Silicon Investor - Sears Holdings Corp.

[Sr K] Sears sells DieHard brand to Advance Auto for $200 million Advance Auto Parts s...

Sr K — 12/23/2019 5:45:54 PM

Sears sells DieHard brand to Advance Auto for $200 million

Advance Auto Parts said it will sell DieHard auto batteries in its more than 4,800 stores

Earlier 12/23/2019

[Sr K] Sears boosts SHOS payout about $1.00 from $2.25 to $3.25 Liberty Tax, Inc. To A...

Sr K — 9/5/2019 11:25:15 AM

Sears boosts SHOS payout about $1.00 from $2.25 to $3.25

Liberty Tax, Inc. To Acquire Outlet Business From Sears Hometown And Outlet Stores, Inc.

August 27, 2019

VIRGINIA BEACH, Va. and HOFFMAN ESTATES, Ill., Aug. 27, 2019 /PRNewswire/ -- Liberty Tax, Inc. ("Liberty Tax") (OTC Pink: TAXA), the parent company of Liberty Tax Service and Buddy's Home Furnishings, and Sears Hometown and Outlet Stores, Inc. ("Sears Hometown") ( SHOS) today announced that they have entered into a definitive purchase agreement (the "Purchase Agreement") whereby Liberty Tax will acquire Sears Hometown's Outlet business as well as its Buddy's Home Furnishings Stores (collectively, the "Sears Outlet business") in an all cash transaction valued at up to approximately $132.9 million.

Liberty Tax intends to finance the transaction through a combination of new debt, Liberty Tax's balance sheet cash and/or an equity contribution from an affiliate of Vintage Capital Management, LLC ("Vintage"). In connection with the execution of the purchase agreement, Liberty Tax entered into a debt commitment letter with Guggenheim Credit Services, LLC, as administrative agent and lead arranger, and clients managed by Guggenheim Investments, the global asset management and investment advisory business of Guggenheim Partners, and an equity commitment letter with an affiliate of Vintage, each of which is subject to customary conditions.

The sale of the Sears Outlet business (the "Sale") is in accordance with the terms of the agreement and plan of merger between Sears Hometown and Transform Holdco LLC ("Transform"), which was previously announced by Sears Hometown and Transform on June 3, 2019 (the "Merger Agreement"). As a result of the Sale, which is estimated to result in Net Proceeds (as defined in the Merger Agreement) of approximately $121 million, the merger consideration payable by Transform in the merger transaction for the outstanding shares of Sears Hometown not owned by ESL Investments, Inc. and its affiliates is estimated to be approximately $3.25 per share in cash, an increase of approximately $1.00, or approximately 44.4%, from the previously announced base merger consideration of $2.25 per share. The actual increase, if any, in the per share base merger consideration in the merger transaction with Transform is dependent on the actual amount of Net Proceeds realized by Sears Hometown in the Sale, which may be lower than the current estimate. ESL Investments, Inc. and its affiliates, the majority owners of Transform, presently hold approximately 55.2% of the outstanding shares of Sears Hometown. Concurrently with its entry into the Purchase Agreement, Sears Hometown entered into a letter agreement with Transform and a wholly owned subsidiary of Transform which, among other things, provides that, subject to the satisfaction of certain conditions, the merger will close substantially concurrently with the closing of the Sale.

Both the Sale and the terms of the Purchase Agreement have been unanimously approved by the Boards of Directors of both Liberty Tax and Sears Hometown, and have also been approved by the Special Committee of the Sears Hometown Board of Directors. The Sale and the merger between Sears Hometown and Transform are each expected to close in October 2019, subject to the satisfaction of specified conditions. In addition, Buddy's Newco, LLC ("Buddy's"), a wholly owned subsidiary of Liberty Tax, has acquired 41 Buddy's Home Furnishings stores from A-Team Leasing, an existing Buddy's Home Furnishings franchisee. In connection with its sale of these Buddy's Home Furnishings stores to Liberty Tax, A-Team Leasing intends to become a franchisee of five Sears Outlet locations, with this franchising transaction expected to become effective concurrently with the Sale. Liberty Tax's acquisition of the 41 Buddy's Home Furnishings stores from A-Team Leasing was financed, in part, through approximately $23 million of additional borrowings under the existing secured credit facility of Buddy's.

The acquisition of Sears Outlet is an important step forward in the evolution of Liberty Tax's strategic objectives, as it follows the July 2019 acquisition of Buddy's Home Furnishings and the proposed acquisition of The Vitamin Shoppe, Inc. ("Vitamin Shoppe") announced earlier in August. This unique portfolio of Sears Outlet retail stores and distribution capabilities will add complementary products and sales channels and enable Liberty Tax to offer high quality home goods to consumers across the nation, while also offering unique value propositions. Upon the closing of the Sale, Liberty Tax's store portfolio will include several hundred retail locations with a combination of company operated and franchisee operated stores.

Andrew Laurence, Chairman of Liberty Tax's Board of Directors, said, "We are excited about the acquisition of Sears Outlet and its unique model that offers its customers in-store and online access to outlet-value products across a broad assortment of merchandise categories, while serving as a valuable supply chain partner for its vendors. This is a continuation of Liberty Tax's strategy of identifying and acquiring franchised or franchisable businesses while also building scale at attractive acquisition valuations. It's an exciting time for Liberty Tax and its shareholders as we begin to recognize the strength in our future-facing franchise business model."

Will Powell, Chief Executive Officer and President of Sears Hometown, said "The Sears Outlet business is a profitable business with a unique business strategy that, as part of the dynamic Liberty Tax group of companies, is expected to generate future growth."

Shearman & Sterling LLP acted as legal counsel to the Special Committee of the Sears Hometown Board of Directors and PJ Solomon acted as its financial advisor.

About Liberty Tax, Inc.

Liberty Tax, Inc. (OTC PINK: TAXA) is the indirect parent company of Liberty Tax Service and Buddy's Home Furnishings and expects to acquire Vitamin Shoppe in the third or fourth quarter of 2019. In the U.S. and Canada, last year, Liberty Tax prepared approximately two million individual income tax returns in more than 3,100 offices and online. Liberty Tax also owns Buddy's Home Furnishings, a specialty retailer engaged in the business of leasing and selling consumer electronics, residential furniture, appliances and household accessories. Liberty Tax is focused on the evaluation and acquisition of franchise-oriented or complementary businesses. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor to many charitable causes.

About Sears Hometown and Outlet Stores, Inc.

Sears Hometown and Outlet Stores, Inc. is a national retailer primarily focused on selling home appliances, hardware, tools and lawn and garden equipment. Its Hometown stores (which includes its Hometown Stores, its Hardware Stores, and its Home Appliance Showrooms) are designed to provide its customers with in-store and online access to a wide selection of national brands of home appliances, tools, lawn and garden equipment, sporting goods and household goods, depending on the particular format. More than 90% of its Hometown Stores are operated by independent local dealers or franchisees.

Its Outlet stores are designed to provide its customers with in-store and online access to new, one-of-a kind, out-of-carton, discontinued, reconditioned, overstocked, and scratched and dented products across a broad assortment of merchandise categories, including home appliances, lawn and garden equipment, apparel, mattresses, sporting goods and tools at prices that are significantly lower than list prices.

About Guggenheim Investments

Guggenheim Investments ("Guggenheim") is the global asset management and investment advisory division of Guggenheim Partners, with more than $209 billion1 in total assets under management across fixed income, equity, and alternative strategies. Guggenheim focuses on the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers, and high-net-worth investors. Guggenheim's 300+ investment professionals perform rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and underfollowed. This approach to investment management has enabled Guggenheim to deliver innovative strategies providing diversification and attractive long-term results. Guggenheim Investments ("Guggenheim") is the global asset management and investment advisory division of Guggenheim Partners, with more than $209 billion1 in total assets under management across fixed income, equity, and alternative strategies. Guggenheim focuses on the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, consultants, wealth managers, and high-net-worth investors. Guggenheim's 300+ investment professionals perform rigorous research to understand market trends and identify undervalued opportunities in areas that are often complex and underfollowed. This approach to investment management has enabled Guggenheim to deliver innovative strategies providing diversification and attractive long-term results.

[Glenn Petersen] Sears sues former CEO Edward Lampert, claiming he stripped $2 billion in assets ...

Glenn Petersen — 4/20/2019 10:18:22 AM

Sears sues former CEO Edward Lampert, claiming he stripped $2 billion in assets as it headed to bankruptcy

Lauren Zumbach
Chicago Tribune
April 19, 2019

Sears Holdings Corp. has filed a lawsuit against its former chairman and CEO, Edward Lampert, and his hedge fund, claiming they wrongly siphoned $2 billion in assets from the company as it headed for bankruptcy.

While promising a turnaround based on unrealistic financial projections, Lampert and his investors instead systematically picked off the retailing giant’s most valuable and enduring assets as the company’s losses deepened, the lawsuit asserts. Ultimately, the company was forced into bankruptcy — after Lampert and his investors benefited at the company and creditors’ expense, the lawsuit says.

“Had defendants not taken these illegal and improper actions, Sears would have had billions of dollars more to pay its third-party creditors today and would not have endured the amount of disruption, expense, and job losses resulting from its recent bankruptcy filing,” lawyers for company wrote in the lawsuit.

The lawsuit was filed by the team winding down what remains of Sears’ business after Lampert purchased the majority of its remaining assets in a bankruptcy auction this year and formed a new company out of those assets. The complaint, filed Wednesday in the U.S. Bankruptcy Court in the Southern District of New York, seeks to recover the property that was allegedly fraudulently transferred.

The lawsuit also names former Sears directors and ESL executives and directors including U.S. Treasury Secretary Steven Mnuchin, a former investor and executive at ESL, and Kunal Kamlani, president of ESL and a former Sears director, as defendants, as well as Sears shareholder Fairholme Capital Management and its founder Bruce Berkowitz.

ESL said the allegations are “misleading or just flat wrong.”

“We are confident that the processes we followed for each of these transactions are unimpeachable. We reject the debtors’ allegations and will vigorously contest their complaint concerning these transactions,” the hedge fund said in a statement.

Fairholme said it was in the process of reviewing the filings. Berkowitz, chief investment officer of Fairholme, joined Sears’ board in February 2016 and at one point held 24 percent of the company’s stock. He stepped down the following year and in early 2018 wrote that Sears’ continued losses “wrecked” his funds’ performance in a letter accompanying Fairholme’s annual report. By November, Sears reported that Fairholme owned just 4 percent of its stock.

A request for comment from Mnuchin, made through the Treasury Department’s website, was not answered.

Sears lawsuit against Edward Lampert.

The lawsuit claims Lampert directed employees to produce financial plans reflecting “fanciful, bad-faith” predictions of a turnaround in Sears’ performance, while pursuing transactions that allegedly unfairly benefited Lampert, ESL and other defendants. Those transactions involved Orchard Supply Hardware Stores, Sears Hometown and Outlet Stores, Sears Canada, Lands’ End and Sears’ real estate investment trust spinoff, Seritage Growth Properties.

In its statement, ESL said that Sears was solvent throughout the period the transactions took place and received more than $3 billion through the transactions criticized in the lawsuit. Those funds were used to reduce debt and fund operations and all shareholders were treated equally, the hedge fund said.

ESL said it provided more than $2.4 billion in secured financing, and that all transactions with Sears “were done in good faith, on fair terms, beneficial to all Sears stakeholders” and approved by Sears’ board and a committee overseeing transactions involving potential conflicts of interest.

It’s not the first time critics of Lampert’s tenure at Sears have accused him of stripping cash-strapped Sears of its most valuable assets. A committee of unsecured creditors made similar allegations during Sears’ bankruptcy and the company faced a shareholder class-action lawsuit over the Seritage real estate deal, which was settled for $40 million in 2017.

Lampert’s and ESL’s initial attempts to buy the retailer out of bankruptcy sought to guarantee that they would not be held liable for controversial transactions the hedge fund made with Sears. Following opposition from the creditors, ESL’s successful $5.2 billion bid dropped that requirement.

Such lawsuits aren’t uncommon in cases where an individual with financial ties to a bankrupt company ends up purchasing that company, said Larry Perkins, bankruptcy expert and CEO of SierraConstellation Partners.

But they typically involve much smaller companies. It’s rare for an individual to have as much influence as Lampert did over a company with Sears’ scale, he said.

“Everyone is suspicious of someone who controls all the transactions and at the end says they’re all fair,” said Bruce Markell, professor of bankruptcy law and practice at Northwestern University.

Litigation is a way of testing that assertion, which comes down to whether Sears got a fair price for assets it sold, he said.

The lawsuit spells out a series of deals that it maintains allowed a group of insiders at Sears, led by Lampert, to methodically carve out the ailing retailer’s most valuable assets in ways they stood to gain at the expense of the Sears and its creditors, starting with the 2011 spinoff of home improvement chain Orchard Supply Hardware Stores Corp.

Sears shareholders received Orchard stock but paid nothing to Sears, according to the complaint. Lampert and ESL’s shares were worth at least $81 million, Fairholme’s $20 million and Tisch’s $5 million, the lawsuit states. Tisch, Lampert and Mnuchin were on Sears’ board at the time of the spinoff.

The following year, Sears Hometown and Outlet Stores was spun off and Sears shareholders were given rights to purchase shares in the new company, followed by the partial spinoff of Sears Canada. In both cases, Sears shareholders including Lampert, ESL, Fairholme and Tisch received shares worth millions, according to the lawsuit.

Lands’ End followed in 2014. According to the lawsuit, Sears knew the apparel brand had potential buyers: Leonard Green Partners and the Tommy Hilfiger investment group had expressed interest in investing in Lands’ End. But Lampert rejected the overture, which would have left fewer shares in the spun-off company for Sears’ investors – of whom Lampert and ESL were the largest, attorneys for Sears claim.

In Seritage’s case, lawyers for Sears allege the property under the 266 stores spun off into Seritage Growth Properties were undervalued by at least $649 million, while terms that let Sears lease back space were unfair to the retailer, according to the complaint.

The terms ensured “that Sears would continue to pay Seritage rent, even for unprofitable stores, and that Seritage could invest those funds in redevelopments that ousted Sears from its most profitable stores,” the complaint states.

Lampert is both an investor in Seritage and its chairman.

While the number of transactions outlined in Sears’ lawsuit gives the appearance of a pattern, “when you’re running a company that’s deeply distressed, your options are limited and sometimes you’re making the best of bad options,” said Perkins of SierraConstellation.

“The accuracy is going to be played out over time,” he said.

