My “Free” Advice for Sears Holding CEO Eddie Lampert

“Don’t write any more blog posts to blame pensioners for the collapse of Sears Holding after you wasted $5.8 billion on share buybacks.”

I don’t give “free” advice to hedge fund managers. But if I were to give free advice to Sears Holding CEO and hedge-fund manager Eddie Lampert, it would sound like this:

“Don’t write any more blog posts in which you explain who all is at fault for the decade-long collapse and coming bankruptcy of Sears Holding without doing some serious soul-searching and navel-gazing first.”

And I would add: “Because…”

  • You bought the place — Kmart in 2003 and Sears in 2005 to form Sears Holdings in an $11.5 billion deal – and knew what you were getting into.
  • You ran the place.
  • You refused to listen to your customers and failed to value your customers as the most precious asset the company had, and thought it would be more profitable to run them off.
  • You were focused on slashing inventories and expenses, including promotions and advertising, to increase short-term profits and cash flows and inflate the stock price.
  • With this focus on cutting, cutting, cutting, you ruined the customer experience and customer service along with the brand – suicide in retail.
  • It seems you were too focused on stripping out real estate assets, but not for the benefit of Sears Holding shareholders but for other entities you control.
  • And most importantly: You blew, wasted, and destroyed $5.8 billion on share buybacks between 2005 and 2010 to manipulate up the share price, paying as much as $170 a share. Now they’re trading at $1.26.

To humor me, let me just add this: If you had invested that $5.8 billion in creating a vibrant customer-focused online presence, Sears would be in much better shape today. 2005 through 2010 would have been the perfect time to do this. But no. Your hedge-fund mentality doesn’t believe in investing in a company and its customers.

So, you killed the place. And that’s OK in American capitalism. As long as you follow the rules of the law and make money doing it, great. To heck with shareholders and other stakeholders. That’s what we’re all about.

But given this background, as a smart CEO, you should never-ever write another idiotic blog post, as you just did, trying to defend your record by blaming others, including retired employees and their pension fund.

Maybe Sears and Kmart would have gone out of business anyway if you hadn’t acquired them, but that’s a hypothetical consideration whose train has left the station a long time ago.

In your blog post, you specifically blame Sears’ slow-motion demise on two main things:

The “very difficult retail environment” where customers are shifting to online purchases of just about all the goods Sears and Kmart are trying to sell. OK, that’s correct. I have come to call this the “brick-and-mortar meltdown.” But you should blame yourself. This has been going on for 20 years, and many retailers have succeeded in building a thriving online presence.

Pension fund obligations. Here is what you said:

Sears has also been significantly impacted by its long-term pension obligations. In the last five years, we contributed almost $2 billion, and since 2005 we have contributed over $4.5 billion, to fund our Pension Plans.

OK, let me interject here: You blew $5.8 billion on share buybacks over this period, even as you knew that these pension obligations would have to be dealt with. This is money that is owed. Did you think you could just walk away from these pensions – and let the Pension Benefit Guaranty Corporation pick up the tab, even as the older folks that had worked for Sears all their lives, would suddenly see their benefits get cut? Were you nuts, or something?

These funding levels have been significantly higher than they otherwise would have been because of the historically low interest rates driven by Federal Reserve policy since the 2008 financial crisis, increases in Pension Benefit Guaranty Corporation fees, and required changes in mortality assumptions.

Here you’re correct for once: The monetary policies of the Fed (QE and zero-interest-rate policy) will cause a painful reckoning among all pension funds, and has already done so for a decade for retirees living off their savings. But your hedge fund also benefited hugely from low interest rates, cheap leverage, and the Everything Bubble these policies have created. And on you go (I added the bold):

Had the Company been able to employ those billions of dollars in its operations, we would have been in a better position to compete with other large retail companies, many of which don’t have large pension plans, and thus have not been required to allocate billions of dollars to these liabilities.

Let me fix that paragraph for you: “Had the Company been able to employ in its operations those $5.8 billion we wasted on share-buybacks, we would have been in a better position to compete with other large retail companies….”

Yup, you got it. No one to blame but yourself.

But let me assure you that I hope it works out for you, your hedge fund entities, Seritage (which extracted some of the best real estate, and of which you’re chairman), and all the other beneficiaries of your strategy. That’s the American way. But for crying out loud, don’t put this stuff into blog posts. It looks terrible and gives hedge-fund-manager-CEOs a bad name.

And to stay on topic, here I explain how, despite all your claims that you’re trying to turn around the company, both revenues and store count will hit zero by the end of 2020, just using basic math. In reality, it won’t take that long – defying my dictum that nothing goes to hell in a straight line. Read… Dead Meat Walking: Sears Revenue & Store Count to Hit Zero by 2020 
 

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  103 comments for “My “Free” Advice for Sears Holding CEO Eddie Lampert

  1. Begbie
    Sep 14, 2018 at 2:03 pm

    Stupid question:

    What happens to pensioners when Sears Holdings goes teets up?

