It is February 14th, 2026. And while, you know,
half the country is probably scrambling for dinner
reservations right now, we are looking at a very
different kind of milestone. Because as of December
2025, just two months ago, there are now only
five Sears stores left. Five. In the entire United
States. Five. It's a number that just doesn't
compute, does it? Yeah. It feels wrong. Especially
when you think about the sheer scale of what
this company used to be. It feels like a typo
in the data. You've got two in Florida, and one
of them has been operating since 1954, which
is incredible, and then a couple others scattered
around. But that's it. That's the list. And if
you're, say, 20 years old listening to this,
Sears is probably just a ghost. It's that empty
building at the mall where the Halloween store
pops up in October. Right, it's a relic. But
the sources we're diving into today, the internal
records, the financial filings, they tell a story
that is so much bigger than just a store going
out of business. Oh, it's not a business failure.
We're looking at the fall of an economic nation
state. That's not hyperbole. That is the only
way to describe it. The numbers are just staggering.
At its peak, Sears wasn't just the biggest retailer.
It accounted for one percent of the entire U
.S. gross domestic product. One percent. Let
that sink in. Think about that. That's like if
you took Amazon and Walmart and maybe Google
and smashed them all into one single entity.
That was Sears in the 1970s. And that's our mission
for this deep dive. We're not here to just, you
know, get nostalgic about the smell of craftsman
tools and popcorn. We need to unpack how a company
that was literally Amazon before Amazon managed
to lose every. And we have the documents to do
it. We've got the extensive Wikipedia archives
for both Sears and Sears Holdings, the 2018 bankruptcy
filings, and some of the internal memos from
what we have to call the hedge fund era. Ah,
yes, the Lampert years. That's where things get,
well, they get really interesting from a financial
engineering perspective. And we are definitely
going to spend a lot of time there. But to really
understand the fall, you have to understand the
ascent. Because the story doesn't start with
the department store. It doesn't even start in
Chicago. No. It starts on a dusty railroad platform
in North Redwood, Minnesota in 1886. And it all
began with a box of watches and a, let's call
it a slightly sketchy wholesale tactic. This
is the Richard Warren Sears origin story. And
I love it because it's not some grand vision.
It's just a guy spotting a simple inefficiency
in the market. Exactly. Richard Sears was a railroad
station agent. So he's the guy running the local
depot. And one day, a shipment of gold -filled
pocket watches shows up. addressed to a local
jeweler. But the jeweler didn't order them. Nope.
It was a classic, slightly shady move back then
called unsolicited shipping. The wholesaler just
sends the product, hoping the local guy feels
pressured to pay for it just to get rid of it.
And the jeweler said, no thanks. He refused the
shipment. So now Richard Sears is just standing
there on the platform with a box of watches nobody
wants. The average person would have just shipped
them right back. But Sears wasn't the average
person. Not even close. He opens the box, looks
at the manifest. The wholesaler wants $12 per
watch. Sears knows from, you know, just being
alive that a watch like that retails for about
25 bucks in a jewelry store. Ah, so he sees the
spread. He sees the arbitrage instantly. He realizes
he can send telegrams up and down the rail line
to other station agents and sell them the watches
for $14. So he undercuts the jewelers, makes
a $2 profit on every watch, and he doesn't need
a storefront. He doesn't need inventory. He just
needs the railroad. Yeah. It was his distribution
network. It was brilliant. He eventually teamed
up with a watch repair man named Alva Roebuck,
which makes sense because if you're selling watches,
you need someone who can actually fix them. Right.
Sears was the salesman, not the technician. Precisely.
And they moved the whole operation to Chicago.
OK, let's pause there. Why Chicago? The sources
really hammer this point home. It seems critical.