While Seritage has been able to find new tenants paying higher rents for many of the properties it purchased, Orchard has closed all of its stores and Sears Hometown and Outlet Stores is struggling, with ESL saying it was forced to step in to keep the Hometown chain from liquidating earlier this week.

Neil Stern, senior partner at Chicago-based consulting firm McMillanDoolittle, said that because the assets weren’t put up for sale on the open market, it is more difficult to assess whether Sears got a fair value.

Sometimes, a private sale can produce a better deal, but that can be difficult to prove after the fact, said Markell of Northwestern.

Stern said he thinks Lampert was doing his best to turn the company around. But his fund’s financial dealings with the company meant that by the time it sought a buyer in bankruptcy, “he was holding all the cards.”

“Only one person understands the value of the company, and that’s him,” Stern said.

lzumbach@chicagotribune.com

Twitter @laurenzumbach

chicagotribune.com

[Sr K] In an 8-K filed this morning: As previously reported, on October 15, 2018 (the ...

Sr K — 4/16/2019 10:55:36 AM

In an 8-K filed this morning:

As previously reported, on October 15, 2018 (the “Petition Date”), Sears Holdings Corporation (the “Company”) and certain of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) seeking relief under chapter 11 of title 11 of the United States Code.

The Company does not believe that there will be sufficient funds or other assets in the Estate to allow holders of the Company’s common stock to receive any distribution of value in respect of their equity interests and expects to file a chapter 11 plan memorializing that belief in the coming weeks.

[Sr K] 3/7/2019 Stanley, Black & Decker (SWK), which accused it of breach of contract ...

Sr K — 3/7/2019 1:42:34 AM

3/7/2019

Stanley, Black & Decker (SWK), which accused it of breach of contract and trademark infringement over its new line of professional-grade mechanics tools under the Craftsman Ultimate Collection brand.

Sears did not immediately respond to requests for comment. The complaint was filed in Manhattan federal court.

Craftsman had been an iconic Sears brand before Stanley paid about $900 million for it in March 2017, while giving Sears what it called a "limited" license to sell some Craftsman products.

But according to the complaint, Sears breached the license agreement by launching its new tool line and touting its stores as "the real home of the broadest assortment of Craftsman."

Stanley said the tagline falsely implies that other Craftsman products are "somehow illegitimate."

It also said Sears' actions threaten to confuse shoppers and irreparably harm Stanley's own Craftsman brand and trademarks, as well as its goodwill and customer relationships.

Sears emerged from Chapter 11 in February after longtime Chairman Edward Lampert, who oversaw its years-long descent into bankruptcy, won court approval for a $5.2 billion takeover, which included the Craftsman licensing rights.

The reorganized company was expected to have about 425 Sears and Kmart stores, down from roughly 3,500 when those companies merged in 2005. Sears brands also include DieHard and Kenmore.

Reuters

[Sr K] HOD 2.41 at 10:55 AM Latest 2.37 Up 25.4% Volume 7.422M

Sr K — 2/13/2019 11:04:08 AM

[Sr K] Currently $2.30 +21.69%, after a HOD 2.39 volume 6.1 million bid, asked 2.29 to...

Sr K — 2/13/2019 10:27:22 AM

Currently $2.30 +21.69%, after a HOD 2.39
volume 6.1 million

bid, asked 2.29 to 2.30

[Sr K] Final numbers, 2/12/2019 close 2.02 +.6125 (43.52%) high 2.10 (at about 3:12 ET...

Sr K — 2/12/2019 4:27:06 PM

Final numbers, 2/12/2019

close 2.02 +.6125 (43.52%)
high 2.10 (at about 3:12 ET)
vol 19,487,628

[Sr K] Bid and asked are both $1.90. Very unusual. Volume a little over 9M. High a lit...

Sr K — 2/12/2019 11:08:13 AM

Bid and asked are both $1.90. Very unusual. Volume a little over 9M.

High a little over a minute ago, $1.92.

[Sr K] $1.79, after hitting $1.80. Company expects to be cash flow positive - see news...

Sr K — 2/12/2019 9:54:05 AM

$1.79, after hitting $1.80.

Company expects to be cash flow positive - see news for details.

editing

Last $1.87

[Sr K] Back down to .684 to .685. Volume 3.66M.

Sr K — 2/7/2019 12:33:28 PM

[Sr K] Latest .78, after hitting .79. 12:08PM ET Volume 2.668 M

Sr K — 2/7/2019 12:09:52 PM

[Sr K] SHLDQ is +.07 to .64 after hitting .655. edit now .63, volume about 1.018M. n...

Sr K — 2/7/2019 11:37:30 AM

SHLDQ is +.07 to .64 after hitting .655.

edit

now .63, volume about 1.018M.

now vol is 1.050M with shares up to .64 again.

bid-asked is .6401 to .647

at 11:41 AM the volume is 1.104M

Lampert wins PBGC support for his bid.

[Sr K] PBGC Challenges. wsj.com The Pension Benefit Guaranty Corp. says a $1.7 billi...

Sr K — 1/27/2019 11:07:37 PM

PBGC Challenges.

wsj.com

The Pension Benefit Guaranty Corp. says a $1.7 billion funding gap should sink Chairman Edward Lampert’s efforts to buy out the chain. It’s the latest and most influential creditor to oppose the sale.

[Sr K] In the Washington Post Opinions The overlooked hero behind Sears’s success By...

Sr K — 1/22/2019 12:04:30 AM

In the Washington Post

Opinions

The overlooked hero behind Sears’s success

By Stephanie Deutsch

January 21 at 1:07 PM

Stephanie Deutsch is the author of “You Need a Schoolhouse: Booker T. Washington, Julius Rosenwald and the Building of Schools for the Segregated South.”

Sears chairman Eddie Lampert’s ESL hedge fund staved off, at least temporarily, the company’s liquidation with a $5.2 billion bid at a bankruptcy auction last week in New York. Creditors of the former department store colossus are challenging the sale in court. The fate of the company’s 425 stores, and with it the jobs of 45,000 employees, is likely to be determined in early February.

Sears’s bankruptcy declaration in October prompted a wave of media coverage focusing on Sears’s mid-20th-century glory days and its roots in a mail-order watch business operated by Richard W. Sears with the help of watch repairer Alvah C. Roebuck. Often overlooked in those nostalgic chronicles was the man who bore much of the responsibility for building the company into a paragon of U.S. retailing. With Sears’s future hanging in the balance, this seems like a good moment to give Julius Rosenwald his due, not least because of how he put his Sears fortune to philanthropic use: partnering with African American communities across the segregated South to build schools.

Rosenwald was born in Springfield, Ill., in 1862 to German-Jewish immigrant parents.

He grew up working in the family’s clothing store, never finished high school and as a young man started a moderately successful business in Chicago manufacturing clothes. Sears, Roebuck and Co. owed him money for men’s suits in 1895, the year that Roebuck asked Sears to buy him out. Eventually, the opportunity to take an ownership stake in the company came Rosenwald’s way.

In Richard Sears’s heyday, it was said that he could “sell a breath of fresh air,” but he was more interested in promotional gimmicks than in ensuring customers’ orders were reliably and promptly filled. Rosenwald had worked behind store counters, where the offerings were limited, and he understood the hunger felt in small towns and in the countryside for the huge array of new products appearing with America’s late-19th-century manufacturing revolution. He emphasized efficiency, innovation and customer service, knowing that catalogue shopping was effective only if buyers received, in a reasonable amount of time, the clothing, seeds, tools, baby carriages and sewing machines they had ordered.

Working with a creative staff, Rosenwald initiated an ingenious system to open letters mechanically and to fill orders through a network of chutes and conveyor belts. When the growing company needed larger quarters, Rosenwald took the lead in finding land on Chicago’s West Side and commissioning an enormous facility that included a printing press for the catalogues that sat beside a railroad yard for speedier shipping. To finance the project, he turned to a friend from his days as an apprentice to his uncles in New York, Henry Goldman (then part of the young investment company Goldman Sachs), who suggested taking the company public. The initial public offering in 1906 , the first for a U.S. retailer, made millionaires of both Sears and Rosenwald. In 1908, Richard Sears retired; Rosenwald wasn’t done.

In his youth, Rosenwald had told a friend that his goal in life was to have an annual income of $15,000 — $5,000 to live on, $5,000 to save and $5,000 to give away. Now he had millions. Initially, he donated money to help Jewish organizations in Chicago and to aid victims of Russian pogroms. But in 1910, alarmed by a surge of racial violence in the United States, he began directing his philanthropy toward African Americans.

Around that time, he was invited by the famed African American educator and author Booker T. Washington to visit the Tuskegee Normal and Industrial Institute that Washington had founded in Alabama. Rosenwald toured the school, joined the board and followed Washington’s suggestion that he donate money to assist six nearby rural African American communities in building schoolhouses.

From that beginning grew a program that, over the two decades before Rosenwald’s death in 1932, built more than 5,000 schoolhouses and related structures in 15 states across the South. A 2009 study by the Federal Reserve Bank of Chicago estimated that a one-third increase in completed schooling by African American students in the region was attributable to Rosenwald schools. The study also noted that “the Rosenwald program caused approximately 90,000 additional students to attend schools during the early 1930s.

The schools played such a vital role in the education of African American children before the end of legalized segregation that the collection of the National Museum of African American History and Culture in Washington includes student desks and a potbellied stove from the Rosenwald-funded one-room Hope School in Pomaria, S.C.The civil rights lawyer Charles Morgan Jr. once observed that from Rosenwald schools “came the parents of the generation who marched and sang and risked their lives in the revolution for equal justice under the law.”

Though the company was rescued from liquidation this month, Sears’s impact on America faded long ago. But the person who was instrumental in building the business left a legacy that still echoes today.

[Sr K] Intraday high $.842, after 1/15 close of $.495. Latest $.72. 9:52 AM Volume 4.5M

Sr K — 1/16/2019 9:53:33 AM

[Glenn Petersen] Whatever happens, Sears' legacy will endure, in everything from Sears (oops, Wil...

Glenn Petersen — 1/11/2019 9:46:17 AM

Whatever happens, Sears' legacy will endure, in everything from Sears (oops, Willis) Tower to WLS-AM

Robert Channick
Chicago Tribune
ReporterChicago Tribune

Customers line up for the reopening event at a renovated Sears store, Oct. 4, 2018, at Oakbrook Center in Oak Brook. The stores' fate is uncertain but the retailer's legacy will endure. (Brian Cassella/Chicago Tribune)
_________________

For more than century, Sears has been a Chicago business icon and the place where America shopped, evolving from a mail order catalog to a department store chain anchoring malls across the country.

Now facing the possibility of liquidation — a bankruptcy judge is expected to decide the retailer’s fate in the coming weeks after Chairman Edward Lampert raised his bid to keep the company in business — Sears may soon be relegated to the history books.

Whether or not Sears survives, the company’s legacy is set to live on — especially in the Chicago area — in buildings, businesses and brands that may long outlast the stores themselves.

The former Sears Tower, now the Willis Tower, is seen in Chicago on Dec. 7, 2017. From 1973 until 1996 it was the tallest building in the world. (Jose M. Osorio/Chicago Tribune)
________________________

Willis (Sears) Tower:

There is no greater monument to the scale of Sears at its height than the 1,451-foot, 110-story tower it erected in Chicago. When Sears Tower opened in 1973, it was the world’s tallest building, a title it held until 1996. Sears occupied less than 20 percent of the distinctive tubular steel building at 233 S. Wacker Drive, but its name became synonymous with the iconic symbol of Chicago’s brawny skyline. The retailer left its namesake home in 1992, moving its corporate headquarters to a sprawling suburban campus in Hoffman Estates and selling the tower two years later. In 2009, the name of the building was changed to Willis Tower as part of the deal for the London-based insurance firm to lease office space there. But for many Chicagoans, the name change didn’t take, and the city’s tallest building will always be known as Sears Tower.

Allstate Insurance

Allstate was founded during the depths of the Great Depression in 1931 as a wholly owned subsidiary of Sears, and it grew into an insurance giant. Its inaugural mission was to provide mail-order car insurance, with its name borrowed from a Sears product, the Allstate automobile tire. In 1993, Sears sold more than $2 billion worth of shares in Northbrook-based Allstate — then the largest initial public offering of a U.S. company — as part of its exit from the financial services business. Two years later, Sears completed the spinoff, selling its remaining stake in Allstate to Sears shareholders.

Discover Financial Services

Competing with Visa, Mastercard and American Express for space in consumers’ wallets, the Discover card launched nationally with a Super Bowl ad in January 1986.

Discover cards. (Charlie Riedel/AP)

The Discover card was initially part of Sears’ subsidiary Dean Witter Financial Services, a brokerage house the retailer bought in 1981. Sears spun off the subsidiary in 1993, and it merged with Morgan Stanley four years later. Riverwoods-based Discover Financial Services spun off as an independent publicly traded company in 2007.

WLS-AM 890

Sears became a broadcasting pioneer when it launched WLS, one of the first Chicago radio stations, in 1924. The call letters stood for “World’s Largest Store,” a moniker Sears earned from its massive headquarters and mail-order plant in Chicago’s Homan Square neighborhood, where the radio studios were initially located. Catering to the rural customer base of the Sears catalog, early program offerings included “National Barn Dance,” which became a long-running staple on the station and an influential force in country music. Sears sold WLS to Prairie Farmer magazine in 1928, but the legacy call letters have endured through multiple owners and formats. Atlanta-based Cumulus Media is the station’s current owner.

A "Hollywood" Sears kit home is seen in Carlinville, Ill., on Jan. 24, 2007. Between the early 1900s and 1942, Sears sold thousands of kit homes. (Seth Perlman/AP)
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Sears kit homes

While not nearly as imposing as its eponymous tower, Sears’ mail-order kit homes leave another architectural legacy dotting the landscape. Between the early 1900s and 1942, Sears sold thousands of the homes, which buyers ordered from a catalog and built themselves — with the help of a 75-page instructional manual, detailed blueprints and, if necessary, a hired construction professional of their choice. Models such as the Barrington, Lexington, Kismet and Solace cost several thousand dollars and arrived via rail car in several thousand pieces. Hundreds of completed Sears kit homes remain standing in the Chicago area.

Sears briefly re-entered the home sales market with the purchase of residential real estate firm Coldwell Banker in 1981, which it sold along with other nonretail assets in 1993.

Craftsman tools

While Sears has created a number of signature brands including Kenmore and DieHard, Craftsman tools have already found a new home. In 2017, Stanley Black & Decker bought the Craftsman brand from Sears for about $900 million in a deal that allowed both companies to make and sell their own tool lines under the same name. Sears purchased the Craftsman name for a reported $500 from a competing tool company, launching the brand in 1927.

