Sears

History

19th century: Beginnings

Richard Warren Sears was born in 1863 in Stewartville, Minnesota, to a wealthy family which moved to nearby Spring Valley. In 1879, his father died shortly after losing the family fortune in a speculative stock deal. Sears moved across the state to work as a railroad station agent in North Redwood, then Minneapolis.

While he was in North Redwood, a jeweler refused delivery on a shipment of watches. Sears purchased them and sold them at a low price to the station agents, making a profit. He started a mail-order watch business in Minneapolis in 1886, calling it the R.W. Sears Watch Company. That year, he met Alvah Curtis Roebuck, a watch repairman. In 1887, Sears and Roebuck relocated the business to Chicago, and the company published Richard Sears's first mail-order catalog, offering watches, diamonds, and jewelry.

In 1889, Sears sold his business for $100,000 ($3.2 million in 2024 dollars) and relocated to Iowa, planning to be a rural banker. He returned to Chicago in 1892 and established a new mail-order firm, again selling watches and jewelry, with Roebuck as his partner, operating as the A. C. Roebuck watch company. On September 16, 1893, they renamed the company Sears, Roebuck, and Co. and began to diversify the product lines offered in their catalogs.

By 1894, the Sears catalog had grown to 322 pages, including many new items, such as sewing machines, bicycles, sporting goods and automobiles (later produced, from 1905 to 1915, by Lincoln Motor Car Works of Chicago [no relation to the current Ford line]). By 1895, the company was producing a 532-page catalog. Sales were over $400,000 ($12 million in 2024 dollars) in 1893 and over $750,000 ($25 million in 2024 dollars) two years later. By 1896, dolls, stoves, and groceries were added to the catalog.

Despite the strong and growing sales, the national Panic of 1893 led to a full-scale economic depression, causing a cash squeeze and large quantities of unsold merchandise by 1895. Roebuck decided to quit, returning later in a publicity role. Sears offered Roebuck's half of the company to Chicago businessman Aaron Nusbaum, who in turn brought in his brother-in-law Julius Rosenwald, to whom Sears owed money. In August 1895, they bought Roebuck's half of the company for $75,000 ($2.5 million in 2024 dollars), and that month the company was reincorporated in Illinois with a capital stock of $150,000 ($4.9 million in 2024 dollars). The transaction was handled by Albert Henry Loeb of Chicago law firm Loeb & Adler (now Arnstein & Lehr); copies of the transaction are still displayed on the firm's walls.

Early 20th century

Sears and Rosenwald got along well with each other, but not with Nusbaum; they bought his interest in the firm for $1.3 million in 1903 ($47 million in 2024 dollars). Rosenwald brought to the mail-order firm a rational management philosophy and diversified product lines: dry goods, consumer durables, drugs, hardware, furniture, and nearly anything else a farm household could desire.

Sales continued to proliferate, and the prosperity of the company and their vision for more significant expansion led Sears and Rosenwald to take the company public in 1906, with a stock placement of $40 million ($1 billion in 2024 dollars). They had to incorporate a new company to bring the operation public; Sears and Rosenwald established Sears, Roebuck and Company with the legal name Sears, Roebuck and Co., in the state of New York, which effectively replaced the original company. The current company inherits the history of the old company, celebrating the original 1892 incorporation, rather than the 1906 revision, as the start of the company.

Sears's successful 1906 initial public offering (IPO) marks the first major retail IPO in American financial history and represented a coming of age, financially, of the consumer sector. The company traded under the ticker symbol S and was a component of the Dow Jones Industrial Average from 1924 to 1999.

In 1906, Sears opened its catalog plant and the Sears Merchandise Building Tower in Chicago's West Side. The building was the anchor of what would become the massive 40-acre (16 ha) Sears, Roebuck and Company Complex of offices, laboratories, and mail-order operations at Homan Avenue and Arthington Street. The complex served as corporate headquarters until 1973 when the Sears Tower was completed and served as the base of the mail-order catalog business until 1995.

By 1907, under Rosenwald's leadership as vice president and treasurer, annual sales of the company climbed to roughly $50 million ($1.2 billion in 2024 dollars). Sears resigned from the presidency in 1908 due to declining health, with Rosenwald named president and chairman of the board and taking on full control.

