It’s 4:30 p.m. on a Wednesday, and the home and garden section of the Sears store at the Mall of America is abandoned.
For minutes at a time, there is no human presence. No customers admiring an ancient Nordic Track (on sale for $399.99, down from $799.99), no salesmen trying to close a deal on patio furniture. Finally a goateed young man sipping a Mountain Dew enters through a door leading to the parking lot. He doesn’t break stride while zipping past a sad little fountain on his way through the store, out into the mall proper.
Sears is still among the pillars of the MOA, a three-story department store with a corner location. There since the mall’s opening weekend in 1992, Sears joins Macy’s and Nordstrom as the shopping landmark’s “anchor stores.”
If this Sears is anchoring anything, it’s a ghost ship. In the apparently self-service shoe section, piles of tried-on and rejected footwear linger next to shelves.
A young couple conspicuously inspecting a mattress goes unnoticed. The mattress is on closeout: Once $4,439.99, it was marked down to $1,264.40. Then that number was crossed out with a marker, and $1,130.40 hand-written underneath.
On the positively spooky third floor, one clearance shelf holds airbrush pens, mismatched plastic cups, and each of the following: a “one-second slicer,” a ceramic Santa, kitchen “cleaning tonic,” a dinner plate... and a receipt, for $5.99, left there by someone who’d bought two large fry orders from the food court Burger King. Ten days earlier.
There’s something almost tragic about seeing a once-gleaming commercial landmark in a state of atrophy.
And here, of all places, at the American mecca of capitalism — not far from where Richard Sears, a railroad man based out of Redwood Falls, bought his first box of watches in 1886 and tried selling them off to his fellow station agents. Good luck to anyone trying to buy a watch at the Mall of America Sears; there’s no one at the counter.
How did this happen? By design.
Back in 2005, Sears was merged with Kmart, its larger competitor, to create Sears Holdings Corporation. The new mega-conglomerate was headed by Eddie Lampert, a former Goldman Sachs whiz kid who, at 26, started his own firm. At ESL (Lampert’s initials), the investor’s cold, cynical approach made him few friends — and a few billion dollars. Lampert had famously been labeled “the next Warren Buffet,” and was once declared the richest man in all of blue-blooded Connecticut.
Lampert’s move to middle-brow retail was a curious one: a Wall Street recluse, trying to teach Sears how to beat Home Depot.
A dozen years later, it’s clear Lampert saw just another investment he could wring dry.
Sears’ decay was foreshadowed in a 2007 letter, when Lampert told investors the company wouldn’t “upgrade our existing [stores] just because our competitors do.” (Lampert once dismissed better lighting, which explains why every Kmart feels like a frog tank.)
From 2005 through 2009, Sears spent far less than competitors on its stores, about 1 percent of company earnings, less than a third of Target’s 3.5 percent, and easily the lowest among 13 major American retailers.
Sears focused on what Lampert knows: stocks, spending an obscene $6 billion on buy-backs to goose the ticker price. Needless to say, this did little to make the Mall of America Sears any more inviting.
Or profitable. In an annual SEC filing made public last month, Sears Holdings disclosed there is “substantial doubt” about Sears “as a going concern.” That’s investor-speak for, “Looks like this ghost ship’s finally going down.”
In late March, days after that filing went public, Lampert bought even more Sears stock, and the company’s second-biggest shareholder also boosted his investment. Combined, the two now have about three-quarters of Sears Holdings.
Do they have a secret plan to sell more Joe Boxer shirts?
Don’t bet on it. Lampert is strip-mining Sears for available assets. The decent bits can be sold: In January, the Craftsman Tools brand went for $900 million.
The good stuff, Lampert can keep for himself. That means real estate. A spin-off trust called Seritage Growth Properties (controlling investor: one Eddie Lampert) bought 235 of Sears’ best properties in 2015. That is, Lampert’s company sold stores to Lampert’s trust, which is leasing them back to the company.
He’s also on both sides of recent debt deals. ESL has floated Sears more than $1 billion in secured loans. Lampert’s investment fund is collecting interest (!) on that debt, and if (more like when) Sears goes bankrupt, he’ll get his money back first — before, for example, Sears pays out the $2 billion worth of pensions it owes.
In other words, Lampert’s doing what guys like him do. He bet big, and tried making money multiply without spending any. Before his bet lost, he hedged. Lampert will come out just fine.
We can’t say the same for the 175,000 or so Sears Holdings employees, who should follow their bosses’ lead: Stop stocking shelves, and start getting your finances in order.
Interested buyers can make an offer to buy or lease any of Sears’ or Kmart’s 1,700-some stores through the Sears Holdings real estate website, which promises “a portfolio of retail locations second to none.” Those include 30 store sites in Minnesota, including the three-story museum gathering dust at the Mall of America.
Someone should make an offer. They could at least do the decent thing and turn off the lights.
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