Because in the late 19th century, Chicago was
the Internet. It was the central node. It was
the hub for the entire North American railroad
network. If you wanted to ship something from
the coast to the heartland or vice versa, it
had to go through Chicago. It was the physical
server for the country's logistics. Perfectly
put. If you put a package on a train there, you
could reach almost any corner of the country
faster and cheaper than from anywhere else. Geography
was destiny for them. So they're in the right
city. In 1893, they officially become Sears,
Roebuck and Company. And then comes the real
revolution, the big book. The catalog. And it's
almost impossible for us now to understand how
groundbreaking this was. By 1894, it was 322
pages. Just one year later, 1895, it's over 500
pages. And it had everything. Sewing machines,
bicycles, musical instruments. I saw in the notes
they even sold automobiles for a while. They
did. From 1905 to 1915, it was called the Sears
Motor Buggy. It would arrive in a crate at your
local train station and you'd have to, you know,
do some final assembly. You could mail order
a car? That's incredible. It is. But the car
is just a fun detail. Yeah. The real innovation
was the information itself. The catalog became
known as the Consumer's Bible. And I want to
dig into that name because it wasn't just about
convenience. The sources point to a very specific
reason it exploded in rural America. It was a
way to escape a monopoly. You're talking about
the local general store. If you're a farmer in,
say, rural Mississippi in 1890, you have one
place to buy things. One, the guy who runs that
store sets the prices. He decides what you can
and can't buy. There's no competition. The markup
was insane. And this is where a really important
social dynamic comes into play, something the
history often glosses over. For African -American
families, especially in the Jim Crow South, that
local store wasn't just expensive. It was often
a place of profound humiliation. This is a...
crucial part of the story. A black family could
walk into that store and be ignored, be refused
service or be charged double what a white customer
would pay. They could be denied credit. It was
an instrument of economic oppression designed
to keep people in their place. But the United
States Post Office doesn't care about the color
of your skin. Exactly. The mailman is a federal
employee. He has a mandate to deliver the mail.
He delivers the package, no questions asked.
With the Sears catalog, you filled out a form,
you sent in a money order. And that was it. You
got the same plow, the same dress, the same seeds
at the exact same price as a white family in
Ohio. It provided anonymity and dignity. It was
an economic lifeline. It allowed black families
to bypass those racist local power structures
and participate directly in the national economy
on an equal footing. It built a kind of brand
loyalty that you just you can't buy with advertising.
That's a powerful foundation. And on a more utilitarian
note, the book itself was physically valuable,
right? Ah, yes. The toilet paper thing. The toilet
paper thing. The catalog was printed on a specific
kind of uncoated newsprint. So in rural homes
with an outhouse, once the new updated catalog
arrived in the mail. The old one got a second
life. The old one was hung on a nail and recycled
page by page. It was in a very real way an essential
part of daily life. Talk about market penetration.
OK, so they're the undisputed kings of mail order.
They are the Amazon of their day. But then trouble
starts brewing, not in the company, but in the
country itself. Right. There was the panic of
1893, which was a huge economic depression that
nearly bankrupted them early on. That's actually
when Alvaro Buck got scared and sold his share
of the company. He left. So it should have been
Sears and Rosenwald. It really should have. Julius
Rosenwald came in around 1895. He was the operational
genius. If Sears was the visionary marketing
guy, Rosenwald was the one who actually built
the rational, efficient systems to make it all
work. He's the one who took it public in 1906,
the first major retail IPO in American history.
But the bigger threat wasn't a financial panic.
It was a demographic shift. It was urbanization.
This is where a man named General Robert E. Wood
enters the picture. He took over after Rosenwald
shifted his focus to philanthropy. Wood wasn't
a merchant. He'd worked on the Panama Canal.
He was a military logistics guy. A numbers guy.
And what did the numbers tell him? He looked
at the 1920 census data and saw something profound.
For the first time in American history, more
people were living in cities than on farms. And,
maybe even more importantly, They were buying
cars. So the whole business model, which is built
on serving isolated farmers via mail, is suddenly
under threat. It's facing an existential crisis.
If your customers are all moving to the city,
they don't need your catalog. Go to a store.