Indiana forward Amanda Cahill goes up for a layup in the second half of the Big Ten Women's Basketball Tournament at the Sears Centre Arena in Hoffman Estates on March 4, 2015. (Chris Sweda/Chicago Tribune)
___________________

Sears Centre Arena

The Sears Centre Arena, an 11,000-seat venue, opened in 2006 in the Hoffman Estates business park where the retailer built its corporate headquarters. The arena, built on the site of the former Poplar Creek Music Theater, was developed by Minneapolis-based Ryan Cos. in partnership with Sears, which supplied 35 acres and paid $10 million for naming rights. Rock band Duran Duran christened the new indoor entertainment venue, which has since been home to everything from minor league hockey games to monster truck events. The NBA G League's Windy City Bulls are among the most prominent current tenants.

In October, Sears signed a $1.8 million, three-year extension that could keep its name on the arena through 2022, perhaps outlasting the retailer itself. Sears paid its most recent $600,000 annual installment, due in advance, in September. Hoffman Estates took over the Sears Centre in 2009.

rchannick@chicagotribune.com

chicagotribune.com

[Sr K] Up ~58% today on about 4.9 million shares. SHLDQ $.27 +$.10

Sr K — 12/31/2018 6:41:26 PM

[Glenn Petersen] Good money chasing bad. Sears and Kmart are ultimately doomed.

Glenn Petersen — 12/29/2018 11:30:57 AM

[Sr K] Sears Holdings Corp. (SHLDQ) Chairman Eddie Lampert has submitted a roughly $4.6...

Sr K — 12/28/2018 7:29:45 PM

Sears Holdings Corp. (SHLDQ) Chairman Eddie Lampert has submitted a roughly $4.6 billion takeover bid for the bankrupt U.S. retailer, representing its only chance of escaping liquidation and laying off tens of thousands of workers, people familiar with the matter said on Friday.

6:31 PM

[Glenn Petersen] Sears may be down to its last 24 hours. Iconic retailer likely liquidates if no ...

Glenn Petersen — 12/28/2018 12:40:44 PM

Sears may be down to its last 24 hours. Iconic retailer likely liquidates if no bid comes in Friday

The company's last shot at survival is a $4.6 billion proposal, put forward by Chairman Eddie Lampert.
The bid, largely composed of outside capital, has faced challenges from the start.
The 125-year-old company has more than 68,000 employees.

Lauren Hirsch
Published 20 Hours Ago Updated 7 Hours Ago CNBC.com

Sears, the 125-year-old icon, has 24 hours to survive.

The employer of more than 68,000 filed for bankruptcy in October. Its last shot at survival is a $4.6 billion proposal put forward by its chairman, Eddie Lampert, to buy the company out of bankruptcy through his hedge fund, ESL Investments. ESL is the only party offering to buy Sears as a whole, people familiar with the situation tell CNBC. Without that bid or another like it, liquidators will break the company up into pieces.

But as Lampert stares down a deadline of Dec. 28 to submit his offer, he is quickly running out of time. As of Thursday afternoon, Lampert had neither submitted his bid, nor rounded up financing, the people familiar said. Should Lampert submit a bid, Sears' advisors would have until Jan. 4 to decide whether he is a "qualified bidder." Only then, could ESL take part in an auction against liquidation bids on Jan. 14.

It is possible Lampert, Sears' largest investor, secures financing in time to meet the deadline, these people said. The hedge fund manager turned retailer has managed last-minute feats before. Due to requirements by the Securities and Exchange Commission, Lampert will be required to make his bid public. That stipulation that could sway him to prolong the filing until its exact deadline of 4:00 p.m. ET Friday.

Nonetheless, the quickly approaching cutoff puts Sears the closest to death it has ever been. Should Lampert miss the deadline, it would put Sears and Kmart on the path to liquidation. That process would take weeks, according to the guidelines laid out by the bankruptcy court. But the process has also already slowly begun, with the retailer weighing the closure of 50 to 80 more stores, CNBC has reported.

The people familiar with these developments requested anonymity because the talks are confidential.

Sears filed for bankruptcy on Oct. 15 with a little under 700 stores. At that time, it said it would close 142 unprofitable stores. In November it announced the closure of 40 additional stores.

Sears in bankruptcy has, therefore, continued a trend that far preceded its chapter 11 filing, a slow-paced liquidation.

Once the nation's biggest retailer, it was also its first "everything store," stocking everything from jewelry to clothing, from hardware to prefabricated homes. But the department store industry has struggled over the past half-decade, as the mall has become less convenient and apparel more casual. Rival J.C. Penney is also feeling the pressure of this trend, on Wednesday its shares dipped below a $1 for the first time.

Lampert had a plan to save Sears by combining it with Kmart, which ESL bought out of bankruptcy after the discount store's 2002 bankruptcy filing. But the cultures of Sears and Kmart employees were different, as were its shoppers — cross-selling Sears' appliances and Kmart's apparel proved less successful than originally planned.

In his five-year reign as CEO and even longer term as chairman, Lampert has largely run the company like the hedge-fund manager he once was, say former executives, employees and people familiar with his thinking. That meant investing less in its stores and advertising, believing such investments were optional.

It also meant keeping Sears alive through complex investments from ESL. Lampert poured millions of dollars through ESL into Sears, which struggled for years with losses and debt. Those investments came amid Lampert's strong belief in his ability to turn Sears around, in part through its loyalty program, "Shop Your Way," say people familiar with Lampert's thinking. But Sears finally hit a cliff, when it had a $134 million payment it could not meet.

Financing an issue

Keeping Sears afloat was easier for Lampert before it filed for bankruptcy. ESL's loans, while ample, had been largely protected by Sears' assets, like its prime real estate. Once it filed for bankruptcy, Sears has had far less to offer its lenders and Lampert has had less control.

ESL was in talks to help finance a junior portion of Sears' bankruptcy loan. Those talks fell apart after he asked lenders to improve the terms of the loan and offer him more protections.

His $4.6 billion offer to buy Sears, meantime, is comprised of various tranches of financing, and little of his own cash. The outside lenders he is asking to support his bid lack the same apparent drive that Lampert had to turning Sears around.

The asset-based loan he is seeking has faced scrutiny from investment banks, weary of lending to a business that hasn't turned a profit since 2010.

Some creditors he asked to support his offer have called his efforts to keep Sears alive a "foolhardy gamble with other people's money," according to court filings. They have also taken aim at his efforts to fund $1.8 billion of his bid by forgiving Sears debt owed to him, through a so-called credit bid.

Those creditors last week said they believe there may be claims against Sears for transactions under Lampert's leadership. Those deals include Sears' spinoff of Lands' End and transactions with Seritage Growth Properties, a real estate investment trust Lampert created through select Sears' properties. As such, they have said they will object to the credit bid.

Lampert could use his own cash to backstop the $1.8 billion credit bid, but it remains unclear whether he is willing to do so.

Meantime, Lampert has also asked as part of ESL's bid that Sears' creditors agree to a release from potential lawsuits over his past transactions. With the threat of litigation looming large, that ask is far from trivial.

Without financing in place, ESL missed its chance earlier this month to be named a so-called stalking horse bidder in an auction for Sears. The miss was an early sign of the challenges Lampert faced. Being named the stalking horse in a bankruptcy sale typically affords a number of perks, like a role in setting bidding procedures and a break-up fee should that bid be topped.

cnbc.com

[Glenn Petersen] Sears Chairman Edward Lampert bids $4.6 billion to rescue iconic retailer from b...

Glenn Petersen — 12/6/2018 7:45:31 PM

Sears Chairman Edward Lampert bids $4.6 billion to rescue iconic retailer from bankruptcy

Lauren Zumbach
Chicago Tribune
December 6, 2018

The hedge fund run by Sears Chairman Edward Lampert is offering to buy much of Sears' remaining assets for about $4.6 billion. The bid includes about 500 Kmart and Sears stores. (Seth Wenig/AP)
______________________________

The hedge fund run by Sears Chairman Edward Lampert is offering to buy many of the bankrupt retailer’s remaining assets for about $4.6 billion with hopes of keeping the chain in business and continuing to employ about 50,000 of its workers.

The bid from Lampert’s ESL Investments includes about 500 Sears and Kmart stores, headquarters and distribution centers, and Sears brands and businesses including Kenmore, DieHard and Sears Home Services.

“ESL believes that a future for Sears as a going concern is the only way to preserve tens of thousands of jobs and bring continued economic benefits to the many communities across the United States that are touched by Sears and Kmart stores,” Lampert’s hedge fund said in the letter sent to Sears’ investment banker Wednesday and filed Thursday with the U.S. Securities and Exchange Commission.

Hoffman Estates-based Sears Holdings Corp., which filed for Chapter 11 bankruptcy protection in October, got the Bankruptcy Court’s approval last month to begin auctioning assets, including a group of top-performing stores. The retailer previously received court approval to begin store closing sales at 142 unprofitable stores.

The 500 stores Lampert and ESL want to purchase include Sears locations in Bloomingdale, Chicago Ridge, North Riverside, Oak Brook, Schaumburg, West Dundee, Cherry Valley, Peoria and Fairview Heights and Kmarts in Bridgeview and Des Plaines. The bid also includes the headquarters in Hoffman Estates and other facilities in Manteno, Melrose Park, Naperville, Romeoville, Moline, Granite City and Bloomington.

The $4.6 billion offer includes up to $950 million in cash that would be funded by a new loan and a $1.8 billion credit bid, in which ESL would swap Sears debt it holds for ownership of a newly formed company. Other financing includes an estimated $1.1 billion from taking on Sears’ obligations to honor Sears Home Services protection agreements, gift cards, and loyalty program points.

In the letter, ESL said it believes long-struggling Sears can successfully reorganize around the smaller group of stores. The fund said it expects to continue employing about 50,000 Sears workers and reinstate a severance program in place before the company sought bankruptcy protection.

The holiday season can be do-or-die for retailers. That’s never been truer for Sears, which filed for bankruptcy protection in mid-October in a last-ditch bid to keep the American retail icon afloat.

The Hoffman Estates-based company has struggled for years, with a string of dismal holiday seasons....

The bid comes days after Sears filed an updated budget with the Bankruptcy Court showing the retailer expected to earn almost $246 million less during the critical holiday shopping season than it forecast when it declared bankruptcy. The more recent budget came after Sears said it planned to sell 505 stores that would continue in business, about 100 more than initially planned, which may have affected revenue forecasts.

ESL said the offer is contingent on its ability to acquire all the assets included in its bid since it believes they will perform better together, and that it would offer less if required to bid on assets separately. Sears has received a separate $60 million bid from Service.com for its home improvement business. Other parties have until Tuesday to place competing bids for that business or object to the sale, and an auction has been set for Dec. 13.

The fund also said it wants confirmation that it will be able to use a credit bid to finance the purchase and would require Sears to release it from any liability related to transactions between the retailer and the hedge fund prior to the bankruptcy filing.

A committee of Sears’ unsecured creditors has raised questions about financial dealings between Sears and ESL and Lampert, who was also the retailer's CEO prior to its bankruptcy filing. Both Sears and the creditors committee are looking into transactions between ESL and the retailer, including loans the hedge fund said amount to $2.4 billion over the past several years.

ESL’s offer would also depend on its ability to secure financing and the Bankruptcy Court’s approval.

Others interested in acquiring Sears’ assets have until Dec. 28 to submit bids under the timeline approved by the Bankruptcy Court. If other bids come in, the auction would be held Jan. 14.

lzumbach@chicagotribune.com

Twitter @laurenzumbach

chicagotribune.com

[Glenn Petersen] A Sears bankruptcy could cause one of the biggest pension defaults ever, but the...

Glenn Petersen — 10/14/2018 10:29:55 AM

A Sears bankruptcy could cause one of the biggest pension defaults ever, but the government would protect 90,000 retirees

Robert Channick
October 14, 2018
Chicago Tribune

Jose M. Osorio / Chicago Tribune
If Sears, once the nation's largest retailer, declares bankruptcy, it could cause one of the biggest pension defaults in U.S. history, but the government would step in to keep checks coming to more than 90,000 retirees. (Jose M. Osorio / Chicago Tribune)
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If Sears, once the nation’s largest retailer, declares bankruptcy, it could cause one of the biggest pension defaults in U.S. history, but the government would step in to keep checks coming to more than 90,000 retirees.

The company’s long-term pension obligations, which have been underfunded by more than $1 billion for years, would be covered by the federal Pension Benefit Guaranty Corp., which has footed the bill for nearly 5,000 failed employer pension plans since its founding in 1974.

“PBGC is monitoring developments at Sears and will continue to protect its two pension plans, which cover over 90,000 people,” the agency said in a statement Thursday. “PBGC’s guarantee is critical to the retirement security of workers and retirees in pension plans.”

A spokesman for Sears Holdings Corp. did not respond Thursday to a request for comment.

The struggling Hoffman Estates-based retailer is facing a $134 million debt repayment Monday, which reportedly could lead Sears to seek bankruptcy protection in the next few days. Under a Chapter 7 liquidation, the company’s pension obligations would shift to the government, while under a Chapter 11 reorganization, Sears could maintain one or both of its pension plans.

Drew Dawson, a law professor at the University of Miami, called the potential Sears pension default “pretty staggering” in its scope, based on historic comparisons.

“The human impact of this is really big on the individual retirees,” Dawson said. “But this would be a big impact on the PBGC itself, financially.”

In a blog post last month, CEO Edward Lampert wrote that Sears has contributed more than $4.5 billion to its pension plans since 2005, an obligation that “significantly impacted” the company, which hasn’t turned an annual profit since 2010.

“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,” Lampert wrote.

Not even Lampert's friends could understand why the hedge-fund manager, once hailed as a young Warren Buffett, clung to his spectacularly...

Sears entered into a five-year pension protection plan with the Pension Benefit Guaranty Corp. in 2016, agreeing to set aside certain assets for pension funding. In November, Sears amended the agreement to sell up to 138 properties to finance a $407 million contribution to its pension plans.

Last year, the agency paid $5.7 billion to nearly 840,000 retirees from 4,845 failed single-employer plans, according to its annual report. Taking over the Sears pension plans would be one of the largest defaults in its 44-year history.

Chicago-based United Airlines had the largest pension default when it terminated its four retirement plans while operating under bankruptcy protection in 2005. That shifted $7.3 billion in claims for more than 122,000 participants over to the agency.

For Sears retirees, a pension default by the company is not a major issue, as long as the checks keep coming.

“Pensions are not our concern because pensions will be secured for our retirees,” said Ron Olbrysh, 77, chairman of the Chicago-based National Association of Retired Sears Employees, which represents thousands of former employees across the country.