    • Harrold
      Sep 14, 2018 at 3:01 pm

      The PBGC takes over.

    • Andrew Bonaventura
      Sep 15, 2018 at 4:10 am

      When u combine two dying retailer’s together and have no plans to change how the two are run in this retail landscape you can not see anything but failure and bankruptcy sears was an iconic brand name like coca cola general motors etc that name alone is the only reason why they are not out of business already shame on the executives of this company destroying it

    • Olivier
      Sep 15, 2018 at 6:22 pm

      If I am not mistaken, they become wards of the Pension Benefit Guaranty Corporation but they might have to take a haircut. Wolf?

      • Sep 15, 2018 at 6:33 pm

        Yes, the Pension Benefit Guaranty Corporation picks up the tab for the Sears pensions, but it doesn’t have to pay out the full benefits. There is usually a cut in benefits involved. That cut can be fairly large.

        The PBGC is funded by Corporate America, but is underfunded and has lots of failing corporate pension funds staring at it, and ultimately the taxpayer might be called upon to help out.

        • Sadie
          Sep 17, 2018 at 8:12 pm

          Wolf, great article. Eddie needed a rational response to his idiocy. As for Sears Roebuck, they started a national mail order catalog which was a new and innovative way of retail marketing on a large scale. Jeff Bezos decided to do the same thing only he transformed the “mail order catalog” into an electronic catalog with multiple vendors. Sears could have made a similar transition if Eddie would have had enough sense.

          One other thing about Eddie, he and Steve Mnuchin were buddies in college. Hopefully, Eddie’s ideas or way of thinking didn’t effect Steve…

      • BlueinTX
        Sep 15, 2018 at 11:26 pm

        Here is the link to PBGC, including benefit payout tables, assuming you started receiving a pension before your employer went into bankruptcy:
        https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee
        If you are currently 65, your monthly maximum would be $5,420.45.

    • dave
      Sep 16, 2018 at 8:55 am

      In Canada, Sears workers lost pretty much everything.

  2. Neal Woods
    Sep 14, 2018 at 2:12 pm

    Read his blog post, I couldn’t get past the part where he talks about the “Shop Your Way 5-3-2-1 credit card”.

    Can these guys even count down from five?

    How about that circa-1992 logo Sears won’t retire?

    A dying star, a white dwarf headed for a black hole.

    • Begbie
      Sep 14, 2018 at 2:22 pm

      The question was asked: “Do you think you can walk away from your pension obligation” or something to that effect

      ?

    • David in Texas
      Sep 14, 2018 at 4:38 pm

      The “4” has been looted and is on its way to China. Marketing genius Lampert has been told that the Chinese love that number and that he can sell it there for a vast profit.

      • roddy6667
        Sep 14, 2018 at 9:38 pm

        “4” is equivalent to “13” in China. It sounds very much like the word for death. “8” is the lucky number.

        • David in Texas
          Sep 15, 2018 at 1:07 pm

          Yes. The post was meant to be sarcastic. Only someone who treats his customers as well as Lampert would think of such a scheme.

        • Chris
          Sep 15, 2018 at 1:12 pm

          You must be a lot of fun at parties.

  3. akiddy111
    Sep 14, 2018 at 2:22 pm

    His lust for more money and prestige ruined the livelihood of over 100,000 employees…. and where did Lampert get the money and connections to create such carnage ? Yep. Goldman Sachs.

    Speaking of GS. I read last week that Blankfein has “decided to stay on” as CEO of GS. Blankfein took over in 2007. The stock price is lower today, 11 yars later… and the entrenched guy has “decided” to continue on as CEO. Priceless !

    I think at this point that the majority of Americans feel that there is something just not quite right about all this good news that they see and hear daily but they just cannot quite put their finger on it.

    • sierra7
      Sep 15, 2018 at 6:34 pm

      I can’t help repeating myself:
      Lloyd Blankfein before Congress in the aftermath hearings for the GFC:
      “We were doing God’s work!”
      (Easily researched)

  4. Fernando Arzola
    Sep 14, 2018 at 2:28 pm

    Great article Wolf. Wish we had more people like you in Wall Street, what an amazing economy and country we would have…

  5. Christopher Ryan
    Sep 14, 2018 at 2:28 pm

    You are so on point with this. I would add the Ayn Rand approach of putting departments in competition with each other for limited resources forced employees to focus on short term gains instead of long term strategy.

    • RagnarD
      Sep 16, 2018 at 11:49 pm

      Please point me to your Ayn Rand source material. That is, any general quote from her that would support / promote / cheer on Lampert’s actions.

      I’m a character in Atlas Shrugged, so of course I’m curious about my creator.

  6. Tony Gabagool
    Sep 14, 2018 at 2:37 pm

    Not to mention the fact that Eddie’s affiliates have been doing shady financing deals where they lend the company money at stupid interest rates (~10% ish) that are collateralized by Sears valuable assets. So they bleed the company of cash by earning a fat interest rate and then when Sears finally goes chp 11, they will own all the valuable assets that are used as collateral.