But Wood's insight was that they weren't going
to the right kind of store. Exactly. The big
fancy department stores of the day, your Macy's,
your Marshall Fields, were all downtown. They
were these grand, multi -story palaces built
for people who arrived by streetcar or on foot.
They were urban cathedrals of consumption. Right.
And Wood looked at the data and said, no, that's
not the future. He realized the working class
wasn't living downtown. They were living in neighborhoods
further out. And they were driving. He said,
we're not going to build where the rich people
shop. We're going to build where our customers
live. And we're going to build for the automobile.
Which meant one thing above all else. The parking
lot. It sounds so incredibly basic now. Of course,
a store has a parking lot. But in 1925, it was
revolutionary to dedicate a huge, valuable piece
of land to just storing cars for free. was a
radical idea. Competitors thought he was insane.
But he was betting everything on the car, and
he was absolutely right. The first Sears retail
store opened as an experiment in their Chicago
catalog plant in 1925. It was a madhouse. An
instant success. And they didn't just innovate
on the outside of the store, they changed the
inside too. The sources mention these windowless
stores in the 1930s. That sounds kind of grim.
It sounds like a bunker, but it was pure efficiency.
Think about it. If you have no windows, you gain
all that wall space for shelves. You control
the lighting completely so every product looks
perfect. And this is the big one in the 30s.
You can air condition the entire space. You create
a self -contained world. A hermetically sealed
temple of commerce where the only thing that
matters is what's on the shelves. It's the logic
casinos use but applied to retail. They were
the first to do it. And they also tore down the
walls between departments, right? Yes. Before
Sears, a store was like a collection of little
shops under one roof. The shoe department was
its own world. The men's department was separate.
Sears created the first truly open plan selling
floor. So the hardware section could flow right
into sporting goods, which flowed into automotive.
It was designed to encourage browsing, to make
you wander and discover things you didn't even
know you needed. It's the blueprint for Target,
right? For Walmart. For every big box store that
came after. It is the blueprint. And they used
this model to conquer the suburbs. After World
War II, as the suburbs exploded, Sears was right
there. They became the anchor tenant that made
the American shopping mall possible. If Sears
didn't agree to open a store in your new mall,
the developer couldn't get the financing to build
it. They were that powerful. And they built their
own universe of brands. Kenmore Appliances, Craftsman
Tools in 1927, Diehard Batteries in 67. Vertical
integration at its finest. They didn't just sell
you a wrench. They sold you a Craftsman wrench
with a lifetime guarantee. They didn't just sell
insurance. They founded Allstate in 1931 and
literally put the insurance agents at desks inside
the stores. So you could buy a new set of tires,
get a Diehard Battery, and get them insured with
Allstate all without leaving the building. It
was an ecosystem. They owned every part of the
American dream, from the lawnmower to the life
insurance policy. And the ultimate symbol of
that power was the Sears Tower, completed in
1974. At the time, the tallest building in the
world. And when you look at the timeline, 1974,
that's it, isn't it? That's the absolute peak.
That is the summit. And there's a concept in
business called the edifice complex. It's this
theory that as soon as a company... builds a
massive, record -breaking headquarters as a monument
to its own success, it's usually a sign that
the decline is about to begin. Because they've
stopped looking out at the customer and started
looking in the mirror. Exactly. And that brings
us to the 1980s and the beginning of the great
unraveling. It wasn't a sudden crash. It was
a slow, creeping drift into confusion. This is
the socks and stocks era. Socks and stocks. The
leadership at Sears looked at their core retail
business and thought, this is boring. The margins
are thin. They got seduced by the high -flying
world of finance. So instead of trying to sell
more jeans, they decided to sell, what, mutual
funds? Exactly that. They went on a buying spree.
They bought Dean Witter, a major stock brokerage.
