Schadenfreude: Reposting A 2011 Ship Service On Sears
I posted on Sears inwards 2011.
They finally filed bankruptcy.
I am surprised it took that long.
Here though is the post again. It reads okay.
----
We receive got been curt Sears Holdings, publicly, albeit inwards small-scale quantity. Being summertime inwards Commonwealth of Australia I did non fifty-fifty human face at the marketplace position for the in conclusion dyad of days - but got into run for to a greater extent than or less congratulatory emails every bit Sears stock is off really difficult on an announcement of genuinely awful sales, the closure of 100 to 120 stores in addition to $1.6 to $2.4 billion of non-cash charges. (More nigh the charges afterward on.)
I human face pretty smart putting a Sears curt on inwards Nov - in addition to kudos is gratefully accepted but undeserved. I was curt Sears at my former problem solid when the Eddie Lambert controlled K-Mart took them out for considerably to a greater extent than than they were worth. It was non the solely fourth dimension that happened to me - but multiple stabs don't ho-hum the pain. I would gladly swap kudos for a refund of my hence clients' money.*
The premise for owning Sears was belongings liquidation. The companionship owned many of its sites - sometimes on mass at depression historic values reflecting the company's long in addition to i time glorious history. Eddie Lambert in addition to his merry-men were going to extract that value through selective shop closures in addition to super-profitable liquidation. Sears was an awful retailer (there was footling dubiety nigh that) but it was - they thought - a expert belongings play.
My view: owning Sears every bit a belongings play is a demonstration of the arrogance in addition to breathtaking naivete of much that passes on Wall Street. Sears Holdings has over 300 chiliad employees. I don't know how you lot successfully liquidate a concern integrated amongst that many lives. I don't know of anyone who has ever successfully liquidated a concern amongst that many employees.** I am non sure it tin travel done in addition to it sure enough can't travel done past times someone amongst my skill-set (highly analytical, might to spy value or value traps but no people management science in addition to non much tact).
The thought that Sears was going to travel managed/liquidated past times a bunch of hedge fund guys (people similar me) good - that was comical.
Just to stress the holler for for my fund managing director friends who read accounts in addition to receive got my skills (but similar me are oftentimes disconnected from the businesses they invest in) I volition dry soil the obvious. The employees are living breathing people in addition to every bit you lot line the concern apart the way you lot process those people in addition to how they recall nigh you lot (and deport towards you) are critical to whatever value you lot extract inwards liquidation. Someone has to human face these people inwards the optic in addition to tell them they don't receive got a job. And someone has to pick-and-choose which people to burn in addition to which to retain. And they receive got to practise this without destroying much of the value extracted along the way. They receive got to liquidate the problem solid inwards such a way that the value accrues to the liquidators in addition to non to the people who are beingness screwed.
I don't tending what you lot recall of the morality of that. The reality of that is that it was ever going to travel difficult - peradventure really hard.***
We are nigh to uncovering out how hard. Sears is going to unopen 100 to 120 stores (it is vague nigh the number) in addition to burn many employees. But they receive got non worked out which employees or fifty-fifty which stores. Not to sound ghoulish - but my gauge is that this is going to travel considerably harder than the "Sears spokesman" makes it sound. And if they can't practise 120 stores without problem hence the master copy Sears liquidation premise was insane. This is a representative of Wall Street fantasy coming together reality: eventually reality wins.
The charges in addition to reality
The large (non-cash!) charges deserve mention. This is from the Sears release:
The reality is unchanged: when you lot recall of the 1950s you lot recall of Sears. Sears was (in Main Street reality) irrelevant a decade ago. The Wall Street fantasy took a footling longer to end.
John
*(A annotation nigh Schadenfreude.) The take-over of the former Sears past times the Eddie Lambert controlled K-Mart was the mo worst twenty-four hours of my career. The worst twenty-four hours was when Fred Goodwin's Royal Bank of Scotland purchased Charter One Financial. When I started the weblog i of the top dog goals was to piece out simply how atrocious Sir Fred Goodwin (the hence CEO of Royal Bank of Scotland) was. The fourth post on this blog was the outset of my "Sir Fred Goodwin expiry watch". I enjoyed watching him in addition to his banking concern come upwards apart. But I should non receive got enjoyed it. Schadenfreude is non an attractive personality feature in addition to the collapse of RBS has caused existent hurting to a lot of innocent parties. And a Schadenfreudegasm - good that simply strikes me every bit unreasonably indulgent. After all my clients lost coin - in addition to I should in addition to would but cannot swap whatever pleasance I had for a refund of their losses.
This fourth dimension though I am simply accepting the Schadenfreude. My customer are making coin in addition to I receive got no argue to experience guilty nigh that. Moreover I don't receive got to burn those employees. Unlike Royal Bank of Scotland (which Sir Fred destroyed) Sears employees were doomed anyway.
**. It is worth mentioning the GM example. GM was salvaged through bankruptcy amongst a dyad of hundred chiliad employees. But those employees were specially trapped, the shareholders were wiped out in addition to the Government contributed considerable money. That is what a "successful" transition for a concern amongst that many employees looks like.
***. (Politics, employees in addition to realism). I am a haemorrhage optic left-winger in addition to naturally experience a footling paternalistic to the employees beingness fired. However you lot don't postulate to travel a haemorrhage optic lefty to concur amongst my analysis. Influenza A virus subtype H5N1 realist volition tell that when you lot receive got 300 chiliad employees your relation to them is going to travel critical inwards running your business. Employees are "stakeholders" fifty-fifty if your solely (moral) criteria is "shareholder value". Realism over politics is a meliorate ground for investment.
They finally filed bankruptcy.
I am surprised it took that long.
Here though is the post again. It reads okay.