In 1910, Sears acquired the David Bradley Plow company. This acquisition would lead to the manufacturing of riding mowers, chainsaws, tillers, etc., in the Bradley Illinois factory.

Boom years

Rosenwald decided to shift emphasis to urban North America and brought in Robert E. Wood to take charge.

Rosenwald oversaw the design and construction of the firm's first department store, built on land within the Sears, Roebuck, and Company Complex. The store opened in 1925. In 1924, Rosenwald resigned the presidency but remained as chair until he died in 1932; his goal was to devote more time to philanthropy.

The first store opened on February 2, 1925, as an experiment in the North Lawndale Sears, Roebuck and Company Complex. Despite its remote location on the outskirts of Chicago, its success led to dozens of further openings across the country, many in conjunction with the company's mail-order offices, typically in lower-middle-class and working-class neighborhoods, far from the main downtown shopping district. This was considered highly unconventional at a time when shopping was concentrated in city centers, but through World War II, there was an extensive streetcar network in Chicago and other U.S. cities. However, rapidly increasing car ownership and the brand's huge popularity helped attract customers.

Sears retail stores were pioneering and broke the conventions of the time in three ways:

their location away from central shopping districts,

innovative store design, and

unconventional product mix and retailing practices.

Many stores at this time were designed by architect George C. Nimmons and his firms. The architecture was driven by merchandising needs rather than the desired outer appearance. This made the stores excellent examples of the modern architecture of the time—styles made famous by Bertram Goodhue and Eliel Saarinen.

Its stores were oriented to motorists. Set apart from existing business districts amid residential areas occupied by their target audience, they had ample, free, off-street parking and communicated a clear corporate identity. In the 1930s, the company designed fully air-conditioned, "windowless" stores, such as Sears-Pico in 1939 in Los Angeles, which was the first to have an open plan selling floor (instead of breaking up the floor into discrete sections).

1980s: Expansion into non-retail entities

In the 1980s, the company began to diversify into non-retail entities such as buying Dean Witter and Coldwell Banker in 1981. In 1984, it launched Prodigy as a joint venture with IBM and CBS, and introduced the Discover credit card in 1985. However, these actions have been said to have distracted management's attention from the core retail business and allowed competing retailers to gain significant ground, culminating with Walmart surpassing Sears as the largest retailer in the United States in 1990.

1990s and early 2000s: decline

In the 1990s, the company began divesting itself of many non-retail entities, which were detrimental to its bottom line. Sears spun off Allstate and its financial services arm, which included brokerage business Dean Witter Reynolds and Discover Card. It sold its mall building subsidiary Homart to General Growth Properties in 1995. Sears later acquired hardware chain Orchard Supply Hardware in 1996 and started home improvement store The Great Indoors in 1997.

The cost of distributing the once highly influential general merchandise catalog became prohibitive; sales and profits had declined. The company announced on January 25, 1993 that it would close 113 stores, terminate 50,000 workers, and discontinue the "big book" catalogue. In 1992, the company posted a $3.9 billion loss, the largest ever from a North American retailer.

In 1992, California successfully sued the company for falsely finding things wrong with automobiles in for repair for other reasons. In 1997, criminal charges were made. In 1998, Sears announced it had sold the remnants of Western Auto, which it had originally acquired in 1988, to Roanoke, Virginia-based Advance Auto Parts. The transaction resulted in Sears, Roebuck becoming one of the largest shareholders in Advance Auto Parts after obtaining a 40% equity stake and merging their respective store networks. This deal combined Advance Auto's existing network of 915 stores across 17 U.S. states with 590 U.S.-based Parts America locations and 40 Western Auto stores located in Puerto Rico.

Separately, as part of its international restructuring, Sears sold a majority stake of its Mexico affiliate to Grupo Carso in 1997. In later years, Sears Holdings continued to produce specialty catalogs, which included reintroducing a smaller version of its traditional Holiday Wish Book in 2007.

On March 26, 2001, Sears acquired 18 department stores and 10 freestanding auto centers from Montgomery Ward, planning to remodel and reopen these former Ward stores by 2002. Four of these former Montgomery Ward locations were to be converted to The Great Indoors, while 14 were to be converted to Sears. Sears also opened two new Chicago-area Appliances and Electronics stores in Bolingbrook and Mt. Prospect, Illinois on November 15 of the year.