Olbrysh, the company’s former assistant general counsel who retired in 1996, said the Sears pensioners were primarily hourly employees who would be fully covered under the set limits of the agency. He, along with many higher-income salaried employees, took a lump sum pension payment when they retired.

A bigger concern for many Sears retirees is the potential loss of a life insurance plan that the company has continued to fund but which the agency would not cover.

“The retirees can still maintain that insurance if they want to pay for it themselves, but the average age of most our retirees is about 80 and the cost of that would be just ridiculous,” Olbrysh said

Olbrysh, who lives in suburban Lombard, started at Sears as a trademark attorney in 1972, and worked his way up the corporate ladder as the once powerful retailer began to lose its hold on consumers, failing to meet challenges from bricks-and-mortar competitors such as Walmart and, later, Amazon and other online giants.

He called its potential bankruptcy a shame, but perhaps a sign of the times.

In its heyday, Sears offered employees attractive benefits including a “phenomenal” profit-sharing plan, and of course, the pension plan, Olbrysh said.

“Sears was a good company for me,” he said. “I was lucky I got out when I did.”

chicagotribune.com

[Glenn Petersen] Sears Hires Advisers to Prepare Bankruptcy Filing Troubled retailer working wit...

Glenn Petersen — 10/10/2018 9:57:39 AM

Sears Hires Advisers to Prepare Bankruptcy Filing

Troubled retailer working with boutique firm M-III Partners and could file for court protection ahead of Monday debt payment

By Suzanne Kapner and Lillian Rizzo
The Wall Street Journal
Updated Oct. 9, 2018 10:51 p.m. ET

Sears, which has been losing money for years, has $134 million in debt due on Monday. Photo: Scott Olson/Getty Images
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[url=http://quotes.wsj.com/SHLD]Sears Holdings Corp. SHLD -28.22% has hired M-III Partners LLC to prepare a bankruptcy filing that could come as soon as this week, according to people familiar with the situation, as the cash-strapped company that once dominated American retailing faces a debt payment deadline.

Employees at M-III Partners, a boutique advisory firm, have spent the past few weeks working on the potential filing, the people said. In recent days, M-III staff have been at the retailer’s headquarters in Hoffman Estates, Ill., one person said. Sears continues to discuss other options and could still avert an in-court restructuring, the people added.

Sears, which has been losing money for years, has $134 million in debt due on Monday. Edward Lampert, the hedge-fund manager who is Sears’s chairman, chief executive, largest shareholder and biggest creditor, could rescue the company, as he has done in the past by making the payment.

But Mr. Lampert is pushing for a broader restructuring that would include shaving more than $1 billion from Sears’s $5.5 billion debt load, selling another $1.5 billion of real estate and divesting $1.75 billion of assets, including the Kenmore appliance brand, which he has offered $400 million to buy himself.

The company’s poor financial performance has made it difficult to get support from lenders for the plan, one of the people said. Mr. Lampert hopes to shrink Sears back to profitability, this person said. The company has already closed hundreds of stores in recent years.

Sears has more than $11 billion in cumulative losses since 2011, and its annual sales have dropped nearly 60% in that period to $16.7 billion. Analysts say it needs to raise more than $1 billion a year to stay afloat.

Mr. Lampert has also sought advice from consulting firm AlixPartners; lawyers at Weil, Gotshal & Manges LLP; and investment bank Lazard Ltd., as he tried to keep the company afloat and restructure out of bankruptcy court, the people said.

On Tuesday, Sears added restructuring expert Alan Carr as a director, expanding the six-person board to seven. Mr. Carr runs a restructuring advisory firm and previously worked as a restructuring lawyer at Skadden, Arps, Slate, Meagher & Flom LLP. He has also served on the board of companies—including wireless-networking business LightSquared Inc. and guitar maker Gibson Brands Inc.—that have recently navigated the bankruptcy process.

Once hailed as a genius investor for smart bets he made on AutoZone and AutoNation , Mr. Lampert met his match in Sears, Roebuck & Co. The retailer was struggling before he combined it with Kmart, which he rescued from bankruptcy, to create Sears Holdings Corp. in 2005.

He moved quickly to cut expenses and close unprofitable stores. But the business worsened coming out of the recession, as more purchases were made online and rivals such as Walmart Inc. and Amazon.com Inc. grew stronger. The company wasn’t helped by Mr. Lampert’s unconventional approach to retailing. He resisted investing in store upgrades and, after becoming CEO in 2013, managed the company from Florida, according to people familiar with the situation.

Mr. Lampert wants to restructure Sears’s debt without filing for bankruptcy protection, because he views bankruptcy as risky for retailers, according to a person familiar with his thinking. Retailers often enter bankruptcy with the hope of restructuring but wind up liquidating instead, as was the case this year with Toys “R” Us Inc., this person said.

Mr. Lampert, whose hedge fund ESL Investments Inc. owns a majority of Sears shares, also believes the company can get more value for its assets by selling them while it is a going concern, this person added.

wsj.com[/url]

[Glenn Petersen] avoid bankruptcy, Sears CEO proposes selling off real estate. The retailer has ...

Glenn Petersen — 9/30/2018 11:56:00 AM

avoid bankruptcy, Sears CEO proposes selling off real estate. The retailer has tried that move before.

Lauren Zumbach
ReporterChicago Tribune
September 28, 2018

A hedge fund controlled by Sears CEO Edward Lampert is urging the retailer to sell off nearly all of its remaining real estate holdings. (Chris Sweda / Chicago Tribune)
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To stave off bankruptcy, Sears CEO Edward Lampert has put forward a plan that would significantly shrink the struggling retailer’s looming debts by selling off nearly all of its remaining real estate holdings.

Selling about 200 company-owned stores, as Lampert’s hedge fund, ESL Investments, is proposing, certainly would lighten Sears’ debt load. But even if the plan succeeds in preserving the company, it likely would accelerate the decline of Sears’ physical presence.

The bricks-and-mortar footprint of Sears Holdings Corp. already has shrunk dramatically amid more than $11 billion in losses since 2011. By the end of the year, the Hoffman Estates-based company will have half as many Sears and Kmart stores as it did just two years ago.

Lampert’s previous attempt at leveraging Sears’ real estate to keep the company going offers a window into what losing control of almost all of its remaining properties could mean for the retailer’s business in the long term.

In 2015, Sears sold 235 stores, along with its stake in joint ventures involving 31 more properties, to real estate investment trust spinoff Seritage Growth Properties. Lampert is both a stakeholder in Seritage and its chairman.

In the years since, the retailer’s presence has been shrinking at those properties as space is leased to new, higher-paying tenants. Nearly a quarter of the former Sears stores still in Seritage’s portfolio are no longer in use by the retailer. Sears and its sister brand Kmart share space with at least one other tenant in about half the remaining occupied stores, according to the company’s most recent financial report. Sears and Kmart now account for less than half the rent Seritage collects each year.

Closing weaker stores isn’t necessarily bad news. Sears has said store closures are part of its plan cut costs and focus on the best-performing locations. But shuttering unprofitable stores won’t automatically bring shoppers back to those that remain.

“If you get rid of all your underperforming stores, and the ones that are left are still underperforming, you just have a smaller underperforming company,” said Bryan Gildenberg, chief knowledge officer at Kantar Consulting.

ESL said its proposal, made public Monday, would free up cash to invest in Sears’ retail business by reducing the company’s debt. Lampert and the hedge fund hold the vast majority of the $1.5 billion Sears would repay. The repayment would be funded by selling the properties, either to outside buyers or, if the company hasn’t sold enough to pay off real estate debts in one year, to a group of lenders willing to extinguish that debt.

The deal would guarantee a minimum value for the sale of Sears’ property, reduce its cash interest payments and give the retailer a share of profits from real estate sales above a certain threshold, ESL said. An unspecified number of stores sold to lenders would be leased back to Sears, much the way the retailer initially kept leasing all but a handful of the Seritage properties.

But the amount of space in those stores devoted to Sears and Kmart could shrink over time, as it has at many of the properties Sears sold in 2015. Buyers will come up with a business plan “geared towards optimizing the value of the real estate portfolio,” the ESL proposal says.

Sears was a dominant force in retail when many malls and shopping centers were being built, so its stores are in “superior real estate locations” with opportunities for new development, Seritage said earlier this month in a report to investors. Among them: the last two Sears stores that were in operation in Chicago, where plans call for a mix of residential and retail space.

Redevelopment is further along in suburban North Riverside, where Sears downsized and Seritage brought in a gym and a Round One bowling and amusement center. A Seritage-owned Sears store in Springfield, meanwhile, was replaced by Orangetheory Fitness, Binny’s Beverage Depot, two restaurants and new stores, including off-price retailer Marshall’s.

Erik Gordon, assistant professor at the University of Michigan's Ross School of Business, said he’s skeptical the properties that would be part of the ESL proposal are as valuable as those that were previously sold to Seritage.

“It’s not the stuff you could have disposed of earlier in a way that gave you better returns,” Gordon said.

Regardless of what happens to the Sears-owned stores, more closures are planned, including another 149 by the end of the year. There were 866 Sears and Kmart stores in the U.S. as of last month.

Sears’ goal is to get down to a solid base of stores it can build on, and the retailer hopes it can stabilize the number “at a meaningful level in the near future,” Lampert said earlier this month in a news release discussing the company’s most recent quarter earlier.

As stores closed, quarterly sales at those open at least a year have declined. However, the most recent quarter, with a 4 percent sales decline, was an improvement from an 11.5 percent decline during the same quarter last year. In July and August, sales at stores open at least a year increased modestly, Lampert said in the news release.

A number of retailers reported strong sales in the most recent quarter, but even if confident consumers felt like they had more to spend, “they’re still going to spend it at the best places with the best value they can get,” said Perry Mandarino, senior managing director at investment bank B. Riley FBR.

ESL’s broader proposal might buy Sears the time it needs to avoid bankruptcy court, Mandarino said.

Others were more skeptical. Fitch Ratings said it thinks the real estate proposal will be difficult to execute. And even if it does go through, Fitch said, it won’t be enough to prevent another restructuring given the company’s ongoing losses.

The plan might help Sears’ financial woes, but it won’t address the company’s underlying struggle to bring back shoppers, Kantar’s Gildenberg said.

“I don’t think Sears’ problem is money; it’s strategy and relevance to the shopper, and money isn’t going to help fix that,” he said.

chicagotribune.com

[Glenn Petersen] Eddie Lampert has finally identified the reason for Sears' pending demise...and ...

Glenn Petersen — 9/14/2018 5:00:17 PM

Eddie Lampert has finally identified the reason for Sears' pending demise...and it isn't him:

What's killing Sears? Its own retirees, the CEO says

by Chris Isidore @CNNMoney September 14, 2018: 12:30 PM ET

What's to blame for the problems at Sears? Amazon? Bad management? CEO and primary shareholder Eddie Lampert has another idea: It's the company's own retirees.

Sears turned in another bleak quarterly earnings report on Thursday, and Lampert complained about the billions of dollars that Sears owes its former employees through pension plans.

Lampert said Sears has paid almost $2 billion into pension plans in the past five years, and $4.5 billion since Sears and Kmart merged in 2005 to form Sears Holdings ( SHLD). The company pays retirees about $300 million a year, filings show.

If Sears could have put that money into 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," Lampert wrote in a blog post.

He also faulted the "very difficult" environment for retailers, but he said Sears has been "significantly impacted" by pension obligations.

Many other analysts have blamed Lampert himself for Sears' misfortunes. They say he made bad decisions about marketing, didn't invest enough in stores and didn't commit to selling online.

Americans' increasing preference to buy online, and at big-box stores rather than malls, is a major problem for the company. Sears has lost $11.7 billion since its last profitable year in 2012.

Lampert is right that the company is at a disadvantage because it once had traditional pension plans, which pay a fixed monthly benefit to retirees as long as they live.

Most businesses today offer what's known as a defined contribution plan, such as a 401(k).

Sears ended its pension plans in 2006, but longtime employees and retirees are still entitled to benefits they accrued while the plans were in effect.

Sears, once the nation's largest employer, has an estimated 100,000 retirees still eligible for benefits under the pension plans, according to a federal regulator. By comparison, the company had only 89,000 employees as of February, and many of them have since left the company because of store closings.

Sears is required to make contributions to pension plans under rules set by the Pension Benefit Guaranty Corp., which provides benefits to retirees whose companies and pension plans go bankrupt.

When pension plans are severely underfunded, or when a company is at risk of bankruptcy — both of which are the case for Sears — the PBGC sets stricter rules.

For example, Sears is getting about $900 million by selling its Craftsman tool brand to Stanley Black & Decker ( SWJ). Under a settlement with the PBGC, Sears must contribute about $250 million of that into its pension plans.

Sears is trying to sell its Kenmore appliance brand as well, and Lampert has offered to buy for $400 million through a hedge fund he controls. But no deal has been reached. One reason could be that Sears needs to work out an agreement with the PBCG on how much of the money would go to pensions.

money.cnn.com

[Glenn Petersen] Sears names dozens of the 72 stores it plans to close in the near future Sears h...

Glenn Petersen — 6/1/2018 11:30:17 AM

Sears names dozens of the 72 stores it plans to close in the near future

Sears has identified another 100 unprofitable stores.
It will begin closing sales at 72 of these stores "in the near future."
The retailer said it continues to evaluate its store fleet and will make further adjustments "as needed and as warranted."

Lauren Thomas | Christina Cheddar Berk
Published 6:07 AM ET Thu, 31 May 2018 Updated 19 Hours Ago
CNBC.com

Sears Holdings said Thursday it will be closing more than 70 additional stores in 2018 as its sales continue to erode, dropping more than 30 percent in the latest quarter from a year ago.

The retailer has identified 100 unprofitable stores in total, and it will begin closing sales at 72 of these stores "in the near future."

"We continue to evaluate our network of stores, which are a critical component in our transformation, and will make further adjustments as needed and as warranted," Sears said in a statement announcing its fiscal first-quarter results.

The department store chain has been caught in a vicious cycle — shuttering weak stores to reduce costs. But even as it closes more stores, sales fall further. In the latest period, Sears said roughly two-thirds of its sales decline was tied to store closures.

The company named 63 locations it plans to close; they are mapped here. Sears will list the additional nine locations in a forthcoming update.

cnbc.com

[Glenn Petersen] Sears' CEO proposes breaking up troubled retailer with offer to buy Kenmore bran...