They bought Coldwell Banker, the real estate
giant. And they launched their own credit card,
the Discover card. I mean, I can almost see the
logic on a PowerPoint slide. You buy your house
with Coldwell Banker, you insure it with Allstate,
you fill it with Kenmore appliances from Sears,
and you put it all on your Discover card. It's
the lifecycle pitch. It was pitched as the great
American financial network. But the reality was
it was a catastrophic distraction. Retail is
a daily ground war. It's about pricing, inventory,
customer service, store cleanliness. It requires
relentless focus. And the CEO can't be focused
on that if he's worried about interest rate spreads
and the real estate market in California. Precisely.
While the top executives were playing Wall Street,
the actual stores, the things generating the
cash, were being neglected. The paint started
to peel. The carpets got worn. The product mix
got stale. And while Sears was looking the other
way, the competition was getting fierce. Oh,
the sharks were circling. Sam Walton was building
a logistics machine at Walmart that made Sears
look ancient. Home Depot was creating a warehouse
model for hardware that made the Sears tool department
look like a tiny closet. Best Buy did the same
for electronics. They were being carved up by
these category killers. Piece by piece. And then
in 1990, the unthinkable happened. Walmart officially
surpassed Sears as the largest retailer in the
United States. And just three years after that,
in 1993, they make what might be the single worst
business decision of the 20th century. They kill
the catalog. They discontinue the big book. After
100 years. Let's just frame the timing here.
They shut down their mail order business in 1993.
Jeff Bezos incorporates a company called Cadabra
Inc., which would later be renamed Amazon in
1994. It's the ultimate what if. It's just it's
painful to think about. Sears had everything.
They had the warehouses, the trucks, the customer
data, the brand trust. They had a hundred year
head start on Amazon. If they had just taken
that catalog infrastructure and put it online,
we would all be Sears Prime members today. There
would be no Amazon. But they saw it as a cost,
a legacy business to be cut. They were managing
for the next quarter's earnings report, not for
the next decade's economy. They saved a few million
dollars printing and mailing books, and in doing
so, they threw away a trillion -dollar future.
And on top of that, the trust they had built
for a century was starting to crack. The auto
center scandal in 1992 was a huge blow. It was
a disaster for the brand. The state of California
sued them, and the investigation found that Sears
Auto Centers were systematically ripping off
customers. What were they doing? They had put
their mechanics on a commission and quota system.
Management told them, you need to sell, for example,
five brake jobs per shift to hit your numbers.
So suddenly every car that rolls in for an oil
change mysteriously needs new brakes. You got
it. They incentivized fraud. They settled the
lawsuit for about $46 million, but the real damage
was to their reputation. The entire brand was
built on the phrase, satisfaction guaranteed
or your money back. Suddenly that promise felt
hollow. So they spend the rest of the 90s trying
to right the ship. They spin off Allstate, Dean
Witter, Discover. They try to get back to basics.
But it's too late. And that brings us to 2004
and the deal that seals their fate. Kmart buys
Sears. Well, technically. But it's more accurate
to say that a hedge fund manager named Eddie
Lampert, who controlled Kmart after its own bankruptcy,
used Kmart as a vehicle to acquire Sears. This
is the moment we enter the hedge fund era, and
I really want to break this down for our listeners.
What does it actually mean in practice to run
a retail company like a hedge fund? It's a fundamental
difference in philosophy. A traditional retailer,
a merchant, believes in investing money back
into the business. You spend money on capital
expenditures, capex. You renovate stores. You
update your technology. You train your employees.
You spend money today to hopefully make more
money tomorrow. Okay, that makes sense. A hedge
fund manager, particularly one like Lampert,
is obsessed with capital allocation. Their only
question is, where can I put this dollar right
now to get the highest possible immediate return
for shareholders? So if renovating the store
gives you a 2 % return, but buying back your
own stock juices the share price and gives you
a 5 % return. You don't fix the leaking roof,
you buy the stock. And that is precisely what
happened. From 2005 to 2010, Sears Holdings spent
over $5 billion on stock buybacks. $5 billion.
They could have rebuilt every store in the country
for that. They could have. But instead, they
used that cash to artificially inflate the stock
price, making the company look healthy on Wall
Street while the actual stores were visibly decaying.
