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November 20, 2004
Goodbye Sears
Wall Street (investors) cheered the sale of Sears & Roebuck to KMart this week. Ordinary Joe should look forward to seeing the Craftsman Tools being sold at Home Depot. This is a money deal and everybody seems to understand that perfectly.
When I was a kid, I believed that American Corporations were these giant, permanent immovable objects. I have learned that they are a great deal more dynamic than I ever imagined. In fact, they come and they go. This particular move is something of a surprise. While my stock market predictions are just about right (Dow 11,000; NASDAQ 2,100) for the year, predicting what will happen to businesses is literally anybody's guess.
Well I don't care what anybody says, Sears is going down. The guys at Kudlow & Cramer were just salivating over the deal. US News says:
At the Manhattan meeting, hedge-fund manager and self-proclaimed Warren Buffett fan Edward Lampert, who owns 15 percent of Sears and will serve as chairman of the combo, conceded that the deal was an "enormous undertaking." But he also expressed confidence that a strategy of cutting costs, mixing the pair's most successful product lines--Martha Stewart Everyday from Kmart, Kenmore and Craftsman from Sears--and converting several hundred Kmarts situated in more upscale demographic areas into Sears stores would work.
I don't buy it. They saliva was over real estate. That's right. And I think we're just about at that point where the American people have gotten so silly that we need to understand the value of land again. Too much high falutin' going around for my taste, and so we need a little bit of interest rate creep and to see the price of gold break 500 bucks. I say Lampert is valuable as Sears' very own Carl Ichan. He doesn't know snot about retail and will not in a million years beat Wal-Mart prices or Target savvy. So he'll do a bunch of real estate transactions, change what malls look like, and carve up Sears into little pieces with KMart's cash.
Marketing people are seing the light of a new day. People don't care about brands as much any longer. We don't care if it's a Kenmore washer, we care that the damn thing doesn't shake the whole house in the spin cycle. Quality is divorced from brands, and people buy 50 dollar DVD players, and throwaway 'burner' cell phones. Comprende? We don't 'Trust Sears' we just shop there.
Mark my words, KMart is going bye-bye and Sears is next. Only shareholders will be happy. The rest of us will be at Wal-Mart & Target.
Posted by mbowen at November 20, 2004 05:08 PM
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