Glenn Petersen — 4/24/2018 4:27:09 PM

Sears' CEO proposes breaking up troubled retailer with offer to buy Kenmore brand, other assets

Corilyn Shropshire and Lauren Zumbach
Chicago Tribune
April 23, 2018

Sears CEO Edward Lampert's hedge fund has offered to buy the Kenmore brand and other real estate assets of the troubled retailer. (Elise Amendola / AP)
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The hedge fund run by Sears CEO Edward Lampert has offered to buy the retailer’s popular appliance brand Kenmore and other Sears divisions, moving to break up the company after it failed to find other buyers for the assets.

Sears said it has received a letter from ESL Investments suggesting that it acquire all or a portion of its Kenmore brand, the home improvement business of the Sears Home Services division and the Parts Direct business of Sears Home Services.

Hoffman Estates-based Sears Holdings Corp. has been exploring alternatives for those businesses, as well as the Craftsman and DieHard brands, for nearly two years. In 2016, Sears did not say what kinds of options it was considering. But ESL Investments told Sears it should “aggressively pursue divestiture” of all or some of those businesses after failing to find a buyer for assets other than Craftsman. It sold the well-known tool brand to Stanley Black & Decker in a deal valued at $900 million.

Sears’ shares shot up 7.6 percent Monday to close at $3.24.

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A sale would give the retailer a cash injection as it works to restructure its business after racking up more than $10.8 billion in losses over the past seven years. The company has said it believes there’s room to grow those brands by expanding their distribution beyond Sears.

The brands would continue to operate as they have, according to the letter to the board of directors, which was filed with the Securities and Exchange Commission. ESL also offered to buy certain Sears real estate assets, including debt, and continue to lease the properties to Sears or other entities.

Alyssa Pointer / Chicago Tribune
The home appliances department at the Sears located inside of Woodfield Mall, Tuesday, May 9, 2017, in Schaumburg. A hedge fund owned by Sears CEO Edward Lampert has proposed buying the brand and other assets from the struggling retailer.
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“As noted in our letter to the Board of Directors, our proposal is part of a comprehensive solution to transform Sears Holdings,” ESL said in a news release.

“Our principal interest is seeing that Kenmore, SHIP (Sears’ home improvement business) and PartsDirect are divested in the near term in a transaction that delivers the greatest value for Sears, regardless of whether ESL or a third party is the ultimate buyer,” ESL said. “This will enable Sears to improve its debt profile and liquidity position, creating the runway to help continue its transformation, and allow these businesses to unlock their considerable potential by further expanding their presence in the marketplace. We are very enthusiastic about our ownership interest in Sears and its future, and will remain so whether or not a transaction is consummated."

ESL valued the Parts Direct and home services division at $500 million. It did not provide a valuation of the Kenmore brand but offered to submit a proposal and said it believed it could close on a deal in 90 days.

Sears said it will review the letter but would not make an additional comment.

To ensure “fair and reasonable terms” given the close ties between ESL and Sears, ESL said Lampert and Kunal Kamlani, president of ESL and a member of Sears’ board, would not participate in discussions, deliberations, negotiations or decisions on behalf of Sears unless specifically asked to do so. ESL also said it would not purchase the businesses unless the deal was recommended by a Sears board committee and approved by a majority of disinterested shareholders.

Using the pieces of its retail empire to generate cash isn’t a new strategy for Sears, which closed 426 stores last year and has repeatedly tapped Lampert for loans as it works to stem the red ink and slash costs. It spun off the Lands’ End brand in 2015, bringing in a $500 million cash dividend. A year later, Sears sold 235 stores to real estate investment trust Seritage Growth Properties — in which Lampert holds a stake and serves as chairman of the board — and raised $2.72 billion.

Transactions announced since the start of 2017 added up to more than $1.8 billion in additional capital, according to a March report from Moody’s Investors Service. The sum includes asset sales and loans backed by Sears’ real estate and intellectual property, excluding the Kenmore and DieHard brands.

But without the Kenmore, Home Services and Parts Direct businesses, Sears “looks like a bunch of empty stores,” said Erik Gordon, assistant professor at the University of Michigan’s Ross School of Business.

A brand like Kenmore might be better off with an outside buyer with experience building brands, but its ties to Sears could make that a harder sell, he said.

Gordon said it’s hard to see a way the businesses would benefit from separation, beyond the cash infusion for Sears and ability to sell assets before they lose value.

“There’s no apparent strategic logic here. But there is some financial protection logic,” he said, if Sears were to have to seek bankruptcy protection.

And while the company still has a “meaningful’ amount of real estate and other brands that could provide a source of cash, the more it sells, the fewer assets it will have to fund future shortfalls, Moody’s said.

Moody’s also noted Sears issued $1.8 billion of securities backed by royalties from the Kenmore, Craftsman and DieHard brands, which could affect their value.

crshropshire@chicagotribune.com

lzumbach@chicagotribune.com

Twitter @corilyns

Twitter @laurenzumbach

chicagotribune.com

[Sr K] OT about Uber Oakland grapples with Uber's threat to sell massive HQ instead o...

Sr K — 8/25/2017 9:58:00 PM

OT

about Uber

Oakland grapples with Uber's threat to sell massive HQ instead of moving in [Mercury News]

Knight-Ridder
8:35 PM ET 08/25/2017

Aug. 25--OAKLAND -- After spending two years bracing for Uber's arrival, residents reacted with both worry and relief Friday after the ride-hailing giant said it may instead sell the building that was supposed to be its Oakland headquarters.

Following Uber's announcement that it is reevaluating plans for the Uptown Station building at 1955 Broadway, Oakland residents are left wondering what will become of the massive, vacant building in the heart of the city's revitalizing Uptown neighborhood. The space, formerly occupied by Sears, has generated excitement and controversy ever since Uber announced its intention to move in two years ago.

[Sr K] I'm sure Sears stores did not lose ground, despite the line "brick-and-mortar st...

Sr K — 8/24/2017 7:31:46 PM

I'm sure Sears stores did not lose ground, despite the line "brick-and-mortar stores continued to lose ground in a tough retail environment".

The stores pay an annual COL increase, and when Sears or Kmart space is taken back, it has been leasing at more than $18 psf, more than 4x what Sears pays.

If Michelle Ma is related to Jack Ma, that might explain her and Imani's bias. Forever 21 was one of Sears' subtenants (they still may be), but the article has no relevant caption for the photo of nearby customers holding a tenant's bag.

forever21.com is their site

The Non-GAAP expected earnings was -2.48, and Sears reported a beat of -1.16.

[Glenn Petersen] Sears to Close Another 28 Kmart Stores as Sales Slump Continues Struggling re...

Glenn Petersen — 8/24/2017 11:42:22 AM

Sears to Close Another 28 Kmart Stores as Sales Slump Continues

Struggling retailer’s quarterly loss narrows amid efforts to rein in costs

By Michelle Ma and Imani Moise
The Wall Street Journal
Aug. 24, 2017 6:51 a.m. ET

Sales at stores open at least a year declined 11.5% in the fiscal second quarter. Photo: Gene J. Puskar/Associated Press
______________________________

Sears Holdings Corp.’s SHLD +4.78% brick-and-mortar stores continued to lose ground in a tough retail environment, despite the company’s cost-cutting efforts.

Sales at stores open at least a year declined 11.5% in the fiscal second quarter as the company scaled back the number of pharmacies and electronic products in its stores. Kmart’s same-store sales fell 9.4%, compared with 3.3% over the same period and Sears same-store sales declined 12.3% compared with a 7% drop last year.

The declines come as the company has closed about 180 underperforming stores so far this year. Sears says it is on track to close 150 more stores by the end of the third quarter and announced the closure of an additional 28 Kmart stores.

Sears’s results follow those of fellow department-store chains Macy’s Inc., Kohl’s Corp. , and J.C. Penney Co. , which all posted declines in same-store sales, though the drops weren’t as steep as in quarters past. Retailers across the U.S., particularly department stores, are contending with weak foot traffic as shopping moves online.

The big-box retailer said it would experiment with specialized smaller-format stores in the coming quarters in an attempt to make its stores more effective.

Sears got a temporary lift last month when it announced a deal with Amazon.com Inc. to sell its Kenmore appliances through the online retailing giant and is looking for ways to externalize sales for its most successful brands like DieHard.

As Amazon continues to gain traction with consumers, Sears has turned to shedding assets and closing stores to stem losses. In January, it sold its Craftsman brand to Stanley Black & Decker Inc. for $900 million. In March, it spooked investors when it warned in a filing that “substantial doubt exists” that it could continue operating.

Sears has made significant efforts this year to boost its financial position. In addition to the Craftsman sale, it has raised $460 million this year from real-estate transactions and potentially more than $1 billion through new and amended credit facilities. Analyst Bill Dreher of Susquehanna Financial Group said in a research note that Sears would need about $1.2 billion in 2017 and $1.4 billion in 2018 to operate the business.

The company said in June that it would eliminate 400 full-time positions as part of a cost-cutting goal of $1.25 billion in fiscal 2017.

Overall the retailer topped views. Sears posted a loss of $251 million, or $2.34 a share, compared with a $395 million loss, or $3.70 a share a year earlier. Revenue slid 23% to $4.37 billion.

Analysts polled by Thomson Reuters had forecast a loss of $2.48 a share on revenue of $4.21 billion.

Shares, inactive premarket, have fallen 7.8% so far this year.

Write to Imani Moise at imani.moise@wsj.com

[Sr K] Sears launches Kenmore on Amazon Sears to open at 2-month high, after news on K...

Sr K — 7/20/2017 8:36:38 AM

Sears launches Kenmore on Amazon

Sears to open at 2-month high, after news on Kenmore brand on Amazon and integration with Alexa.

9.85 high pre-market

[Glenn Petersen] Sears to close 50 auto centers, 92 Kmart pharmacies to cut costs Ally Marotti C...

Glenn Petersen — 4/22/2017 11:56:47 PM

Sears to close 50 auto centers, 92 Kmart pharmacies to cut costs

Ally Marotti
Chicago Tribune
April 21, 2017

A Sears Auto Center at the Burlington Mall in Burlington, Massachusetts. Sears plans to closescores of auto center locations nationwide.
(CJ Gunther / EPA)
________________________________

Sears Holdings plans to close scores of Sears Auto Center locations and underperforming Kmart pharmacies as part of its effort to cut costs by $1.25 billion this year.

The Hoffman Estates-based retailer already has closed 150 stores nationally — including two in downstate Illinois — in cost-cutting efforts, but more needs to be done in this "very challenging retail environment," Chairman and CEO Edward Lampert said Friday in a news release.

"We need to take further action," he said.

The closures and other steps the company already has taken add up to $700 million in annual savings. Closing 50 Sears Auto Center locations and 92 pharmacy operations in certain Kmart stores will help the company reach its $1.25 billion cost-cutting goal, which it increased from a previous target of $1 billion.

Sears, a back-to-school shopping destination for generations of kids, has said that after years of losing money that there is "substantial doubt" it will be able to keep its doors open. But it also insisted that its actions to turn around its business should help reduce that risk.

The embattled retailer did not give a timeline for the store closures. Company spokesman Chris Brathwaite said he did not have a list of which locations are scheduled to close.

The company also plans to eliminate senior management roles at Sears and Kmart, though it has not said how many.

Some employees were notified Friday that they would be losing their jobs, Brathwaite said. The rest will be told in the coming weeks.

"We obviously don't take these decisions lightly," he said. "But in order to be a more competitive retailer and return the company to profitability, we need to look for ways to streamline the operations."

In February, the company hinted that the auto centers business could find itself on the chopping block. Sears previously signed a $900 million deal to sell its Craftsman brand to Stanley Black & Decker. The company at the time said it would continue to look for options for two other popular brands, Kenmore and DieHard, and its Sears Home Services and Sears Auto Center businesses.

amarotti@chicagotribune.com

Twitter @AllyMarotti

Copyright © 2017, Chicago Tribune

http://www.chicagotribune.com/business/ct-sears-closing-auto-centers-0422-biz-20170421-story.html

[Glenn Petersen] Sears CEO Lampert takes bigger stake in ailing chain, shares jump [graphic] A ...

Glenn Petersen — 3/28/2017 9:24:08 AM

Sears CEO Lampert takes bigger stake in ailing chain, shares jump

A display shows small appliances for sale in 2015 at the Sears store in Schaumburg's Woodfield Mall. Sears Holdings Chairman and CEO Edward Lampert has bought more of the trouble company's shares.
A display shows small appliances for sale in 2015 at the Sears store in Schaumburg's Woodfield Mall. Sears Holdings Chairman and CEO Edward Lampert has bought more of the trouble company's shares. (Jose M. Osorio / Chicago Tribune)
___________________________

Shares of Sears Holdings jumped more than 9 percent Monday after Chairman and CEO Edward Lampert bought more of the department store's shares.

Lampert, already Sears' largest shareholder, bought nearly 526,000 shares last week, according to a Friday regulatory filing. Earlier that week, Fairholme Capital Management bought up nearly 614,000 shares. Fairholme Chief Investment Officer Bruce Berkowitz is also a member of Sears' board of directors.

Lampert's purchases came shortly after Sears acknowledged in a regulatory filing Wednesday there was "substantial doubt" it will be able to stay in business, sending the company's shares tumbling by about 12 percent.

The department store chain said it lost more than $2 billion last year. Despite the disclosure indicating doubt about the company's future, "we remain confident in our financial position and remain focused on executing our transformation plan," Chief Financial Officer Jason Hollar wrote in a post on the company's website Wednesday.

The $1 billion target also includes previously announced plans to close 150 Sears and Kmart stores this spring and improve stores' selection of products while dropping unprofitable categories.

Sears is taking "decisive actions to become a more agile and competitive retailer with a clear path toward profitability," Lampert said in a news release earlier this month.

But it's still struggling to bring shoppers back. This month, the department store chain said it lost $2.2 billion last year while sales at stores open at least a year continued to slide, down 10.3 percent in the fourth quarter of 2016 compared with the same period in 2015.

As of January, Lampert owned 53.2 percent of the department store chain.

lzumbach@chicagotribune.com

Twitter @laurenzumbach

chicagotribune.com

[Glenn Petersen] The important point is that the disclosure was not in the prior year 10-K. The c...

Glenn Petersen — 3/23/2017 9:37:39 AM

The important point is that the disclosure was not in the prior year 10-K. The company continues to crumble.

[Sr K] Bloomberg LP and the writers are overstating how the "substantial doubt" and "go...

Sr K — 3/22/2017 12:06:38 AM

Bloomberg LP and the writers are overstating how the "substantial doubt" and "going concern" wording got to be included in the Form 10-K.