2004–2018: Merger with Kmart and decline

On November 17, 2004, Kmart Holdings Corporation announced it would acquire Sears, Roebuck, and Co. for $11 billion after Kmart completed its recovery from bankruptcy. As a part of the acquisition, Kmart Holding Corporation, along with Sears, Roebuck, and Co., was transformed into the new Sears Holdings Corporation. The new company started trading on the NASDAQ stock exchange as SHLD; Sears sold its single-letter ticker symbol 'S' in the New York Stock Exchange that it had held since 1910 to Sprint Corporation. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands. In 2005, the company began renovating some Kmart stores and converting them to the Sears Essentials format, only to change them later to Sears Grands. The combined company's profits peaked at $1.5 billion in 2006.

By 2010, the company was no longer profitable; from 2011 to 2016, the company lost $10.4 billion. In 2014, its total debt ($4.2 billion at the end of January 2017) exceeded its market capitalization ($974.1 million as of March 21, 2017). Sears declined from more than 3,500 physical stores to 695 U.S. stores from 2010 to 2017. Sales at Sears stores dropped 10.3 percent in the final quarter of 2016 when compared to the same period in 2015.

Sears spent much of 2014 and 2015 selling off portions of its balance sheet; namely, Lands' End and its stake in Sears Canada, one of the biggest e-commerce players in Canada, with CAD$505 million in sales in 2015—more than Walmart and others who had begun pushing aggressively into online sales, such as Canadian Tire. Sears stated that the company was looking to focus on becoming a more tech-driven retailer. Sears's CEO and top shareholder said the sell-off of key assets in the last year had given the retailer the money it needs to speed up its transformation. Sears Holdings had lost a total of US$7 billion in the four years to 2015. In part, the retailer was trying to curb losses by using a loyalty program called Shop Your Way. Sears believed the membership scheme would enhance repeat business and customer loyalty in the long term.

Between September 26 and October 12, 2017, a malware was installed in the computers operated by a service provider for sears.com and kmart.com e-commerce sites in which the credit card information of 100,000 customers were exposed via a malicious script. The breach was not publicly announced until April 2018.

2018–present: Bankruptcy and current operations

On September 24, 2018, Lampert warned that Sears was "running out of time" to salvage its business. Sears Holdings filed for Chapter 11 bankruptcy on October 15, 2018, ahead of a $134 million debt payment due that day. On November 23, 2018, Sears Holdings released a list of 505 stores, including 266 Sears stores, that were for sale in the bankruptcy process, while all others would hold liquidation sales.

On January 16, 2019, Lampert won the bankruptcy auction with an offer to maintain about 400 stores; Sears Holdings announced it would remain open. On February 7, 2019, Lampert's $5.2 billion plan to keep the business going was approved by a bankruptcy judge. The approval meant roughly 425 stores, including 223 Sears stores, and 45,000 jobs would be preserved.

In April 2019, Sears announced the opening of three new stores with a limited set of merchandise under the name Sears Home & Life. Also that month, Sears closed its store at Windward Mall in Kaneohe, Hawaii, and its store at Oakbrook Center in Oak Brook, Illinois (which was razed and already rebuilt as a 1-story store), making it the first post-bankruptcy closure for the brand since being bought by ESL.

On June 3, 2019, the company announced that Transform Holdco would acquire Sears Hometown & Outlet Stores. As per deal, it might need to divest its Sears Outlet division to gain approval. On August 7, 2019, it was announced that 26 stores would close that October, including 21 Sears stores, among them the last Sears stores in Alabama and West Virginia, at Riverchase Galleria in Hoover and at Huntington Mall in Barboursville, respectively. The announcement also included plans to "accelerate the expansion of our smaller store formats which includes opening additional Home & Life stores and adding several hundred Sears Hometown stores after the Sears Hometown and Outlet transaction closes." On August 31, 2019, management announced that Transform would close an additional 92 stores, including 15 Sears stores, by the end of 2019. Near the end of 2019, Sears sold the brand name DieHard to Advance Auto Parts for $200 million.