    Effectively transferring cash and assets out of Sears over to Eddie Lampert. This is known as fraudulent conveyance. And he should go to jail

    • Petunia
      Sep 14, 2018 at 3:29 pm

      Lampert thought that the hidden value of Sears was in the real estate. It was a huge misunderstanding of the company and the business. His biggest asset was the brand, Sears. He destroyed the most valuable part of the business. Now the Sears brand is worthless.

      This is in contrast to you know who(he who must not be named), who understood the business he was in, and the value of his brand.

      • JZ
        Sep 14, 2018 at 4:56 pm

        who?

        • nick kelly
          Sep 14, 2018 at 5:35 pm

          I think she means the brand that is rapidly becoming worthless with several franchisees going to court to dump the name.

      • Ricardo
        Sep 14, 2018 at 8:10 pm

        To Petunia: Is that a jungle/river in Brazil ?

        • Petunia
          Sep 15, 2018 at 12:21 pm

          No, P45.

  7. Mike R.
    Sep 14, 2018 at 2:44 pm

    Wolf,
    Outstanding article. I hope it reaches far and wide.

  8. QQQBall
    Sep 14, 2018 at 2:56 pm

    Kenmore WAS the “go to” appliance brand. Now, crappier appliances force customers into extended warranties with much higher margins. Sears used to be one-stop shopping for the formerly rare appliance purchase.

    • Harrold
      Sep 14, 2018 at 3:03 pm

      Kenmore was always just a brand put on other manufacturers appliances.

      • James Mitchell
        Sep 14, 2018 at 4:11 pm

        Whirlpool

        • fajensen
          Sep 15, 2018 at 2:51 pm

          Whirlpool is shit. If you want an appliance that will spill its guts all over the floor even before the two year warranty is up, so you also get to argue with some call-centre monkeys over the repairs, that is the brand to get!

          Even the very cheapest Bosh is better by a wide margin.

    • jb
      Sep 14, 2018 at 3:54 pm

      yes , i put my grandson on my knee and said “back then washing machines lasted 10 years”. Wow ! he said ” really grandpa ? “

      • kf6vci
        Sep 14, 2018 at 6:36 pm

        OT: in Thailand, they have clever, very fast spinning but basic top loading washing machines. Let the user put in water and detergent. After the 1,800 rotations spin, the washing will be quickly dry.

        Forget computerized machines with many menus.

        • IwasGnarth
          Sep 15, 2018 at 3:13 am

          Had a Chinese version (the ‘Three Gorges’ model). Found it lying on it’s back in the kitchen one day. Clothes inside were well cleaned and once back on it’s wheels it continued to work well.

      • raxadian
        Sep 14, 2018 at 7:51 pm

        Mine is twenty years old and still works.

      • PressGaneyMustDie
        Sep 17, 2018 at 6:10 pm

        Speed Queen still makes a reliable washer & dryer in Wisconsin. https://www.speedqueen.com

  9. Richard Clark
    Sep 14, 2018 at 3:06 pm

    Eddie is the poster child for arrogant hedge fund managers who think that the LUCK that created their wealth is portable to other business ventures. He destroyed one of America’s iconic brands.

    • polecat
      Sep 15, 2018 at 1:26 pm

      Well, Lampreys gotta suck …

  10. Tom Jones
    Sep 14, 2018 at 3:54 pm

    Nothing matters but making a buck…he just did to Sears what corporate America often does to the environment to make a buck; or finacialization and debt does to our own currency. Denuding landscape into a barren ruin is fine, as long as the big boys at the top fill their coffers with coin. In fact it’s rewarded, codified by congress, and supported by powerful money centers. It’s a microcosm of our canabilism for profit culture that gleans the bones while the body still breaths, then when it finally dies, asks for relief from the funeral expenses.

  11. Petunia
    Sep 14, 2018 at 3:54 pm

    In related news:

    Another iconic brand just bit the dust, Henri Bendel. My heart is broken. It was the coolest of the cool in my day. It managed to last 123 years and now L Brands, who owns Victoria’s Secret, is shutting them down. To me this is similar to the Lampert/Sears saga, an owner who doesn’t understand the brand. L Brands tried to turn the snootiest boutique in NYC into a mall store. They could never replicate the atmosphere of the original store.

    • safe as milk
      Sep 14, 2018 at 5:01 pm

      i remember taking my wife and baby daughter to bendel’s on fifth ave for tea and cakes at christmas time. the tables were perched next to antique lalique glass windows. there really is no place like it.

    • Sep 14, 2018 at 5:09 pm

      Petunia,

      I was looking forward to your comment on Henri Bendel. I figured you know the brand. Even though we used to live in Manhattan, I have no recollection of even seeing the stores. Obviously, they’re for women, and that may have something to with it.

      They must have ruined the brand since they also decided to shut down their online operations.