----
We receive got been curt Sears Holdings, publicly, albeit inwards small-scale quantity. Being summertime inwards Commonwealth of Australia I did non fifty-fifty human face at the marketplace position for the in conclusion dyad of days - but got into run for to a greater extent than or less congratulatory emails every bit Sears stock is off really difficult on an announcement of genuinely awful sales, the closure of 100 to 120 stores in addition to $1.6 to $2.4 billion of non-cash charges. (More nigh the charges afterward on.)
I human face pretty smart putting a Sears curt on inwards Nov - in addition to kudos is gratefully accepted but undeserved. I was curt Sears at my former problem solid when the Eddie Lambert controlled K-Mart took them out for considerably to a greater extent than than they were worth. It was non the solely fourth dimension that happened to me - but multiple stabs don't ho-hum the pain. I would gladly swap kudos for a refund of my hence clients' money.*
The premise for owning Sears was belongings liquidation. The companionship owned many of its sites - sometimes on mass at depression historic values reflecting the company's long in addition to i time glorious history. Eddie Lambert in addition to his merry-men were going to extract that value through selective shop closures in addition to super-profitable liquidation. Sears was an awful retailer (there was footling dubiety nigh that) but it was - they thought - a expert belongings play.
My view: owning Sears every bit a belongings play is a demonstration of the arrogance in addition to breathtaking naivete of much that passes on Wall Street. Sears Holdings has over 300 chiliad employees. I don't know how you lot successfully liquidate a concern integrated amongst that many lives. I don't know of anyone who has ever successfully liquidated a concern amongst that many employees.** I am non sure it tin travel done in addition to it sure enough can't travel done past times someone amongst my skill-set (highly analytical, might to spy value or value traps but no people management science in addition to non much tact).
The thought that Sears was going to travel managed/liquidated past times a bunch of hedge fund guys (people similar me) good - that was comical.
Just to stress the holler for for my fund managing director friends who read accounts in addition to receive got my skills (but similar me are oftentimes disconnected from the businesses they invest in) I volition dry soil the obvious. The employees are living breathing people in addition to every bit you lot line the concern apart the way you lot process those people in addition to how they recall nigh you lot (and deport towards you) are critical to whatever value you lot extract inwards liquidation. Someone has to human face these people inwards the optic in addition to tell them they don't receive got a job. And someone has to pick-and-choose which people to burn in addition to which to retain. And they receive got to practise this without destroying much of the value extracted along the way. They receive got to liquidate the problem solid inwards such a way that the value accrues to the liquidators in addition to non to the people who are beingness screwed.
I don't tending what you lot recall of the morality of that. The reality of that is that it was ever going to travel difficult - peradventure really hard.***
We are nigh to uncovering out how hard. Sears is going to unopen 100 to 120 stores (it is vague nigh the number) in addition to burn many employees. But they receive got non worked out which employees or fifty-fifty which stores. Not to sound ghoulish - but my gauge is that this is going to travel considerably harder than the "Sears spokesman" makes it sound. And if they can't practise 120 stores without problem hence the master copy Sears liquidation premise was insane. This is a representative of Wall Street fantasy coming together reality: eventually reality wins.
The charges in addition to reality
The large (non-cash!) charges deserve mention. This is from the Sears release:
[We Sears] human face that nosotros volition tape inwards the 4th quarter a non-cash accuse related to a valuation allowance on sure deferred taxation assets of $1.6 to $1.8 billionYou know what that means. It agency that you lot should non human face to earn that lucre inwards the future. It is the admission from the Eddie Lambert controlled Sears that the fantasy is over.
The reality is unchanged: when you lot recall of the 1950s you lot recall of Sears. Sears was (in Main Street reality) irrelevant a decade ago. The Wall Street fantasy took a footling longer to end.
John
*(A annotation nigh Schadenfreude.) The take-over of the former Sears past times the Eddie Lambert controlled K-Mart was the mo worst twenty-four hours of my career. The worst twenty-four hours was when Fred Goodwin's Royal Bank of Scotland purchased Charter One Financial. When I started the weblog i of the top dog goals was to piece out simply how atrocious Sir Fred Goodwin (the hence CEO of Royal Bank of Scotland) was. The fourth post on this blog was the outset of my "Sir Fred Goodwin expiry watch". I enjoyed watching him in addition to his banking concern come upwards apart. But I should non receive got enjoyed it. Schadenfreude is non an attractive personality feature in addition to the collapse of RBS has caused existent hurting to a lot of innocent parties. And a Schadenfreudegasm - good that simply strikes me every bit unreasonably indulgent. After all my clients lost coin - in addition to I should in addition to would but cannot swap whatever pleasance I had for a refund of their losses.
This fourth dimension though I am simply accepting the Schadenfreude. My customer are making coin in addition to I receive got no argue to experience guilty nigh that. Moreover I don't receive got to burn those employees. Unlike Royal Bank of Scotland (which Sir Fred destroyed) Sears employees were doomed anyway.
**. It is worth mentioning the GM example. GM was salvaged through bankruptcy amongst a dyad of hundred chiliad employees. But those employees were specially trapped, the shareholders were wiped out in addition to the Government contributed considerable money. That is what a "successful" transition for a concern amongst that many employees looks like.
***. (Politics, employees in addition to realism). I am a haemorrhage optic left-winger in addition to naturally experience a footling paternalistic to the employees beingness fired. However you lot don't postulate to travel a haemorrhage optic lefty to concur amongst my analysis. Influenza A virus subtype H5N1 realist volition tell that when you lot receive got 300 chiliad employees your relation to them is going to travel critical inwards running your business. Employees are "stakeholders" fifty-fifty if your solely (moral) criteria is "shareholder value". Realism over politics is a meliorate ground for investment.
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