Sears' Downfall: Mergers and Mismanagement

Intro “My dad’s idea of a good time is to go to Sears and walk around,” said Jay Leno. That’s what people thought of sears back in the day. Sears was the retailer you would tell your friends where you got your recent tool, or appliance. Now a days you will try to find your closest Sears via Google and it will take you to a mall that no longer has a Sears in it. They are now going out of style like some of their merchandise that they carry. Throughout this paper I am going to talk about 2 key decisions that Sears made and their outcomes. The first key decision is going to be the merger between Sears and K-Mart in 2005. How it got started and what happened with that merger. The second key decision I will talk about is the way Sears is trying

You wanted to combine both of them to make a super human of the NBA, while everything looks great by just the names but you wouldn’t be able to combine both of them to make a Lebron James in his prime. That’s what the Sears and K-Mart merger was, two great names but at the time they were two struggling companies. K-Mart acquired Sears on March 24th, 2005, and at the time of the merger Sears was the nations fourth largest retailer behind Wal-Mart, Home Depot and Target. K-Mart was ranked at seventh right behind Lowes and Best Buy (Article 1). The deal was reported to be worth $11 billion dollars and they would form the Sears Holdings Corporation. At the time of the merger Edward Lampert , who was the CEO of K-Mart at the time, orchestrated the merger and had a vision of Sears Holding Corp to be unrecognizable in 30

This move came after Kmart proposed to buy Sears Roebuck for about $11 Billion. As per the terms of the transaction, Kmart shareholders received one share of the Sears Holding for each Kmart Stock (Article 13). At the time of the merger both companies were both top 10 retail stores, so they were hoping with the merger that they would become the top retailer in the nation. But after the merger they ran into some speed bumps. As Joe Clayton, president/CEO of Sirius Satellite “The Major challenge will be to address their different customer bases. They will probably have to amalgamate their operations. Maybe come up with a different merchandising Strategy” (Article 1). Analyst were also thinking with the merger that they would both go towards the IT direction of Sears. Rob Garf, an analyst at AMR Research Inc. said it would make sense for the retailers to head in the IT directions of Sears. “The combined entity needs to continue the momentum that Sears has gained over the last couple of years,” Garf said. “It’s important for them to not slow that process down” (Article