      • Petunia
        Sep 14, 2018 at 7:52 pm

        The original Henri Bendel was on 57 St. a few steps west of Bergdorfs. That was the flagship and only store, it had several floors. Sometime in the 90’s they moved to 5th Ave. where they are today. The mall stores opened around the same time, there aren’t many of them. I was in the Boca Raton store a few times, not even close to what it was.

        You had to have real New York bravado to shop there. Once, while looking at some dresses, the sales girl told me she didn’t think they carried my size. I was a size 8. Just to be a real New Yorker, I made her bring me every size 8 dress in the dept and then I didn’t buy a thing.

        • Judy Lawson
          Sep 15, 2018 at 7:11 am

          Love that, you are too Funny!

  12. Unamused
    Sep 14, 2018 at 4:10 pm

    It is perfectly legal to rob and murder corporations for fun and profit. Sears is merely the latest in a long line of victims and there are plenty more in the pipeline.

    Running a profitable business can be hard. It’s a lot easier to simply strip it and move on to the next one. You wouldn’t have much of an economy left if everybody conducted economic warfare against the US this way, but federal economic policy is to enrich the wealthy, not to support the population. The people who matter don’t mind at all that the real economy is being liquidated.

    Treason doth never prosper: what’s the reason?
    Why, if it prosper, none dare call it treason.

    • Dan Romig
      Sep 14, 2018 at 10:36 pm

      I agree with your comment Unamused, but I’d add one small addition: It is perfectly legal to rob and murder publicly traded corporations for fun and profit.

      Privately held corporations such as Cargill and Land O’Lakes do not have to worry about leveraged buyouts by the likes of Bain Capital or Mr. Lampert.

    • MD
      Sep 15, 2018 at 4:05 am

      It’s all a result of the dogma introduced in the 70s we call ‘neoliberalism ‘ – that is, the 100% faulty thinking that a business has no responsibilities to anyone apart from its shareholders.

      That legitimizes the behavior of short-term greed and cost-cutting. A route to nowhere, of which stock buyback schemes are the ultimate example; money not used to invest for the future, but to pump up stock prices so that wealthy people with large stock portfolios can increase the wealth chasm even further.

      Great work, Milton!

  13. Tom in Grosse Pointe
    Sep 14, 2018 at 4:32 pm

    I convinced my wife, who had owned Sears even before the spin offs in the 90’s, to sell in the low 100’s. She resisted but capitulated to the argument that Sears and K-Mart were two drunks leaning against one another while they tried to stay upright walking down the road, each with a fifth in their hand. She thanked me when the stock was in the 80’s, the 40’s, the teens and just now when i sent her this article.

    BTW, I read Wolfstreet for exactly this kind of well articulated justifiable rage.

  14. Paulo
    Sep 14, 2018 at 5:02 pm

    Thank you Wolf for a great article and the scathing expose.

    I just fixed my ‘used’ top loading kenmore washing machine the other day. No electronics. A $12.00 part and I gave the appliance guy a twenty for both extra advice and the part. He looked at the worn coupling and said he thought it wasn’t too bad, but that the motor shaft might be rounded over and I might need a new motor. I smiled and said, “I’ll just weld it up and re-grind the profile to fit”. He smiled and replied, “That’s what I do”. I’ll be going to his ‘used’ appliance store for a new-used convection oven one of these days.

    Kenmore, Craftsman, furniture sales, and my first carpentry hand tools were from Sears 45 years ago. I still have a few I use. I’ll miss Sears. On another note, I used to love our local K Mart before it shut down eons ago. I won’t even go into a Walmart. They are not the same at all. Sears was great. Those damn evil pensioners/sarc.

    • RD Blakeslee
      Sep 14, 2018 at 7:41 pm

      My experience was similar, Paulo.

  15. Tony
    Sep 14, 2018 at 6:15 pm

    I read a lot, and this is the best thing I’ve read all year, hands down. Unbelievable hubris and you’ve taken him down neatly. He’s beaten the dead horse to a pulp and sucked out every drop of blood, now he’s going to blame the horse for being dead?

    Enjoy the spoils and STFU!! You are a pirate, not a turn around artist.

  16. Bruce
    Sep 14, 2018 at 6:17 pm

    Excellent commentary. I’d love to see your column posted as a comment on Eddie’s blog. Alas, it is not set up to accept comments. Surprise, surprise, surprise. I guess it’s for the best, as objections and complaints from the little people might disturb Eddie as he eats his cake and gazes down on the worker ants.

  17. a, bona, m.d.
    Sep 14, 2018 at 6:42 pm

    goldman executive criminals and lambert need to go to prison for extortion. it will never happen. I hate to admit it, deep down I hope one of those employees or pensioners wack them godfather style. I vote not guilty if i’m on a jury. it is sad its gotten to this point in our 2-teered [in-] justice system. give em hell wolf. great post.

  18. Pelican
    Sep 14, 2018 at 6:42 pm

    How can these people sleep at night?