Customers would walk in and see peeling paint,
burnt out light bulbs, disorganized shelves.
It felt like walking into a time capsule from
1985. And here's the statistic from the sources
that just floors me. In the third quarter of
2006, one third of the company's entire pre -tax
income came from financial trades, not from selling
washing machines. Correct. They were making complex
derivative bets, total return swaps. They were
using the company's cash flow as collateral to
function as a speculative investment fund. So
it was a hedge fund with a department store attached
as a sort of... cash generating side hustle.
That's a very good way to put it. And it worked
for a little while, as long as the market was
going up. But when the 2008 financial crisis
hit, those bets went sour. And because they'd
starved the retail side for years, there was
nothing left to fall back on. So the profits
vanish. The stores are crumbling. What's the
next move? You start selling off the family silver.
This begins the period we call the asset strip.
If the core business isn't making money. You
start selling off the valuable pieces of the
company to generate cash to cover the losses.
They spun off Land's End in 2014. They sold their
stake in Sears Canada, which then went bankrupt.
And then, the one that really hurt the loyalists,
in 2017, they sold the Craftsman brand. That
feels like the point of no return. Craftsman
was Sears for generations of American men. It
was the heart of the company for so many people.
They sold it to Stanley Black & Decker for about
$900 million. Once that was gone, What was the
reason to even go to Sears anymore? But the most
controversial deal, the one that led to lawsuits,
was about the real estate. Can you walk us through
the Saradage deal? It's a bit complicated. It
is, but it's critical to understanding the endgame.
So, Sears owned hundreds of its own stores, the
land and the buildings. This was their single
most valuable asset. Okay. In 2015, Lampert orchestrated
a plan to unlock the value of that real estate.
He created a new separate company called Seritage
Growth Properties. It's a type of company called
a REIT, a real estate investment trust. So a
company that just owns property. Exactly. Then...
Sears, the retail company, sold 235 of its best,
most valuable properties to Seritage, this new
company. And the catch was? The catch was that
Eddie Lampert was the chairman of Sears, the
seller, and he was also the primary investor
and chairman of Seritage, the buyer. So he was
effectively on both sides of the transaction.
He was selling the assets to himself. That was
the allegation in the shareholder lawsuits that
followed. They claimed he engineered the deal
to sell the properties too cheaply to his own
new company. But the operational consequence
was even worse. Sears got a one -time cash infusion
from the sale, which it used to pay down debt.
But then to keep operating in those same stores,
it had to start paying rent to Saradich. So they
traded a massive asset owning their own buildings
for a massive liability, a monthly rent check.
Yes. And it created this perverse incentive.
If a Sears store was struggling and went out
of business, it was actually good for Saradich.
They could then evict the failing Sears. tear
the building down and release the valuable land
to someone like a Whole Foods or a luxury apartment
developer for much higher rent. So the real estate
company he controlled was positioned to profit
from the failure of the retail company he also
controlled. That was the argument the creditors
made in bankruptcy court. They called it serial
assets tripping. They said the company wasn't
being turned around, it was being systematically
dismantled for parts. And while all this is happening,
the company is burning through billions. The
Shop Your Way loyalty program was a money pit,
right? A complete disaster. They lost $10 .4
billion between 2011 and 2016. They were trying
to become a tech company, a membership club,
but the execution was awful and customers were
just confused. And what about the employees,
the people who had been there for decades? It
was a nightmare for them. constant commission
cuts, store closures with little notice. But
the most brutal part was the attack on the retirees.
In 2019, after the bankruptcy, the company moved
to terminate the life insurance benefits for
its retired employees. These are people who gave
their entire careers to the company. The 30,
40 years. And at the very same time they were
cutting off these retirees, court filings show
they were handing out $25 million in bonuses
to their top executives. The optics of that are
just... It cemented the narrative that this was
a salvage operation for the people at the top,
not a rescue mission for the company. Which brings
us to the final chapter. October 15th, 2018,
they file for Chapter 11 bankruptcy. They couldn't
make $134 million debt payment that was due.