A total of 100 more stores closed by December 2019. 51 Sears stores were closed in February 2020. More stores continued to close throughout 2020 and 2021 including the final Sears in Maine at The Maine Mall.

Corporate affairs

Sponsorships

Before the company filed for bankruptcy, Sears sponsored many entertainment and sporting events.

From 2006 until 2020, it had the naming rights to an 11,000-seat multi-purpose family entertainment, cultural and sports center in Hoffman Estates, the Now Arena.

The company sponsored the television series Extreme Makeover: Home Edition. The company also underwrote the PBS television series Mister Rogers' Neighborhood, under the name The Sears-Roebuck Foundation, from the show's premiere in 1968 until 1992.

Through the Sears Auto Centers, the company sponsored the Formula Drift Darren McNamara Sears/Falken Saturn Sky drift car. It sponsored the NASCAR Truck Series, using the Craftsman brand as the title sponsor, from the series' inception in the 1995 NASCAR SuperTruck Series presented by Craftsman to the 2008 season, when the agreement ended. It sponsored the #10 Gillett Evernham Motorsports car of Scott Riggs for the September 2, 2007, running of the Sharp AQUOS 500 at California Speedway through its Sears Auto Center branch. However, Riggs failed to qualify for the event. In 2016, Craftsman became the title sponsor of the World Racing Group, World of Outlaws Sprint car racing series.

Employee relations

Sears has struggled with employee relations. One notable example was the shift in 1992 from an hourly wage based on longevity to a base wage (usually between US$3.50 and US$6 per hour) and commissions ranging from 0.5% to 11%. Sears said the new base wage, often constituting a substantial (up to 40%) cut in pay, was done "to be successful in this highly competitive environment".

Following a transition from its historical 1992 compensation model, Sears instituted a series of sweeping commission rate reductions for hourly store employees throughout its financial decline. Between 2007 and 2011, the company repeatedly reduced commission rates across key retail divisions—including the electronics and home improvement departments—while adjusting base hourly wages to offset volatile employee earnings. By 2017, following successive rounds of department downsizings and corporate cost-cutting, the major appliances division remained one of the few core sales departments utilizing a predominantly commission-based compensation structure.

In March 2019, Sears said that it was ending life insurance benefits for an undisclosed number of its 90,000 retirees. A few months earlier, the company had handed out over $25 million in bonuses to executives. This key Sears Retiree Benefit was worth between $5,000 and $15,000 for most of the pool (29,000) of eligible retired employees.

In May 2019, former Sears Holdings chairman and CEO Eddie Lampert, months after purchasing the remains of Sears from the holding company, threatened not to pay out the $43 million in pension payments owed to 90,000 former Sears and Kmart employees and retirees. A Forbes editorial pointed out that Steven Mnuchin, Secretary of the Treasury at the time, was a board member of Sears Holding until 2016 and was, at the time, one of three directors of the Pension Benefit Guaranty Corporation, which manages administration of pensions for defunct or bankrupt businesses.

Leadership

President

Richard W. Sears, 1886–1908

Julius Rosenwald, 1908–1924

Charles M. Kittle, 1924–1928

Robert E. Wood, 1928–1939

Thomas J. Carney, 1939–1942

Arthur S. Barrows, 1942–1946

Fowler B. McConnell, 1946–1958

Charles H. Kellstadt, 1958–1960

Crowdus Baker, 1960–1968

Arthur M. Wood, 1968–1973

A. Dean Swift, 1973–1981

Edward R. Telling, 1981–1982

Archie Boe, 1982–1986

Richard M. Jones, 1986–1988

Chairman of the board

Julius Rosenwald, 1924–1932

Lessing Rosenwald, 1932–1939

Robert E. Wood, 1939–1954

Theodore V. Houser, 1954–1958

Fowler B. McConnell, 1958–1960

Charles H. Kellstadt, 1960–1962

Austin T. Cushman, 1962–1967

Gordon M. Metcalf, 1967–1973

Arthur M. Wood, 1973–1978

Edward R. Telling, 1978–1981

Edward A. Brennan, 1981–1982

Edward R. Telling, 1982–1986

Edward A. Brennan, 1986–1995

Arthur C. Martinez, 1995-2000

Alan J. Lacy, 2000-2006