    • AC
      Sep 14, 2018 at 8:09 pm

      Psychopaths have no conscience.

  19. HomerSimpsonRocks
    Sep 14, 2018 at 6:48 pm

    Brilliant article. Thank you.

  20. interesting
    Sep 14, 2018 at 7:01 pm

    “Your hedge-fund mentality doesn’t believe in investing in a company and its customers”

    LOL, products and customer don’t mean a f’ing thing in modern American style capitalism…….share price is the only “value” that matters……nothing and I mean nothing else does.

  21. Crysangle
    Sep 14, 2018 at 7:24 pm

    There must be an irony somewhere in that Sears started out as mailorder, even later selling mail order homes ( link in the below article)

    https://en.m.wikipedia.org/wiki/Richard_Warren_Sears

    To keep a company going through the depressiom and wars and all else since, to lose it during times of greatest consumerism, is sad…but I am not sure if that speaks of modern society choices as much as management or financial shenanigans.

    There are still vintage watches available from the time of Sears management, anyone considering buying wants to check they are not fake… irony there too of fakes replacing originals.

    https://m.ebay.com/itm/VINTAGE-12-SIZE-ILLINOIS-PLYMOUTH-WATCH-CO-SOLD-BY-SEARS-GRADE-228-FROM-1905/171052634205?hash=item27d388105d:g:BdQAAOxy4c5Rrhj8

    https://m.ebay.com/itm/VINTAGE-18SIZE-ILLINOIS-SEARS-ROEBACK-CO-FROM-1899-KEEPING-TIME/162082866455?hash=item25bce44517:g:XRQAAOSwintXRfT2

    If its not worth owning the company, people can at least own part of its history…

  22. Finster
    Sep 14, 2018 at 7:40 pm

    Hear hear! Outstanding, Wolf.

    Among all the other things, trying to conflate Sears’ downfall with general brick and mortar malaise doesn’t work. Sears’ catalog business was the equivalent of online retail in its heyday; if anything moving online should have been a natural extension of what Sears did best.

    • Crysangle
      Sep 14, 2018 at 8:01 pm

      Why didn’t they though?

      I am going to guess that Sears was outmanouvered, it could not compete with the low cost, low quality market being newly installed tailored to that end, and financially leveraged, i.e. Amazon. That is a big swing in customer orientation for an established business to handle. I don’t mean to excuse the direction management took, pillage comes to mind, and surely if they were on their toes they would have redirected it towards a workable compromise of an outfit, downsizing to market if necessary, instead of simply blowing it at the casino.

      • Finster
        Sep 14, 2018 at 8:32 pm

        I think Wolf has it right … not so much a question of ability but of motivation. Walmart built a successful online business; it’s hard to imagine that for $5.8B someone with a long history in mail order and shipping retail couldn’t have made a better go of it.

        • Crysangle
          Sep 14, 2018 at 9:07 pm

          Have to agree. Even reading the story of its downfall, e.g.

          http://fortune.com/2012/01/09/how-amazon-ate-sears-lunch/

          failure to adapt comes across as an excuse, the article does not properly explain why Sears did not adapt when it had the opportunity to. Amazon though did have a different advantage, starting fresh with no drag and able to build itself specifically to online. For whatever reason they captured the market… in a sense created a clean version of what Sears once was in whatever new economic/social paradigm was and is unfolding.

          I guess the whole event is a bit tectonic in that it confronts various ideals, social strata, management methods, financial methods, national policy decisions on trade, values and so on.

        • Crysangle
          Sep 14, 2018 at 9:40 pm

          Plain old corruption and greed would explain what motivations were at work quite well though, and would explain why motivations were not fully focused on properly reforming the company. I suppose with a large dependent staff, it is easier for management to go that way, hedge smaller reform with a drawing off wealth…doesn’t really count as trying though.

        • Larry
          Sep 14, 2018 at 11:30 pm

          Walmart has never built a successful online business. They have spent billions purchasing successful online companies ( jet.com, Bonobos, Vudu, Flipkart etc). They sell $14 billion on the internet out of $500 billion total revenue or only 3%.

          That is pretty pathetic when you realize they have been trying for 20 years now to find an internet strategy that works.

          If you believe Christiansen’s The Innovators Dilemma, no brick and mortar business will be able to succeed on the internet unless they are willing to destroy their existing business model.