It's described on page 74: [color added]

Presentation of Financial Statements - Going Concern

In August 2014, the FASB issued an accounting standards update which requires management to assess whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued. If substantial doubt exists, additional disclosures are required. This update was effective for the Company's annual period ended January 28, 2017. The Company's assessment of our ability to continue as a going concern is further discussed in the "Uses and Sources of Liquidity" paragraph above. The adoption of the new standard did not have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures.

-

The "substantial doubt" wording appears 6 times in the filing (on pages 48, 66, and 74), twice each in a paragraph on each of those pages, and 2 of those paragraphs are identical. The one year timeframe is in the FASB Standard.

[Glenn Petersen] Sears Warns of ‘Substantial Doubt’ About Company's Future by Nick Turner and ...

Glenn Petersen — 3/21/2017 10:44:07 PM

Sears Warns of ‘Substantial Doubt’ About Company's Future

by Nick Turner and Lauren Coleman-Lochner
Bloomberg
March 21, 2017

-- Troubled retailer adds ‘going concern’ language to filing

-- Company has struggled to recover from billions in losses

Sears Holdings Corp. acknowledged “substantial doubt” about its ability to keep operating, raising fresh concerns about a company that has lost more than $10 billion in recent years.

The retailer added so-called going-concern language to its latest annual report filing, suggesting that weak earnings have cast a pall on its future as a business.

“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” the Hoffman Estates, Illinois-based company said in the filing. But the company added that its comeback plan may help alleviate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements.”

The disclosure comes after more optimistic signs from the company, which has been working on a turnaround under Chief Executive Officer Eddie Lampert. Sears posted a narrower loss than predicted in the fourth quarter, and it has pledged to lower its debt burden and cut annual expenses by at least $1 billion.

Lampert, a hedge fund manager who is also Sears’s biggest investor, aims to reduce debt and pension obligations by $1.5 billion. The CEO has helped keep the ailing retailer afloat by offering more than $1 billion of assistance, including a $500 million loan facility announced in January.

As part of its comeback plan, Sears had closed stores, sold real estate and offloaded businesses. Earlier this month, the department-store chain completed the sale of its Craftsman tool brand to Stanley Black & Decker Inc. for about $900 million.

“While our historical operating results indicate substantial doubt exists, we want to be very clear that we’re taking decisive actions to mitigate that doubt,” Howard Riefs, a Sears spokesman, said in an emailed statement.

bloomberg.com

[Sr K] Seritage Growth Properties put out an 8-K update. Briefing.com had a summary, w...

Sr K — 1/17/2017 9:01:52 PM

Seritage Growth Properties put out an 8-K update.

Briefing.com had a summary, which I am excerpting to eliminate duplication:

10:04 am Seritage Growth Properties +4% after updating on its leasing and development activity as of December 31, 2016 ( SRG) :

Highlights include:

Signed new leases totaling 2.2 million square feet since the Company's formation, including 890,000 square feet during the fourth quarter of 2016

Increased third-party rental income by $41 million, or approximately 94%, since the Company's formation
New rents at 4.4x prior rents upon releasing, with new average rent of $18.62 PSF compared to $4.20 PSF for space currently or formerly occupied by Sears Holdings (SHLD)
Completed or commenced 48 wholly-owned redevelopment projects with projected cost of over $460 million since the Company's formation, including eight new projects commenced in the fourth quarter of 2016

Projected incremental returns of approximately 12% on 33 new projects initiated solely on the Seritage platform with projected cost of $400 million

Initiated recapture of Sears building in downtown Santa Monica for redevelopment during the fourth quarter of 2016

The 8-K has this paragraph:

Santa Monica
During the fourth quarter the Company submitted a recapture notice to Sears Holdings for 100% of the space at the Company’s property in Santa Monica, CA. One of the Company’s premier redevelopment opportunities, the freestanding property is located across the street from the new Metro Rail station and two blocks from the Pacific Ocean and the Santa Monica Pier. The planned redevelopment will transform the existing building into a vibrant, mixed-use destination of retail, restaurants, and creative office space.

[Glenn Petersen] Sears to sell Craftsman tool brand to Stanley Black & Decker Joseph Pisani, AP ...

Glenn Petersen — 1/5/2017 2:48:12 PM

Sears to sell Craftsman tool brand to Stanley Black & Decker

Joseph Pisani, AP Business Writer
Associated Press
January 5, 2017

Sears to sell Craftsman tool brand to Stanley Black & Decker" FILE photo shows an assortment of Craftsman wrenches at a Sears store in Bethel Park, Pa. Sears is selling its well-known Craftsman brand to Stanley Black & Decker Inc., which plans to grow the tool brand by selling its products at more stores. Shares of Hoffman Estates, Illinois-based Sears Holdings Corp shares rose 7.5 percent to $11.14 before the stock market open Thursday, Jan. 5, 2017. (AP Photo/Gene J. Puskar, File)

_____________________

NEW YORK (AP) -- After controlling the Craftsman name for 90 years, troubled department store operator Sears said it will sell the famous tool brand to Stanley Black & Decker Inc.

Stanley, which makes and sells tools under the DeWalt and Black & Decker names, wants to grow the Craftsman brand by selling its products in more stores outside of Sears. Today, only 10 percent of Craftsman products are sold in other stores. Sears said it will continue to sell Craftsman, including at its Kmart and Sears Hometown stores. The Hoffman Estates, Illinois-based company first took control of Craftsman in 1927 when it bought the trademark for $500.

Sears has struggled, losing money for years as its revenue fell. The company also announced plans Thursday to close 150 stores, about 10 percent of its total 1,500 locations. And last week, the company said it received a credit facility for up to $500 million to provide it with cash as it sells assets.

Shares of Sears Holdings Corp., which are down 45 percent in the last 12 months, rose 6 percent to $10.94 in midday trading Thursday.

Stanley will pay Sears about $900 million for Craftsman, which includes $525 million when the deal closes this year, $250 million after three years and a percentage of sales for 15 years. After 15 years, Sears will start paying Stanley 3 percent of the Craftsman sales it makes. Shares of Stanley, based in New Britain, Connecticut, rose 1.4 percent to $117.90.

Stanley said it plans to hire more workers and open a new U.S. plant to make more Craftsman products, but didn't provide details.

finance.yahoo.com

[Glenn Petersen] Struggling Sears is borrowing another $200 million from its CEO to stay afloat ...

Glenn Petersen — 12/29/2016 10:18:40 AM

Struggling Sears is borrowing another $200 million from its CEO to stay afloat

Hayley Peterson
Business Insider

December 29, 2016

Sears is borrowing more money from CEO Eddie Lampert's hedge fund to stay afloat.

The company announced Thursday that it obtained a loan called a secured standby letter of credit facility for an initial cash infusion of $200 million, with the option to expand the amount to $300 million.

This particular kind of loan comes with a guarantee on behalf of the lenders that Sears' suppliers will be paid, should the company default on its debt.

The loan is being provided by JPP, LLC and JPP II, LLC, which are affiliates of Lampert's hedge fund, ESL Investments. Citibank is serving as administrative agent and issuing bank.

Sears' shares surged as much as 6% Thursday morning to $8.64, after closing at a 52-week low on Wednesday following Business Insider's report that the company was planning to close more stores.

In a statement on the loan, Sears Chief Financial Officer Jason Hollar said, "As Sears Holdings has consistently shown, we will take actions to adjust our capital structure, generate liquidity and manage our business to enable us to execute on our transformation while meeting all of our financial obligations. This new standby letter of credit facility further demonstrates that Sears Holdings has numerous options to finance our business strategy."

Over the past two years, Lampert and his hedge fund have loaned Sears more than $800 million — not including this most recent cash infusion —to keep the business in operation.

In the most recent quarter, Sears' revenue fell 13% to $5 billion and losses widened to $748 million from $454 million in the period last year.

Same-store sales dropped 7.4%, including a 10% decrease at Sears stores and a 4.4% decrease at Kmart stores.

finance.yahoo.com

[Glenn Petersen] The third quarter "earnings" press release: prnewswire.com Sales, profit at ...

Glenn Petersen — 12/14/2016 11:21:07 AM

The third quarter "earnings" press release: prnewswire.com

Sales, profit at Sears continue downward spiral

Sears, the one-time standard bearer for U.S. retail, has now lost money in every quarter for more than a year and sales continue to slide as the company shutters poorly performing stores

Associated Press
December 8, 2016 4:32 PM

HOFFMAN ESTATES, Ill. (AP) -- Sears, the one-time standard bearer for U.S. retail, has posted quarterly losses for more than a year now, and sales continue to slide as the company shutters poorly performing stores.

The company's cash situation, which has led in the past to clashes with suppliers, is an ongoing concern. Cash and cash equivalents fell another 12 percent from last year at this time, to $258 million.

On Thursday, Sears said it had $174 million remaining in a $1.97 billion revolving credit facility.

In the spring, Sears said that it was exploring its options for its Kenmore, DieHard and Craftsman brands, in addition to its vast real estate holdings.

It continues to do so.

"We will continue to take actions to generate liquidity, adjust our overall capital structure, and manage our business while meeting all of our financial obligations," said Chief Financial Officer Jason Hollar. "Actions may include additional expense reductions, financing transactions and asset monetization including exploring alternatives for our Kenmore, Craftsman and DieHard brands, our Sears Home Services business and our real estate portfolio."

The Hoffman Estates, Illinois, company, which also owns Kmart, lost $748 million, or $6.99 per share, in the most recent quarter. It was the fifth consecutive quarter of losses. In the same quarter last year, Sears lost $454 million, or $4.26 per share.

Losses adjusted for one-time items were $3.11 per share.

Revenue declined to $5.03 billion from $5.75 billion, as some locations were closed. The company at the end of this fiscal year will probably post its first decade of declining annual sales.

Sales at stores open at least a year, a key indicator of a retailer's health, tumbled 7.4 percent. Those sales fell 10 percent at Sears, and 4.4 percent at Kmart.

Chairman and CEO Edward Lampert said that Sears Holdings Corp. continues to work toward returning to profitability.

That has become difficult for even industry-leading chains as online sales sap traditional retail stores of traffic.

Further jolting Sears, now deep into the crucial holiday shopping season, is the recent departure of key executives.

Executive Vice President Jeffrey Balagna left last month, according to a regulatory filing. And Joelle Maher, who served as president and chief member officer for Sears, recently departed.

Hollar took over for CFO Rob Schriesheim, who departed earlier this year.

Shares, down 38 percent this year, rose 5.3 percent, or 64 cents, to close at $12.76 as the broader markets rallied.

finance.yahoo.com

[Sr K] Megan McArdle is one of the lightweights of the "Bloomberg View" crew. What she...

Sr K — 12/13/2016 12:25:31 AM

Megan McArdle is one of the lightweights of the "Bloomberg View" crew.

What she and the others write, and speak on Bloomberg Radio is not a Bloomberg View, it is a BloombergView View.

What I'm replying to states:

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To make her case, she uses the GAAP Q3 loss, which includes

Closed store reserve and severance
of $113 m.

I believe Ed Lampert knows what he's doing.

The big picture is the float and the short squeeze.

The 2019 8% Notes issued in 2014 will pay 12/15 and they trade at a premium to their issue price. After Thursday, there will be 3 years to maturity.
63.77% of the float is short (according to finance.Yahoo)
14.66 m shares are short, and
the float is 21.71 m shares

[Glenn Petersen] Sears Transformed America. It Deserves to Die With Dignity. Dec 9, 2016 11:35 A...

Glenn Petersen — 12/12/2016 7:09:45 PM

Sears Transformed America. It Deserves to Die With Dignity.

Dec 9, 2016 11:35 AM EST
By Megan McArdle
BloombergView

Listening to a Sears earnings call in 2016 is like realizing that the twinkling light you're admiring in the night sky is from a star that died 50 years ago.

Sears Holdings Corp. lost $748 million last quarter amid falling sales, an even worse performance than the dismal losses of the period a year earlier. There is no obvious reason that the business might improve. And yet executives are still discussing how important its shopper loyalty program is "to the future and growth of the company," as if the company were going to have growth, and shoppers and a future.

We can argue about whether the current problems date back to the Great Recession or to the 2005 merger with Kmart, in which some bright strategist decided that the solution to the problems of two struggling retailers with badly dated business models was to lash them together and hope that somehow these two rotted timbers could hold each other up. But this is a distraction, because in fact, the seeds of this decline were planted decades ago, during the last time Sears needed to reinvent itself, in the aftermath of World War II.

Sears was the Wal-Mart of its era, that era being the 1890s to the 1930s. The company used economies of scale to become the comprehensive retailer to the large segment of the population that lived in small towns with few retail options. Then, as now, smaller local retailers might resent it, but the "wishbook," aka the Sears Roebuck catalog selling spices and plows and player pianos and seemingly everything else, could be found in almost every farmhouse in America.

Eventually, the firm moved into brick-and-mortar retail. World War II left the company in trouble. With inventories and cash low because of wartime shortages, Sears embarked on an audacious expansion plan, building new stores and investing heavily in the automobile suburbs that were springing up everywhere. This decision by Sears helped create the retail landscape that many of us remember from our childhood: the massive suburban shopping mall, anchored by a giant Sears store.

That Sears store might not have a plow, but it could sell you tires for your car, a refrigerator for your kitchen, and makeup for your 16-year-old daughter's first dance. It was an impressive act of reinvention, at the kind of crisis point that often drives previous titans of industry out of business.

But however brilliant this move was at the time, it has heavy costs now. Retailers have a lot of assets: brand, human talent and of course their physical inventory. But ultimately every major brick-and-mortar retailer's biggest asset is geography -- as the real estate brokers like to say, "location, location, location." Geography saved Sears, for a time, but now its biggest asset is an albatross.

The malls that Sears anchored for decades now seem to be slowly dying. They, like Sears itself, are suffering from online competition. Companies in this situation are often urged to find a new business model, but when your core asset is prime locations that are no longer so prime, that's hard advice to follow.

Not that Sears hasn't tried. In its most recent earnings release, the company presented cheerily arranged facts and figures that aimed to soften, but could not hide, the fact that the company has not turned a profit in years. During the earnings call, the chief financial officer, Jason Hollar, spoke almost lovingly of all the stores they were planning to close: "As we reduce our overall store base, we believe we will inevitably end up with stores that are profitable, operate at a small loss, or have a clear path to profitability."

This rosy forecast is, of course, eminently evitable. It could be evited pretty darn quick. Closing stores can be the path back to profitability for fundamentally sound businesses that expanded too quickly, or into the wrong areas. But it is precisely Sears's basic competitive strengths that have been badly impaired by the changing retail landscape, so there's no obvious profitable core that the company can shrink back to.