The game was up. Lampert stepped down as CEO,
but crucially remained as chairman of the board.
And then came this bizarre bankruptcy auction
in early 2019. It wasn't a normal sale. No, it
was high drama. The company was on the verge
of total liquidation, meaning every single store
would close immediately. Then at the last minute,
Lampert himself, through his hedge fund ESL investments,
came in with a $5 .2 billion bid to buy the remaining
assets out of bankruptcy and keep about 425 stores
open. And the creditors, the banks, the suppliers,
everyone Sears earned money to, they fought him
on it. They were apoplectic. They argued directly
to the judge that Lampert should not be allowed
to buy the company. Their position was essentially,
this man drove the car off the cliff and now
you're going to sell him the wreckage for pennies
on the dollar, just liquidate it and give us
what's left. But the judge approved the sale.
He did, primarily on the argument that it would
save, at least temporarily, about 45 ,000 jobs.
So the new Sears is born under a new corporate
name. TransformCo. It sounds like a generic evil
corporation from a movie. It really does. And
the transformation has really just been a slow
managed decline ever since. We call it the slow
death. It's just been a steady drip of closures.
In 2021, the last store in their home state of
Illinois closed. At the Woodfield Mall, their
flagship, gone. In 2022, the last of the Sears
Auto Center's shut down for good. 2023, they
pulled out of five more states entirely. And
then came the final symbolic blow. The headquarters.
The massive campus in Hoffman Estates, Illinois.
A symbol of their suburban dominance. In August
of 2024, the demolition crews moved in. They
started tearing it down. And what are they building
in its place? Data centers. You couldn't write
a more perfect metaphor. The physical retail
giant is being bulldozed to make way for the
server farms that power the digital economy that
killed it. It is the perfect tombstone for the
20th century American corporation. Which brings
us right back to today. August 2025, the last
store in Puerto Rico closes. December 2025, we
hit the final number. Five stores left. Sears
.com still exists, but it's basically just a
marketplace for other people to sell their stuff.
It's a ghost ship. So let's try to synthesize
all of this. We started with a station agent
selling watches, and we've ended with five stores
and a data center being built on the rubble of
their headquarters. What is the grand takeaway?
I think you have to see it as a story in two
acts. Act one is a century of relentless. Brilliant
innovation. They figured out the supply chain.
They invented satisfaction guaranteed. They perfected
the suburban retail experience. They knew their
customer better than anyone on earth. And act
two. Act two is what happens when a company falls
in love with financial engineering instead of
its customers. They stopped trying to innovate
in the aisles and started trying to innovate
on the balance sheet. They forgot the why serving
the American family and focused only on though.
The assets, the stock price, the real estate.
They started treating the company not as a living
organism to be nurtured, but as a pile of assets
to be liquidated. Precisely. And the ultimate
lesson of Sears is that you cannot financialize
your way into a customer's heart. You can play
games with the stock price for a while. You can
extract value for a few years. But eventually
the customer walks in, sees the leaking roof
and the empty shelves, and they just... They
stopped coming back. It's an incredible sobering
story. But I want to leave our listeners with
one final thought. The big what if. Sears Prime.
Sears Prime. They had the warehouses. They had
the trucks. They had the customer list. They
had the consumer's Bible. If in 1994 they had
embraced the Internet with the same ferocity
that Robert E. Wood embraced the automobile in
1925. We wouldn't be talking about Jeff Bezos
today. We'd be getting two day shipping on our
craftsman tools from Sears. They had a century
long head start. start and they just let it all
slip away because they were looking at the wrong
spreadsheets. And that leads to the final provocative
question for you listening right now. Who is
the Sears of today? Which corporate giant is
sitting at its absolute peak in its gleaming
new headquarters, so focused on stock buybacks
and financial maneuvering that it doesn't see
the world changing right under its feet? That's
the question that should keep every CEO in America
up at night. Because as Sears proves, no empire
is forever.