        • Crysangle
          Sep 15, 2018 at 8:13 am

          There is some very subtle psychology for customers involved as far as I make out. People notice the difference between say an offering from a company that has expanded from a different base, to one that is 100% dedicated to a certain kind of sale. The first is offering, the second gives the simple impression of being in control, is compact and specifically tailored to you making the purchase from them, designed just to suit that sale. It is hard to define, but people like to go to others who have an air of knowing what they are doing, and a business expanded from another base (now stores) is confused in that way . So with Sears, it suits a portion of the population as traditional for example, but that in itself will put off another part of society who really would prefer to do their own thing and not get caught in “the past”. I cannot pin it better than that, and Sears could have made the necessary shift, but probably not keeping its traditional image at the same time, so really to continue as is with some online, it would have had to reajust in advance to a shrinking customer base and then rework itself up again as it fought for the new shift in market. I don’t know, I am no CEO, but these realities are observable. When you go online a sales site either “has it”, or is coming from somewhere a bit different – people meet a fully tailored service and that is then the new norm. I think for pre-existing companies they have to really battle to overcome their established image and be recognised as something else. A lot of this might occur at high level even, you might have one financial clan with a certain world view vs. another financial clan working from a completely different perspective – the newer one is likely to be more in touch and succeed when there are major shifts occuring. Enough writing, this is all speculative, but something to consider all the same.

      • fajensen
        Sep 15, 2018 at 3:20 pm

        Why didn’t they though
        In my experience, they can’t. Because to make a transition they devalue the existing products and the brand. Only when truly desperate is it possible for a few companies to abandon decades of sunk costs and change.

        I had this discussion when working with radar- in the 1990’s it was very clear that everything was going in the direction of Digital Signal Processing, CW coded transmissions and active beam forming array antennas, which were much like mobile cell towers popping up all over — abundant and cheap.

        These guys had the very best pulsed transmitters, the finest analogue signal processing, the lowest noise log amplifiers and the best slot antennas. And they were having none of this digital crap!

        After I left in annoyance, time passed and now they are all digital. Someone of the old ‘blockers’ must have retired and someone must have kept the flame alive!

        Usually, stubborn businesses go bust when their techs are gen-lapped by some aggressive, young folks.

  23. RD Blakeslee
    Sep 14, 2018 at 7:45 pm

    Telling truth to power!

    I’ll read you as long as I live Wolf.

  24. Capt. Hmmm
    Sep 14, 2018 at 7:49 pm

    Maybe I’m missing the point here, but Sears didn’t “get” the Internet correlation with it’s once world famous catalog long before Amazon showed up. I don’t blame Mr. Lampert, he is just another corporate pirate who boarded a dead in the water ship to run her aground.

    Excuse me for rocking the boat….

    • MC01
      Sep 15, 2018 at 4:19 am

      The basic idea of Internet shopping actually goes back to the early 60’s. Of course since period computers were incredibly expensive, bulky and complicated so the scheme was based around a rather convoluted system of dedicated TV channels acting as catalogs and an impossible army telephone-activated card-punching machines, but the basic idea was there: you see it on the screen without sitting through a sales pitch, order it through a data connection and receive it in the comfort of your home.
      Technical issues aside, the most unsound part of the system was how to handle payment.
      The inventor of this system, UFO enthusiast and independent US hopeful Gabriel Green, had conceived an absurd and unfeasible credit system which was to be somehow linked to his “Tele-Dial Automatical Vending” system by means unknown: Green was never particularly clear on the matter. Or how his “Prior Choice Economics” were supposed to work.

      Of course in those days Green was considered just your run-of-the-mill “UFO nut” and nobody but his disciples took him seriously. But his idea was reprinted in many fanzines throughout the 60’s (often without any references to his nutty ideas about Venusian proto-hippies and nuttier ideas about Prior Choice Economics): many people looking for the latest trends in independent music, literature and film-making were exposed to it.
      Like a handful of seeds thrown carelessly in the dirt, the idea germinated when conditions were ripe and eventually took over the world.

      So perhaps Jeff Bezos should spare a few moments every day to thank the obscure UFO nut who in the end made his fortune possible.

  25. Dale
    Sep 14, 2018 at 8:05 pm

    Well done, as always, Wolf.

    Your letter would be equally apropos to IBM, which has wasted $50B in buybacks in the last 5 years, with nothing to show except a lower stock price and a complete inability to compete in any leading-edge technology. And GE, which spent $24B in the last 2 years, with nothing to show except a vastly lower stock price and a nearly complete inability to compete in new or legacy markets.

    It is clear that buybacks are a sign of incompetent management. An idea for revenue generation: tax buybacks at 100%.

  26. Mr. Knoss
    Sep 14, 2018 at 8:07 pm

    When socialism comes to America I will not blame the voters, I will not blame the politicians, I will not blame the media, I will blame people like Eddie Lampert who have done and created nothing for this country and its citizens other than create digits in a computer for their own self enrichment.

    • Capt. Hmmm
      Sep 14, 2018 at 10:20 pm

      News Alert!!
      Already socialism has settled in and gained a foothold in the U.S. with many of our politicians, with our media, led by corporations, etc… most firmly since the 1960’s, and appears to be thriving.
      Also,
      Many citizens don’t vote, and many non-citizens have been allowed this precious franchise in local elections through efforts by unethical and unprincipled elected and public officeholder’s across our nation (Chicago, Maryland, San Francisco).
      End Transmission….

      I wonder who voted to elect those folks who allow non citizens to vote in Chicago, Maryland, and SanFran? Of those who hold office, how many do you think are affiliated with a third party?