In the meantime, the company is still hemorrhaging cash as it waits for those leases to expire. Selling off remaining brands like Kenmore and Craftsman may temporarily staunch the bleeding in its cash flow, but that's not a trick the company can repeat very often, and it makes the underlying business even less valuable.

It's looking increasingly likely that Sears is going to lose the race to close stores before the cost of running them chokes the company to death -- or that if somehow it does manage to close stores faster than it loses money, it will eventually discover that the equilibrium number of Sears locations is zero.

It's fashionable to bash "dinosaurs" that can't evolve to survive, but I won't. Sears revolutionized American retail not once but twice, and made a lot of Americans immeasurably better off. But Sears built a great business for an America that no longer exists: eyes on the burgeoning suburbs, lives centered on cars, aesthetics relentlessly bourgeois. That business required a lot of investment in both business expertise and real estate that the company could not change, or shed, as fast as America changed around it. And there's no shame in that. Even the brightest stars eventually burn out.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor responsible for this story:
Philip Gray at philipgray@bloomberg.net

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”

bloomberg.com

[Glenn Petersen] Ailing Sears is a test of CEO Lampert's survival instinct Robert Reed Chicago T...

Glenn Petersen — 10/9/2016 4:42:12 PM

Ailing Sears is a test of CEO Lampert's survival instinct

Robert Reed
Chicago Tribune
October 9,2016

Eddie Lampert
Sears Holdings
______________________________

The holiday buying season is approaching and with it comes a package of questions about the fate of Sears, Kmart and company CEO Edward Lampert.

Financial and retail experts have long predicted catastrophe for this franchise, which has suffered from more reorganizations, store closings, deep cutbacks and fiscal pain than any business deserves. Sears hasn't found a long-term profitable core and critics argue that Lampert, a renowned hedge fund player who in 2013 became Sears Holdings Corp. CEO, should face the fact that his damaged retailer is a goner and get on with the funeral.

Yet this spreadsheet analysis may just be whistling in the dark because it doesn't account for one important human factor: Edward Lampert's unrelenting survival instinct.

Sears Holdings, Claire's Stores and Nine West Holdings are among seven chains at high risk of defaulting within a year as shoppers shift to online merchants and spend more on experiences, according to a Fitch Ratings study of retail bankruptcies.

The companies were named in a 114-page report Wednesday...

Sears Holdings, Claire's Stores and Nine West Holdings are among seven chains at high risk of defaulting within a year as shoppers shift to online merchants and spend more on experiences, according to a Fitch Ratings study of retail bankruptcies.

A case in point: In 2003, staying alive was literally Lampert's objective after being kidnapped by four masked men while he was leaving his Connecticut office. The harrowing experience reportedly ended 39 hours later after Lampert convinced his kidnappers the police were on their trail and it was in their interest to let him go. The four, who apparently were dumb enough to order pizza with Lampert's credit card, were soon caught, convicted and sent to jail.

Business is not life and death but I expect Lampert's survival instinct has to be in overdrive these days as Sears Holdings deals with its latest multidimensional crisis.

There's plenty going on, much of it worrisome: A recent quarterly loss of $395 million; the summer closure of 68 Kmart and 10 Sears stores and more expected; and a multibillion-dollar debt load even as the company quickly burns through more cash, according to Moody's Investors Service.

A recent industry report says some toy vendors are nervous about shipping to Sears and Kmart because of its financial situation, which could make for a very unhappy holiday sales season. (A corporate spokesman says the company has a strong relationship with vendors and plans to offer "the hottest toys, games" in its stores.)

Eddie Lampert, the hedge fund manager who runs Sears Holdings, is once again lining up financing for the money-losing retail chain.

Lampert's ESL Investments offered to lend Sears $300 million this month, and Sears accepted, the Hoffman Estates, Illinois-based company said in a statement Thursday....

What's more, the retailer's merchandising efforts and online outreach aren't connecting with enough buyers, especially younger shoppers, argues Howard Davidowitz of the New York-based retail research and investment banking house that bears his name.

"Every time there's an obituary, they lose another customer," Davidowitz said.

Considering these circumstances, a more conventional corporate executive would be tempted to cut and run or, at the very least, humbly bow to the conventional wisdom that time is running out.

On Jan. 28, the company and Lampert agreed to extend...

Edward Lampert, the hedge fund manager who's also chief executive and majority shareholder of Sears Holdings, plans to keep the top job at the Hoffman Estates-based retailer for a while, according to the company's proxy statement, filed Friday.

But that's not Lampert.

In his blog post on the Sears corporate website Monday, Lampert came out swinging by ridiculing recent reports that Kmart is going out of business as "false and exaggerated claims." In contrast, he talks about plans for making Kmart a "more fun, engaging place to shop".

Lampert, who declined to comment for this column, also boasts of customer prospects, saying the company's push into online retailing is on course, while adding that even if more stores are shuttered Sears Holdings remains among the country's biggest retail chains.

According to a Business Insider article citing local news reports and conversations with employees, Sears is closing 64 additional Kmart stores throughout the nation.

The stores will begin liquidation...

Fresh off the heels of a round of closures this year, Kmart is shuttering another slew of stores.

To address its financial issues, Sears already has unloaded the Lands' End clothing brand and spun off selected stores into a real estate investment trust.

A sale or licensing agreement of its respected Craftsman, Kenmore and DieHard brands may be in the wings. And the company is making moves to improve liquidity, including getting a $300 million credit line from ESL Partners, the hedge fund run by Lampert.

Of course, Lampert isn't being altruistic. Lampert and ESL own 50 percent of Sears Holdings stock, so what works for the company will benefit him.

Critics argue that his transformation plan is just a lot of hot air. Lampert is a gifted hedge fund manager but a weak store merchant, they contend.

Lampert, his hedge fund ESL Investments and related companies' recent purchases now put the total number of shares...

Sears Holdings CEO Edward Lampert now holds a majority stake in spun-off Sears Hometown and Outlet Stores, according to a Securities and Exchange Commission filing made on Thursday.

Based on his tenure, there's a ring of truth to that harsh assessment.

Yet, I'd maintain that before Lampert came on the scene, Sears and Kmart weren't setting the world on fire. Sears had devolved into a giant cluster of confusing big beige department stores and Kmart was on brink of going out of business and holding its own blue-light special.

Moreover, Sears Holdings isn't the only old-school chain getting beat up by the likes of Amazon and other internet sites that have revolutionized how we buy stuff.

Right now, Sears Holdings is in for the fight of its life.

And that begs the question: Can Edward Lampert's uncanny survival instinct save his retail giant from perishing?

chicagotribune.com

[Sr K] Seritage Growth Properties Class A (SRG) hit, and closed at, an all-time high of...

Sr K — 3/29/2016 6:51:36 PM

Seritage Growth Properties Class A (SRG) hit, and closed at, an all-time high of 50.94.

It goes ex-dividend tomorrow.

[Sr K] An 8-K filed today by SHLD gives data on the Seritage Growth Properties (SRG) RE...

Sr K — 7/13/2015 5:57:56 PM

An 8-K filed today by SHLD gives data on the Seritage Growth Properties (SRG) REIT and the rights offering.

archive.fast-edgar.com

From the Explanatory Note

The Rights Offering expired on July 2, 2015. According to reports from Computershare Trust Company, N.A., the subscription agent for the Rights Offering, the offering was 97.3% subscribed on a primary basis and 125.5% subscribed including oversubscriptions.

.

Term and Renewals

The Master Lease has an initial term of 10 years. Sears Holdings has three options for five-year renewals of the term and a final option for a four-year renewal. The Master Lease is a unitary, non-divisible lease as to all properties, with Sears Holdings’ obligations as to each property cross-defaulted with all obligations of Sears Holdings with respect to all other properties.

Rental Amounts and Escalators

The aggregate rent for all of the Acquired Properties is initially approximately $134 million. In each of the initial and first two renewal terms, after the first lease year, the annual rent will be increased by 2% per annum (cumulative and compounded) for each lease year over the rent for the immediately preceding lease year. For the third and fourth renewal options, rent for the renewal periods will be set at the commencement of the renewal period at a fair market rent determined based on a customary third-party appraisal process, taking into account all the terms of the Master Lease and other relevant factors, but in no event will the renewal rent be less than the rent payable in the immediately preceding lease year.

Seritage may at its election, for administrative, technical or other reasons (including facilitating sale or transfer of properties) from time to time separate and remove from the Master Lease any of the leased premises and cause Sears Holdings to enter into new leases for such premises. In such cases, the rent will be adjusted under the Master Lease to reflect the removal of such leased premises, and the new leases will be for the rent attributable to the removed premises, and for the remaining term and otherwise on the same terms and conditions as the Master Lease. If the lessor under any new leases is Sears Holdings or an affiliate, such new leases will be cross-defaulted with the Master Lease, but not otherwise.

-

SRG closed today at $37.44, down $.06. That is $7.86 more than the $29.58 exercise price per full share. The rights (SRGRT) gave the right to buy one-half share, or $3.93 per half-share, as of the close 7/13/2015.

The rights closed as high as $6.01 and as low as $2.65, and at $3.22 on their last trading day July 2.

[Glenn Petersen] Sears reborn: Spinoff company eyes Milwaukee market for 'store within a store' c...

Glenn Petersen — 5/28/2015 8:46:47 AM

Sears reborn: Spinoff company eyes Milwaukee market for 'store within a store' concept

Alison Bauter
Milwaukee Business Journal
May 26, 2015, 11:45am CDT Updated May 26, 2015, 3:48pm CDT

A "store within a store" concept meant to fill the gaps left by Sears closings could be coming to the Milwaukee market, with locations around southeast Wisconsin under consideration.

As Sears Holdings Corp. (Nasdaq: SHLD) shutters its big boxes, a spinoff is seeding the company's iconic appliances inside independent, local home improvement stores. The "store within a store" concept from Sears Hometown and Outlet Stores Inc. (Nasdaq: SHOS), which already has a location in Virocqua, could be coming to southeastern Wisconsin next. Area locations currently under consideration for the "store within a store" or Hometown concept include Racine, Mukwonago, Hartford, West Bend and Fond du lac, according to Ed Sosniak, Sears Hometown regional new store development manager.

Sears Hometown spun off from struggling Sears Holdings Corp. in late 2012. It's primarily focused on selling home appliances, hardware, tools and lawn/garden equipment through dealers and franchisees via its outlet stores and Sears Hometown and Hardware segment. In the past year, it has since opened its first eight "store within a store" concepts across the country, with three additional openings planned. The idea is to leverage extra square footage inside existing independent home improvement stores and dealerships to sell the home appliances and other goods.

Sears Holdings Corp., based in Hoffman Estates, Ill., operates Kmart and Sears, both of which have been closing across the country and in southeastern Wisconsin. The rise of online shopping and the decline of new home sales during the recession combined to put pressure on Sears' big box stores and deplete large home appliance sales. Most recently, Sears has closed its Bayshore Town Center anchor store in Glendale and its Regency Mall anchor in Racine.

Where those stores close, Sears Hometown hopes to fill a void in brand-name home appliances and other larger products that become harder to find in Sears' absence. As the housing market improves and new home sales increase, Sears Hometown director of market development Fred Riffle sees a corresponding release of "pent-up demand" for big-ticket appliances like stoves and refrigerators.

The concept is best-suited to local retail outlets who offer similar products (such as a flooring or furniture business), and have between 2,000 and 5,000 square feet to fill. Those independent retailers then offer brands such as Kenmore, Maytag, Whirlpool and GE, provided on consignment through Sears Hometown.

Meanwhile, malls like Bayshore and Regency are fighting to fill the vacant space left behind. Bayshore recently shared plans to redevelop Sears' space into a mix of retail and residential once its lease is up, and Regency is reportedly courting a sporting goods company to fill the vacancy.

bizjournals.com

[Sr K] Just the Facts–Our Pension Plan and Obligations April 19, 2015 by Rob Schries...

Sr K — 4/19/2015 3:41:02 PM

Just the Facts–Our Pension Plan and Obligations

April 19, 2015
by Rob Schriesheim

This past week, there was another in a continuing series of articles by a major publication that selectively uses certain facts (such as our 2014 pension plan return), ignores other facts (such as our asset allocation disclosures in our 10k) and adds speculation to the mix to find a negative interpretation for its conclusion. In this case, the article takes the fact that the SHC pension plan returned 1.5% in 2014 and speculates that it must be because of some sort of misplaced bet, such as exposure to oil or other commodity prices. This is false.

In fact, a review of our pension allocation over the past several years makes it clear that the primary source of our performance is that we have taken a much more conservative approach than many other pension plans. Two-thirds of our pension plan is invested in fixed income securities, with an average life of less than five years. We have chosen this allocation because we believe that our primary responsibility is to meet the plan’s obligations and not to gamble with our pensioners’ money.

Certainly, given the performance of equities over the past several years, any portfolio with a disproportionate exposure to equities or to longer term bonds, including many pension plans, would have had higher returns than our plan. That’s ok with us. Because we have been making such significant contributions to our plan annually, we want to minimize the risk of having to do it again, should equity markets falter or long term interest rates rise.

As we continue to contribute to our plan, bringing it to being fully funded over time, expect us to continue with this conservative posture. We will leave the comparative performance game to others.

Robert Schriesheim is EVP, Chief Financial Officer for Sears Holdings.

blog.searsholdings.com

The post referred to this in The Wall Street Journal:

DOW JONES NEWSWIRES
Poor Returns Weigh on Sears Pension Plan

Updated April 18, 2015 4:21 a.m. ET
By Suzanne KapnerThe problems at Sears don't end with its stores. The retailer also has to worry about its cash-draining pension plan. There, too, some of the damage has been self-inflicted.

[Sr K] SHC recognized with 2015 ESTAR Partner of the Year – Sustained Excellence Award ...

Sr K — 4/19/2015 3:36:55 PM

SHC recognized with 2015 ESTAR Partner of the Year – Sustained Excellence Award

Our team will be honored in Washington, D.C. on April 20, 2015 for our long-term commitment to energy efficiency.

April 6, 2015 by SHC staff

The U.S. Environmental Protection Agency (EPA) has recognized Sears Holdings with the 2015 ENERGY STAR Partner of the Year – Sustained Excellence Award for its continued leadership in protecting the environment through superior energy efficiency achievements. This year marks the sixth consecutive year that SHC has been awarded the ENERGY STAR Partner of the Year recognition in retail and the third consecutive year to achieve both Partner of the Year in energy management and the distinguished Sustained Excellence award in retail. Our longstanding efforts exemplify an ongoing commitment to leverage our integrated retail capabilities for maximum energy efficiency in the marketplace.

