson. When Americans the shopping mall in the 1950s, working McGinley, an analyst at Evercore ISI, do buy goods, they're shifting where with developers to build the retail the lone Wall Street firm still covering they shop-not just to online, but to off- centers that grew with the exodus to the company. "I wouldn't say any of the mall retailers, such as Walmart, Costco the suburbs. And when customers asset sales have been from a position of Wholesale, and T.J. Maxx. needed financing, it created a massive strength in the past three or four years. That's left department stores more credit arm that paved the way for the They've been done to fund substan• and more on the margins, with bigger MasterCards and Visas of today. tial operating losses." Sears declined a chains such as Macy's swallowing "They stood like a colossus on top of request for comment for this story. smaller regional merchants-and the American retail market-bigger than The retailer has suffered from an others such as Mervyn's filing for bank• the next four companies combined," industrywide ruptcy and being liquidated. In the says Craig Johnson, president of con• Sears sultant Customer Growth Partners. Through That was as recently as the 1980s. "Now the Years 1896 1927 Launches 1945 Sears annual they're a 98-pound weakling." Distributes the Craftsman sales exceed its first large tool brand. It's been 11 years since hedge fund general catalog 1886 Railway station 1931 Retail sales featuring a wide magnate Edward Lampert merged agent Richard Sears exceed those array of items, $1b Sears with another ailing company, begins selling watches of mall orders from women's for the first 1953 Sears expands Kmart Holding, which he bought out to other station agents garments to in Minneapolis. time. Launches to Canada. of bankruptcy in 2003, to form Sears wagons. Allstate Insurance, 1973 The 110-story 1887 Watchmaker 1913 Launches the selling by mail only. Sears Tower opens Holdings. Sales have plunged by almost Alvah Roebuck joins Kenmore brand of Two years later, opens in Chicago as the half, the result of defecting customers the young Sears, appliances. Allstate sales offices world's tallest and the sundering of assets such as the and they start selling inside Sears retail building. 1925 Opens its first goods by mail. stores. 1981 Buys Dean Lands' End clothing brand in 2014. retail store, in a 1893 Sears, Roebuck Chicago mail-order Witter Reynolds Sears has lost more than $8 billion founded. plant. Organization in a in the past five years. Its stock, once big expansion into Hershey cuts down on the sugar 16 '80s, consumers did about 10 percent through the company, with Lampert retailer with smaller and fewer stores. of their spending on goods in depart• himself becoming chief executive Sears Holdings had 1,672 stores on ment stores, excluding autos, gas, and officer in 2013-in addition to his Jan. 30, vs. almost 3,500 at the time of restaurants, according to Johnson. The roles as chairman, lender, and largest the merger. estimate for 2016 is 1.7 percent. shareholder. "The presumption when "Leaner, meaner, but with no reason That's quite a turnabout for Sears, he bought it was that he was buying to walk through the door," Corlett says. which rose from being a watch mer• it for the real estate," Corlett says. "They don't have any reason for being chant in the late 1800s to America's "I don't think anyone but Eddie anymore. They're totally redundant," powerhouse retailer by the middle Lampert thought he was going to be a and others do the work better. of the 20th century. In the 1980s it successful merchant." Still, Johnson thinks Sears can expanded its quest to be all things to Evercore's McGinley says he remem• survive as a smaller chain focused on all people, buying Coldwell Banker and bers paging through a 2005 presen• appliances-long a strength-despite Dean Witter Reynolds and introducing tation where the company laid out the heightened competition from the Discover credit card. But the '90s its plans for cost-cutting and savings online sellers and brick-and-mortar were a time of upheaval, with Sears through the merger, including dra• chains such as Best Buy, Home pulling back from financial services matic declines in store upkeep and Depot, and Lowe's. "There's a 'there' and pushing hard to compete in cloth• advertising. "The stores degraded at there," says Johnson. "But it's not ing. To that end, it purchased Lands' a pretty fast pace," he says. "It exac• going to be easy to get to." —Lauren End in 2002 for $1.9 billion. erbated the broader issues Sears and Coleman-Lochner It was in that period that Sears began Kmart had with relevance right out of The bottom line Sears built Kenmore, DieHard, to move away from its blue-collar base, the gate." At the same time, compa• and Craftsman into some of America's choicest says Candace Corlett, president of nies such as Target and Home Depot brands. Now it's considering selling all three. consulting firm WSL Strategic Retail. were expanding, opening stores away "They wanted a better customer," she from malls in locations that were often says. "Frequently, when retail goes off more convenient to shoppers. the rails, it has to do with not liking the Sears tried to adapt in other ways. shopp^r-youTTave: It experimented with various store jlematic of that effort, she says, formats, including a failed program tfas its 1990s Circle of Beautybrand to convert hundreds of Kmart outlets 'of higher-end cosmetics that "were to a one-stop format called Sears about three steps above the Sear; Essentials. The company has invested shopper." In the meantime, "the heavily in its digital operations, offer• competitive mix was capturing th ing often innovative features such as shopper that Sears didn't online ordering for drive- want anymore." through pickup. It's sublet Sears Holdings neglected $850m space in some of its stores to spend on its stores, to other retailers, includ• Sears transferred control of which still account for the the Sears Tower in Chicago to ing Dick's Sporting overwhelming portion of creditors in 1994, wiping out Goods and British chain sales for merchants even in this amount of debt Primark, and closed J:he internet age. Chief executives and hundreds of unprofitable locations as other senior managers cycled quickly part of Lampert's vision of a leaner financial services. the second-largest 2002 Buys former DleHard batteries and Buys Coldwell stock dividend in U.S. sailing gear retailer accepting Sears cards Banker real estate history. Also sells Lands' End. at Kmart. brokerage. 2003 Sells retail 2006 Begins selling 1985 Launches the credit card business to Craftsman tools at Discover Card. 20% Citibank. Kmart. 1993 Closes its of Allstate; it's the 2005 Hedge fund 2012 Spins off outlet unprofitable general largest IPO in U.S. manager Edward and neighborhood catalog business. history. Lampert, Sears's stores. Launches 1995 Distributes largest 2014 Spins off Lands' an IPO of rest of Allstate to shareholder, End. I 20 percent of shareholders. Sells merges It 2016 Considers putting Dean Witter- Coldwell Banker. with Kmart. Craftsman, Kenmore, gives remainder 1997 Sells its majority Sears and DieHard brands on to shareholders, interest in Sears, Holdings in what is then starts selling the block. Roebuck de Mexico. : .