      We as voters must show more emphasis at supporting candidates who fully support our country’s founding principles at the ballot box! Otherwise, we will continually decry Mr. Lampert and folks of his ilk who legally have not committed a crime in his ownership and handling of Sears.

      Ahoy!

    • IGW
      Sep 15, 2018 at 3:53 am

      “When socialism comes to America” comes? LOL

      • Mr. Knoss
        Sep 18, 2018 at 11:44 am

        What we have to day is more akin to, as the Italian’s called estato corporativo, corporatism also known as fascism. The consolidation of state and corporate power.

  27. Matt P
    Sep 14, 2018 at 8:15 pm

    “But let me assure you that I hope it works out for you, your hedge fund entities, Seritage (which extracted some of the best real estate, and of which you’re chairman), and all the other beneficiaries of your strategy. That’s the American way.”

    I’m sorry, but why do you hope it works out for them? I hope they crash and burn and end up in jail where they rightfully belong, so this nonsense will stop happening.

  28. Bill from Australia
    Sep 15, 2018 at 12:48 am

    whats the bet EDDIE has a New Zealand BOLT hole.

    • Shane From Melbourne
      Sep 15, 2018 at 5:09 am

      As long as it is not Australia. We have enough crooks as it is………

  29. Gold
    Sep 15, 2018 at 1:12 am

    It’s a company, who cares! Seriously. Of no import whatsoever.

    • MD
      Sep 15, 2018 at 3:57 am

      Stock buybacks…the easy option for lazy, clueless management seeking to run a company for nothing but short-term gain, and a result of the mistaken thinking (inculcated by greedy financiers) that a corporation has responsibility to only its stockholders, and not to its employees or society (rights of citizens but no social responsibilities).

      The stock-in-trade excuse for inept, greedy managers running companies into the ground whilst disappearing into the sunset with bundles of cash used to be to blame labor unions – but now those mostly don’t exist, so it’s pensioners who are put in the firing line.

      And they say socialism is a bankrupt ideology..!

      • robt
        Sep 15, 2018 at 11:52 am

        Socialism will never be a bankrupt ideology. They just start over with a new generation and say they’re going to do it right this time. The supply of teenagers and people who think like teenagers is infinite.
        Just try getting that 30-something to move out, or even pay rent.

        • RagnarD
          Sep 17, 2018 at 10:51 am

          Correction: It will always be bankrupt as an ideology, but it will never lack for followers.

          I’m a character from Atlas Shrugged, yet my son is an avowed communist.

          While backpacking with him across Europe a few years ago we dropped by one of his online friends house in Hungary. We all hung out in his friends room, a 25 yr old employee at IBM. In the room were flags for the USA, USSR / Hammer & Sickle along with busts of Lenin and Marx.

    • Kent
      Sep 15, 2018 at 6:06 am

      Companies employ humans, providing meaningful work and skill development.

  30. xear
    Sep 15, 2018 at 6:11 am

    Blaming it on those who had no input in the decisions may seem wrong, except, all over the internet his narrative is the one being read and presumably believed.

  31. breamrod
    Sep 15, 2018 at 7:52 am

    if one looks to the right when driving over the bridge into Georgetown S.C. one can see a perfectly good steel mill rotting away thanks to Mitt Romney and Bain Capital. I hope in the future this sort of thievery will be illegal.

    • jb
      Sep 15, 2018 at 9:26 am

      there are “winners” and “losers” in this asset stripping model. When the “losers” have had enough the system will stop as long as the fed doesn’t back stop the losers. (moral hazard)

  32. Sep 15, 2018 at 7:59 am

    I’ve been a Whole Foods shopper for almost ten years. I think I see the beginnings of the same trend since Amazon bought the company. My favorite sections are the salad bars and the prepared food section. They cut down on variety and creativity towards stuff with longer shelf life. There isn’t much to choose from anymore.

  33. Duke DeGuise
    Sep 15, 2018 at 9:08 am

    Lampert?

    Lamprey is more like it.

  34. Bobby
    Sep 15, 2018 at 9:31 am

    It’s interesting how well many fast food chains constantly renovate their store appearance inside and outside every 7 years or so (McDonalds, Wendys, etc) verses any Sears store that still looks the same as 1981 (with some worse having leaky roofs and druppy ceiling tiles)

  35. lenert
    Sep 15, 2018 at 9:31 am

    “Paulie could do anything.
    Like run up bills on the joint’s credit.
    And why not? Nobody
    will pay for it anyway.
    Take deliveries at the front door and
    sell it out the back at a discount.
    It doesn’t matter. It’s all profit.
    Then finally, when there’s nothing left…
    …when you can’t borrow another buck from the bank…

    …you bust the joint out.”

  36. Setarcos
    Sep 15, 2018 at 9:52 am

    This guy appears to be a part of the large scale hypocrisy, which is so easy to overlook on a small scale. Consider this – how many Sears pensioners were quick to shop at Walmart, Amazon, etc. to save a dollar? They, along with millions of us, nicked Sears with every competing purchase. Is their pursuit of a few dollars justifiable? Again, hypocrisy is easy to overlook on a small scale …and almost impossible to notice in ourselves.

