[ad_1]
The hedge fund manager Edward S. Lampert has spent the last 14 years in the business.
It has been a long, and often painful, trip, but how has Mr. Lampert fared?
His hedge fund, ESL Investments, appears to have a much greater impact on the company than any other company.
ESL's nearly 50 percent stake in Sears will probably be wiped out in bankruptcy. But that is offset by gains elsewhere. For example, Mr. Lampert has collected hundreds of millions of dollars in interest and fees from Sears. He also took the stakes in businesses that were spun off from the company, and some of those investments are doing well.
He and his hedge fund played an unusual role at Sears. In addition to being the controlling shareholder, ESL has been one of its biggest lenders. Mr. Lampert is the retailer and chairman, until Monday, he was also its chief executive.
For years, the company warned investors in regulatory filings that his interests "may be different than your interests" – a disclaimer that few publicly traded companies make.
But Mr. Lampert said he had always been in the best interests of Sears. Hoffman Estates, Ill., He told us that he had been in business for years. Instead, he said, he "doubled down."
"I did everything I could think of it again," Mr. Lampert said, according to an audio recording of his remarks obtained by The New York Times.
Here's how it's made on the various parts of Sears.
loss
His investment in Sears is worthless
In 2005, Mr. Lampert orchestrated one of the biggest retailers in the history of retailing to the larger Sears & Company department store.
A few years earlier, he had started buying up his business. His investment totaled $ 700 million, he told Fortune magazine in 2006. When Kmart came out of bankruptcy in 2003, ESL was its largest shareholder and Mr. Lampert its chairman.
The merger created the nation's third-largest retailer. The deal was meant to help Sears and Kmart better compete against Walmart, which had overtaken both companies in the 1990s. world's largest retailer.
The deal was a wild success – at least in the early years. The stock of the combined company, Sears Holdings, soared, and ESL's investment was worth $ 5 billion by 2007. The company was flush with cash and spent $ 6 billion buying back its own stock from 2005 through 2012. The hedge fund its shares.
Critics, including training Sears executives and employees, said the money would be better than Sears and Kmart stores. Mr. Lampert has said that he does not want to pay for money.
The good times did not last long. Sales started in 2007, and the company's steady state of profits has been reduced to a few years later. Sears needed money, and it turned to the Bank of Lampert for cash.
ESL and its affiliates slow Sears nearly $ 2.6 trillion, about half its total debt as of September. The hedge fund could lose money on those loans. But because of the retailer's debt is secured by real estate and intellectual property.
The hedge fund has also collected $ 400 million in interest and fees, helping to reduce Mr. Lampert's losses on the company's stock to about $ 300 million.
Win
Lands' End, now an independent company, lives on
Sears acquired Lands' End in 2002, hoping to bolster its struggling apparel business. But the preppy clothing does not have to be used in the home, it does not have to be expensive.
Lands' End lost ground to the likes of L.L. Bean in part because of its clothing. In 2014, Sears spun the business off into a publicly traded company. ESL got 15.4 million shares, or nearly half, of the new company, at no additional cost.
ESL and its affiliates bought six million more shares of land. Their stake is now worth about $ 207 million.
loss
Sears Canada and other businesses
To raise cash, Sears is a member of other divisions. In almost every transaction, ESL bought shares in the new companies, becoming a significant or even the majority owner. For the most part, these corporate offspring have struggled or failed.
In late 2011, Sears gave shares in Orchard Supply Hardware to its shareholders, including ESL. But unable to compete against Home Depot and Lowe's with debt, Orchard filed for bankruptcy protection a year later and was eventually acquired by Lowe's.
In 2012, ESL and Mr. Lampert invested $ 216 million in a public offering of Sears Hometown and Outlet Stores, which sells appliances and lawn and garden equipment. After hitting a high of nearly $ 56 a share in 2013, Hometown's Sears stock has slumped. Today, it trades at just $ 2.55, putting ESL's stake at $ 37.8 million.
In the box of Sears Canada, Mr. Lampert came close to making a profit. When the company was partially spun off from Sears Holdings in 2012, ESL got a 28 percent stake at no additional cost. The hedge fund raised $ 168 million in special dividends that Sears Canada paid out that year and in 2013.
In 2014, ESL spent $ 212 million to buy more Sears Canada shares. But the company filed for bankruptcy last year and subsequently closed all its stores. Taking the dividends into account, ESL lost about $ 44 million.
Win
Seritage: A successful real estate play
Many Wall Street analysts and investors have speculated that Mr. Lampert's primary interest in Sears was its real estate. The retailer had hundreds of stores in prime malls and shopping plazas across the United States. These properties could be more profitable, like movie theaters, condominiums or offices.
ESL invested $ 745 million, and Mr. Lampert became Seritage's chairman. Its share price has soared 45 percent since its initial public offering and prominent investors like Warren E. Buffett have bought into the company. Mr. Lampert's stake in this business is now worth approximately $ 1.1 billion.
unclear
The bankruptcy and what comes next
The bankruptcy will most likely wipe out ESL's equity stake and could reduce the value of the loans it has made to Sears.
But Mr. Lampert could still end up with what's left of its other real estate and businesses. On Monday, he said he hoped to buy 400 profitable Sears and Kmart stores. If he bid is the highest, Mr. Lampert could have some of the best locations.
In August, he offered to buy Kenmore, the Sears appliance brand, for $ 400 million – the final price could change in bankruptcy. Kenmore, which has a loyal following and last year to sell air-conditioners, refrigerators and other products on Amazon, could flourish as an independent company.
Source link