Gina McCarthy, EPA Administrator, stated, “Through their sustained participation with ENERGY STAR, Sears Holdings is helping Americans save money, save energy, and do their part to reduce our nation’s greenhouse gas emissions that fuel climate change. I applaud Sears Holdings for earning the EPA’s highest ENERGY STAR award, the 2015 Partner of the Year – Sustained Excellence Award, demonstrating a strong commitment to energy efficiency and to preserving a healthy planet for future generations.”

Our Chief Supply Chain Officer, Bill Hutchinson added, “We value our partnership with ENERGY STAR and are honored to receive the Partner of the Year Award. Sears Holdings remains committed to continuing our work to help reduce greenhouse gas emissions, increase energy efficiency and protect the environment through our operational excellence, Kenmore product offerings and partnerships with local utilities.”

Our team will be honored in Washington, D.C. on April 20, 2015 for our long-term commitment to energy efficiency. SHC has been partners with ENERGY STAR since 1998. Our accomplishments in 2014 included:

More at

blog.searsholdings.com

[Sr K] Chairman's Letter February 26, 2015 To our Shareholders, Associates and Member...

Sr K — 3/1/2015 10:58:14 PM

Chairman's Letter

February 26, 2015

To our Shareholders, Associates and Members,

The year 2014 was one of massive transformation. One after another, major American institutions sought to fundamentally change the way they interact with their customers, in most cases trying to catch up to new ways that people choose to access products and services. In most instances, these changes were puzzling to people who don't spend a lot of time focusing on what change looks like up close.

For Sears and Kmart, after years of work at becoming a fully integrated retailer that meets the needs of our members wherever, whenever and however they want to shop, we didn't slow down - we sped up. We're anticipating and adapting to the way members and customers shop, not by guessing what the next big thing might be, but by working to better understand the members we serve through data that allows us to know not only what but also why they buy and then creating experiences around that.

This isn't new for Sears. An article in the October 2014 issue of Harvard Business Review, " Sears Has Come Back from the Brink Before," detailed how Sears found its mail-order catalog business falling into crisis in the 1920s as America changed from a predominantly rural country and everything from cars to national radio advertising left Sears rudderless. Then Sears started using census data to anticipate where potential customers were moving; few if any others did this. Using this information, the first Sears store opened in Chicago in 1925. By the time suburbs started being built after World War II, Sears had become the icon for big retail and an anchor tenant in malls that were developed around the country.

Time and again, people have proclaimed our company all but dead. As I wrote in a blog post late last year, in 1988 our hometown business journal wrote a devastating 14,297-word eulogy for Sears. Virtually all of the companies that Sears was allegedly trailing back then are now gone and forgotten. Many others have merged or simply closed.

These old stories got it partially right. Had we not embarked on a course change; had we not, especially in recent years, started to creatively disrupt ourselves; Sears and Kmart would probably be no more than a treasured American memory.

Without the aggressive steps we have already taken to transform Sears Holdings from the predominantly brick-and-mortar retailer it once was to a best-in-class multi-channel integrated shopping experience for our members, we would be stuck on the same path that has claimed retailers like Circuit City, Borders, Radio Shack and others.

Instead, we're innovating and moving forward. Readers of past letters and my other blog posts know all about our efforts to transform not just turn around our business. The financial results certainly are not where we want them to be yet but we did see our performance trend improve in the third and fourth quarters of 2014. The percentage of our sales coming from Shop Your Way members is high and staying strong. Most importantly, in 2014 we gave ourselves the resources to dig deeper and fuel our ongoing transformation.

2014 IN REVIEW

We ended 2014 on an upbeat note. Our fourth quarter results improved materially from last year, continuing the pattern that we saw in the third quarter and reversing the negative trends from the first half of the year. We are primarily focused on profitability instead of revenues, market share and other metrics which relate to but don’t necessarily drive profit. This means we will be making material changes in some of the underlying business models that have been challenged for many years, such as Consumer Electronics, where we have experienced significant losses since 2010. We intend to continue to operate in most of these businesses, but with a very different approach to serving our members than in the past. This change in approach may dampen our sales as we make the transition but it should also reduce the risk of material profit declines.

We believe that our focus on profitability will contribute to a meaningful improvement in performance in 2015 and beyond, and we are seeing early signs of this progress as part of our most recent quarterly results. In the fourth quarter of fiscal 2014 we had domestic Adjusted EBITDA of $125 million, which represents an improvement of $217 million versus the fourth quarter of 2013. This improvement was largely driven by an increase of $71 million in comparable gross margin dollars combined with expense reductions of $239 million.

We will continue to take actions to increase our financial flexibility to meet all of our obligations while funding our transformation. To this end, in fiscal 2014 we raised approximately $2.3 billion from a variety of asset sale and financing activities, including the spinoff of Lands' End, the sale of a significant portion of our stake in Sears Canada and the issuance of Notes and Warrants in November.

A closer look at some of the revenue figures illustrates why we think it's more important to focus on profitability. Revenue for the fourth quarter was down approximately $2.5 billion year-over-year but only a percentage of that was tied to declines in comp store performance ($313 million). Most of the decline in revenue, about $2.1 billion, comes from assets we sold, spun off or closed. In October, we successfully completed a rights offering that means Sears Canada's revenue (and operating expenses) will no longer appear on Sears Holdings’ financial statements. In April, we successfully completed the spin-off of our Lands' End business to shareholders. Throughout the year we closed underperforming stores, many of which had been operating at significant losses for far too long.

My team and I wrote more about these moves here, here and here, and many of you reading this letter now own shares of Sears Canada and Lands' End that were distributed through these actions. Making use of these assets in different ways than we have in the past was, we think, the right way to allow us to focus on and invest in Sears Holdings' transformation.

Sears Holdings borrowed $400 million in September to provide additional liquidity through the holidays. This loan was secured by only 25 of our approximately 1,700 properties. Much was made about the fact that it was a secured loan (we explained why here) but this enabled Sears Holdings to borrow money at far cheaper rates than it otherwise could have. In fact, it allowed Sears Holdings additional time to generate longer-term liquidity by monetizing its Sears Canada stake and to put in place a longer-term debt offering (the Notes and Warrants), proactively highlighting to our vendors that we were addressing their concerns about liquidity through the holidays.

EXPLORATION OF A REIT

We are continuing our efforts to develop Sears Holdings as a membership company, without the significant asset intensity of its traditional retail business. To this end, we announced in November that we have been exploring the formation of a Real Estate Investment Trust (REIT) to purchase some of our properties and to manage them as a pure real estate company. While not yet final, we are proceeding towards its formation and separation which is projected to occur in the first half of this year. We are currently targeting between 200 and 300 Sears stores to be sold to the REIT with expected proceeds to Sears Holdings in excess of $2 billion.

We anticipate that the REIT will continue and accelerate many of the activities that we have been pursuing over the past several years. Specifically, we have been working to partner with other retailers and mall owners to enable us to reduce the operating footprint of our stores to smaller but still significant spaces, while leasing part of the store to retailers who will bring increased foot traffic and relevance to our locations.

A completion of a REIT transaction has the potential to significantly transform our capital structure toward one that is more flexible, long-term oriented and less dependent on inventory and receivables. We would hope to maintain a long-term presence in each location while allowing Sears Holdings to still have the flexibility to make strategic business decisions should those locations prove unprofitable for Sears Holdings in the future. We believe that many locations can be repurposed with or without Sears Holdings as an anchor, which would give the REIT the potential for value creation as well as downside protection if Sears Holdings were unable to continue to operate certain stores profitably.

OTHER WAYS WE'RE USING OUR STORES DIFFERENTLY

We have highlighted specific examples of how we are reconfiguring our stores so that observers will better understand our plans. In fact, we have received positive feedback from investors, local communities, members and our own associates as we upgrade our sites with partners such as Whole Foods, Nordstrom Rack, DICK's Sporting Goods, Forever 21 and Primark. Each of these retailers has its own attributes and requirements, and we have demonstrated flexibility and creativity in working with each of them to forge deals that work for both of us. They form the foundation for similar deals in the future and are part of how Sears Holdings is driving the innovation and modernization of the U.S. mall industry.

OUR CONTINUAL INNOVATION

As longtime readers of these letters know, Sears Holdings has been a trailblazer for testing out new ideas to both respond to and influence changes in the way customers are shopping in light of new digital, mobile and social technologies. We continued to roll out more industry-leading innovations in 2014.

Shop Your Way. The Shop Your Way program is unlocking value from our most engaged members - those at the center of our transformation who make the most frequent trips to our stores and web sites. Shop Your Way helps them save time and money and rewards them for their loyalty. While there remains much work to be done, there are encouraging signs that indicate that we are increasing the value of our most loyal segment of members. Our best members, those who visit our stores at least four times every 12 months, are increasing their business with us in terms of both sales and margin dollars.

Mobile Integration. The investments and proactive actions that we started making a decade ago to build our Integrated Retail programs have allowed us to stay ahead of the curve and better serve our members. The industry as a whole has seen tremendous growth in the use of mobile in the shopping environment and we have strived to meet this demand for our members. In 2014 alone, we saw large increases in the usage of our mobile platforms, which makes our further development of these programs so imperative.

Ship-to-Store & Buy Online/Pickup in Store Expansion. Some 14 years ago, we were one of the first few retailers to offer buy online, pickup in store, a capability that continues to be one of our members' favorites and accounts for a significant portion of our online sales. This year, we expanded our ship-to-store programs to include returns as well as in-vehicle pick-ups, returns and exchanges. Members love having packages delivered right to their cars in five minutes or less. We also expanded the buy online, pick-up in store to allow pick-up across both our Sears and Kmart formats, so now our members can order from Sears.com and pick up at a Kmart location or vice versa, which gives our members more convenient pick up options.

Digital Kiosks, Signs and Check Outs. Our improvements aren’t just being seen online, they are also in stores across the country as we continue to make technological investments to provide more choices and convenience to our members. With our in-store kiosks, members have access to over 120 million items, so if they can't find what they're looking for in the store they can have it shipped to their home for free. We have replaced paper signs with over 100,000 digital signs across 300 Sears stores. These signs provide our members with additional product information, videos, consumer information and reviews, putting the information they need literally right at their fingertips. In over 500 Sears stores, when shoppers are ready to make a purchase, our associates can either complete the checkout on their mobile device or if the member isn't ready to purchase, they can send them a digital recap of their store visit.

OUR PEOPLE

Our associates continue to be a big strength at Sears Holdings. Whether it is the user experience designers and engineers inventing new ways for members to interact with us across our integrated platforms or an in-store associate who greets a customer and helps them find what they need, our associates are working every day to delight our members.

You don't have to take my word for it. Our teams' innovative strategies for moving Sears and Kmart forward are being recognized across a multitude of media.

For instance, Sears has one of the highest Digital IQs of any department store (ranked in the L2 Digital IQ Index: Department Store Study) due to our constantly expanding site featuring product videos, sizing details, refined search options and even a geo-location enabled store finder that provides details like whether or not a certain location has in-store pickup. This report also found that Sears was ranked as one of the most searched-for brands, even ahead of upmarket competitors like Nordstrom. Thanks to our team, Sears was also a Silver winner in the Channel Innovation Awards for achieving cross-channel success in today's challenging retail environment.

ALL OF THIS IS HAPPENING IN A CONTEXT OF OTHER INDUSTRIES IN TRANSITION

As I noted at the beginning of this letter, fundamental transformations aren't just affecting the retail sector. As 2015 began, we saw industries from media to banking to professional sports struggling to engage audiences in deeply different ways than in the past.

For more than a decade, we've read story after story about the explosive growth of bank branches pushing out small businesses that can't compete with premium rents. Now, the rising tide is suddenly falling fast. U.S. banks shuttered a record number of branches last year. Net closings totaled almost 1,600 nationwide in 2014, following almost as many in 2013. Just this week, one of the nation's major banks announced plans to close hundreds more branches in the next two years, some five percent of their total locations.

It's easy to say the industry should have seen the changes coming. However, it was the banks themselves that created the online and mobile options Americans increasingly prefer for everything from paying rent to splitting a restaurant bill to depositing checks - in the rare cases they still get paper checks.

Still, the "Super Bowl" for second-guessing was clearly, undeniably, this year's actual Super Bowl. Millions of words and billions of pixels were electrified about how plays were called, but even that didn't drown out the second-guessing about how people saw the plays. The Super Bowl livestream, four years after its 2012 debut, is still painfully slow - showing completions and interceptions well after the conventional broadcast.

TV sports in general succeed where other kinds of broadcasts no longer do. Because people want to see the action as it happens, viewers don't record the broadcast and fast-forward through ads. Traditional brick-and-mortar retail would be in great shape if every day were December 24. Broadcast television would be stronger than ever if every day were Super Bowl Sunday. But it isn't.

NBC and the Super Bowl's producers know that nothing lasts forever and eventually the way people watch live sports will be upended by technology. They've made the right choice to plan for that day now and maybe even learn some things from high-volume and high-profile mistakes that they can use on the other 364 days of the year. They're playing offense, not defense and I admire them for that.

What are the alternatives? You can't be nostalgic; you have to plan for a future that most people may not even fully see yet. Leaders in other industries are diving deep into the same kind of mission change in light of digital disruption that we at Sears Holdings have been working on for years. The key for all of them, as for us, is to be able to see beyond what’s always been.

CONCLUSION

Transforming from a series of brick-and-mortar locations that sell products into an integrated retailer that builds relationships with our members and delivers seamless experiences hasn't been easy.

We've logged some successes and experienced setbacks. We've come far and are seeing signs of progress, but have a long way to go. Meanwhile, the actions we've taken to transform our balance sheet have helped us fund the transformation of our business model.

Sentimentality or inaction are not options anymore. Our only option is to become better equipped to support, anticipate and exceed our members' needs.

As noted in my letter last year, our communications approach has evolved this year with our SHC Speakscorporate blog and my own personal blog allowing us to explain our thinking and our actions in an unfiltered manner. We have also expanded our quarterly reporting in an attempt to clarify some of the complexity around our financial results and to better explain our performance. We remain focused on the long-term transformation of Sears Holdings but we recognize that some observers of the company have been confused by or have misunderstood certain aspects of our financial results and our actions. This has led to incomplete or misleading reports, which have had damaging consequences from time to time with our various constituencies. We have received numerous compliments for the extent of our disclosure and the helpfulness that our blog posts have given to those who are impacted by our operations.

Along with this letter, please take a few moments to review the slide presentation and listen to the prepared remarks we've posted at searsholdings.com for the fourth quarter and full year 2014 results.

Finally, I again want to thank our associates who work every day to create products, services and experiences that our members love, and our shareholders who have continued to support our transformation.

Respectfully,

Edward S. Lampert