    Sears lived by the sword destroying local mom and pop stores for decades when things moved more slowly. And 20 years ago Sears was already quickly dying by the same sword which led to the bone picking we now find so abhorrent.

    All hypocites have something in common – they never stop to consider how much of what they know is actually wrong. Hypocrites with higher IQs are actually disadvantaged in that their folly persists with a much greater fervor.

    • MC01
      Sep 15, 2018 at 11:07 am

      Consider this.

      Sears, under the Craftsman brand, sold for decades chainsaws made by the Strunk Manufacturing Co which were great designs… in the late 40’s/early 50’s. Sears kept on selling these completely outdated designs to the end of the 60’s, when everybody else had far better designs available. And if you didn’t want to buy German, Japanese or Swedish, Homelite was selling thousands of the XL family of chainsaws every week.

      By using your logic, people in need of a chainsaw should have stuck with top heavy, slow cutting and generally completely outdated Craftsman’s just to keep poor Sears into the chainsaw business.
      Instead sales of Craftsman chainsaws collapsed and Sears noticed they were selling products nobody wanted anymore, so they adjusted their business model by selling rebadged Echo chainsaws, made by the Kioritz Corporation of Japan. Everybody was happy.
      Until John Deere grew unhappy with the rebadged Remington chainsaws they were (not) selling and offered Kioritz a big pile of US dollars to switch camps.
      That’s when Sears turned to Poulan for their Craftsman chainsaws and things took a real turn for the worse. But that’s another story for another day.

      • Setarcos
        Sep 15, 2018 at 12:04 pm

        Actually I think we are in agreement.

  37. Kasadour
    Sep 15, 2018 at 10:08 am

    Thanks Mr. Richter. I don’t have anything to add here except to say I enjoy your writing and your articles, and you are absolutely correct. And it’s sad because Sears was such an iconic American brand for so long. Now it’s gone.

  38. Daxx
    Sep 15, 2018 at 12:54 pm

    THANK YOU! Wolf

    The slight of hand to which de-intermediaries operate in our global trade world provided even a great profit opportunity in the act of rape and destruction of Sears, a 4-5+ generation American retail icon, so very very sad.

    I raise a glass-pint to you Wolf for being a rare source of strength and clarity. I wish there were more journalist as clear eyed and brave as you.

  39. RangerOne
    Sep 15, 2018 at 12:56 pm

    There comes a point where it is plainly obvious a company is being lead by a CEO who has no interest in making a valid attempt at achieving long term success and is instead chasing short term returns to the detriment of all in the company except major share holders.

    When that reliaztions comes employees need to run for the hills.

    It would be nice to see some form of fiscal punishment levied against CEOs who drive major companies into bankruptcy through negligence and in the process implode a pension system.

  40. Bobber
    Sep 15, 2018 at 1:06 pm

    How about giving some “free” advice to the Janet Yellen, after the short-sighted half-baked speech she just gave?

  41. Alex
    Sep 15, 2018 at 6:16 pm

    China Outsource plus Wall Street Hollow Out Strategy did it. Sears and Kmart didn’t have to end this way.

  42. Sneaky Pete
    Sep 16, 2018 at 7:40 am

    I’m a capitalist. I’m also for the rule of law. Is there no malfeasance involved?

    • Bobber
      Sep 16, 2018 at 2:02 pm

      The malfeasance is the lack of laws and regulation.

  43. WSKJ
    Sep 16, 2018 at 3:53 pm

    Lots to think about here; I will remark on one point:

    Sears, as bankruptcy proceeds, is looking to give retired and retiring employees reduced pensions from what they had been promised, or led to expect. (and as Wolf remarks above, Eddie Lampert complains that this is partly responsible for Sears’s demise)

    I think a comparison to Amazon’s care for its employees is in order: a quick search (“Amazon employees on food stamps”) turns up many recent articles on low pay for Amazon employees, and the fact that reliance on food stamps is common where income from Amazon warehouse jobs provides part or all of the household income.

    Bezos is the world’s wealthiest man; and Lampert is a very wealthy man, scheming to come away from his Sears tenure with his wealth intact and growing. Something is wrong with this picture.

    I don’t look to Bernie Sanders for the best answer to this sad picture. (He’s putting out kind of a public-private partnership, keep marching towards socialism, proposal.) But it IS a problem, and some new ideas, for pushing guys like Bezos and Lampert towards responsibility for their employees, are needed.

    Again, thx, Wolf.

  44. Terri
    Sep 16, 2018 at 6:15 pm

    My heart breaks for the elderly….

  45. Martin
    Sep 19, 2018 at 1:53 pm

    How long ’til we find out that the entire Sears retirement fund is invested in Sears stock, KMart buildings, and their own junk bonds ?

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