Originally Posted By: Vern_in_IL
Originally Posted By: Pop_Rivit
Originally Posted By: bigt61
Competition killed Sears & Kmart.
That's not correct. Edward Lampert and his incompetence as the CEO of Sears Holdings bears responsibility for the downward spiral of both brands. The way the various business units at Sears Holdings are managed and pitted against each other simply doesn't work.
All this started when Kmart decided under pressure from gun-control advocates to stop selling firearms and ammunition.
Firearms sales had nothing to do with it. Sears (and I'll lump Kmart into that mix as well) has been out of touch with the retail market for years. When they started having financial issues they spun off some of their valuable assets, such as Land's End, in order to raise capital. Sears has run out of assets to sell, and is beginning the slow death spiral of closing core business locations.
Not only does Sears have an identity crisis, but they've stopped investing in the brand's future, and the entire business strategy is unsustainable. They have an ever increasing amount of debt and an ever decreasing amount of equity.
Lampert has tried to run a retail organization in the same format as he has run a hedge fund portfolio. With multiple business segments competing against each other the organizational structure is now entirely decentralized. In retail, it's crucial that the organizational units cooperate with each other, but instead they're in direct competition with each other over a scarce resource base. Combine that with a balance sheet that has been effectively strip mined and you end up with a poorly managed company with a debt to equity ratio that has been severely diminished.
Make no mistake-the equity value of Sears Holdings is lurching it's way to zero, and it has nothing to do with firearms sales. The picture and problems are much, much bigger than that.