Sears files for bankruptcy protection; Eddie Lampert steps down as CEO

That business was once a giant. It started with Richard Sears, who launched the Sears Watch Co. in 1886 to sell watches by mail. The company later evolved into Sears, Roebuck and Co., which sold everything from homes to hardware through a catalog. The convenience brought its products to America’s most rural locations.

In 1925, Sears morphed a mail-order plant on Chicago’s West Side into its first retail store. By the end of the year. Sears opened seven more stores. Eventually, Sears became the largest U.S. retailer, and its house brands like Kenmore and Craftsman earned spots as staples in homes across the country. Generations of children marked the holidays by paging through its holiday catalog, known as the “Wishbook,” wondering if they would receive any of the toys inside.

As Sears success grew, so did its empire. It moved into Chicago’s iconic Sears Tower, and for a time, owned financial services businesses like Dean Witter and Coldwell Banker Real Estate Group.

But Walmart topped Sears as the biggest U.S. retailer in 1990. Its efforts to attract female shoppers by showing them the “softer side of Sears” and move into new businesses lines left it without a identity.

Those challenges didn’t stop Lampert, the hedge fund manager who had already impressed Wall Street with his acumen when he seemingly turned around Kmart, which he bought in 2004. He acquired and combined Sears with Kmart in 2005, arguing that two ailing retailers were stronger together than apart. The financial guru saw valuable real estate, customers he could parlay from one store to the other and ample costs to cut.

The retail giant he created had a market capitalization north of $20 billion in 2006. The media began to wonder whether he was the “next Warren Buffett.” Lampert could have sold off his investments then, but stayed on, steadfast in his vision of the combined retailers.

Meanwhile, Walmart and Target kept opening stores, as did Lowe’s and Home Depot. Walmart touted its “everyday low prices,” while Target served up “cheap chic.” Lowe’s and Home Depot provided a wider array of home improvement products for all kinds of projects, making it tough for Kenmore and Craftsman to compete.

Then, came a double blow.

Consumer spending slowed during the Great Recession, especially for big-ticket items like washers and dryers. Cash-strapped shoppers began using the internet to hunt down the best deals. Gradually, they began to spend more online and avoid the mall, fueling Amazon’s rise. Sears’ 140,000-square-foot stores began to seem monstrous as foot traffic declined.

Walmart and others began to invest in their businesses to compete with Amazon, but Sears never had that chance. It simply didn’t have the funds.

Sears’ last profitable year was in 2010. A thinning cash flow has left little money to put back into the company itself, letting it become more irrelevant. For the past five years, the ratio of Sears’ capital expenditures to sales has been less than one percent. That’s even as its sales have more than halved in the same time period.

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