What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing in today's video we're going to go over one of the biggest faults from power in recent corporate history, sears, roebuck and company used to be by far The most successful retailer in the united states, they pioneered the first successful mail order catalog and for most of the 20th century they had a brand that was synonymous with high quality and fashionable consumer products. They were in their heyday. What you might think of amazon today, but nowadays, sears stores are a dying breed and those that do remain are at high risk of being liquidated in the next few months or years. In this video we're going to take a look at sears how it became a legend and how it fell.

Sears was founded by richard warren sears in chicago richard sears had to start in business as a watch, salesman, selling, watches and other high-priced jewelry related items to rural customers. While selling watches he met alva roebuck a watch repairman together, they moved their business to chicago where their business exploded. They were selling hundreds of thousands of dollars worth of watches and other jewelry by the late 1880s. Their main channel of selling was through mail order.

Catalogs with the catalog, they were able to reach a wide, ranging customer base in the midwest who otherwise wouldn't have had access to jewelry at reasonable prices. For the first time, almost anyone could buy any number of different watches or jewelry related items from richard sears and alva robux catalog and have the items delivered to wherever they lived by the late 1800s. The business had grown so big that richard seals was able to sell the business for millions of dollars adjusted to today's dollars. However, after a couple years offering business, sears and roebuck opened a new mail-order company, also focusing on watches around the turn of the century, their business had grown dramatically.

They expanded to selling things other than just watches and jewelry and started selling all sorts of household durable goods the size of their catalogs grew to hundreds of pages and they even started selling perishable items in some locations. In 1895, the company was incorporated in the state of illinois with 5 million worth of stock in today's dollars. Richard sears also brought in more business partners to help run the company, including julius rosenwald rosenwald, ended up helping expand the company tremendously. He added to the product offerings of sears all sorts of new kinds of customer products, including furniture and drugs.

In the early 1900s, the company grew rapidly by 1906. They were able to take the company public for a valuation of 40 million dollars more than 1 billion dollars in today's dollars. In the 1920s series realized that if they wanted to keep growing and take advantage of the booming american economy, they would have to expand beyond mail-order catalog sales. In 1925 they opened their first experimental retail location.

The store was located in sears owned company complex, not in a shopping district, which was unusual for retail stores at the time, but it was a resounding success. Customers enjoyed being able to shop a wide range of items without having to go into the city, their store's, modern, look and feel and diverse product offerings further strengthen the appeal to customers. After the first store, they opened dozens more across the country targeting working-class demographics. That did not have the resources or desire to travel into city downtowns just to go shopping as it became easier and easier for average americans to own cars and go leisure shopping.

Sears began to build up strong brand popularity throughout the middle of the 20th century. Sears pioneered the design of the modern consumer products store. Their large stores became what we might recognize today, as big box stores with no windows in one large room. They sold many different types of goods under the same roof, including tools and hardware, along with clothing and jewelry.

They also care to both men and women, with an emphasis on practicality rather than fashion. The business model was insanely popular with customers and sears became the biggest retailer in the country in the 60s and 70s sears was really the equivalent of what amazon is today. They dominated the retail industry and were seen as an innovator in financial behemoth. They were the first company to offer different options on their products, such as different colors and sizes of clothing items that might not seem like a big deal, but before it existed, consumers could only choose from whatever specific options were present on the shelf at their local Store this is similar to how car dealerships still are when buying a new car.

You can choose to customize the options on the manufacturer's website and have the finished card delivered to a local dealer. But if you want to just shop around at the dealership, your choice is constrained to whatever trims a dealer has on the lot. That used to be the case with all types of products until sears changed it. In 1969, sears decided to consolidate its headquarters under a single roof.

However, there was no good option, big enough for where to locate their new headquarters in chicago at the time. So sears decided to build their own skyscraper. What would become known as a sears tower to clear enough space in downtown chicago for the skyscraper to be constructed, 15 existing buildings were torn down and a section of public road was absorbed. The construction of the tower used the innovative tube design, where nine square tubes made up the body of the tower.

This design gives the tower its distinctive look. It also enhanced the structural efficiency of the building, allowing it to become the tallest building in the world by the time it was completed in 1974.. It would retain that title for almost 25 years after the tower was completed. It housed many other businesses as tenants.

In addition to sears itself, it was one of the prides of the city of chicago a symbol of their most recognizable and successful business. At the time, this was the peak of sears's business legacy, starting in the 1980s sears faced increasing competition from other big box retailers, including kmart, kohl's and especially walmart. Additionally, sears attempted to diversify away from just retail and into things like real estate, brokerage services, news and even the discover credit card. While some of these ventures were successful, many were not discover, is now a multi-billion dollar company, but has not been part of sears.

Since 1993, when it was spun off with the introduction of stiff competition from new big box stores, sears gradually found its brand name less and less able to retain customers. In the 1990s, they discontinued their catalog entirely, leaving the door open for amazon to take over the mail order industry amid declining brand strength and increasing competition, combined with management being distracted by their efforts to diversify the company into other ventures. Sears started to die in the 90s and early 2000s. It wasn't too bad and they were also able to sell off some of their valuable brand names to keep revenue growing, but by the late 2000s it was clear that sears could not keep operating as it had.

Customers just weren't as attached to the brand anymore. Much of the target demographic of sears was born after sears had become big and many people just thought of sears as a story that their parents and grandparents shopped at they were more interested in new stores like kmart and walmart. So the 20th century saw sears begin to decline. Kmart may have been the beginning of the end for sears.

Kmart was founded not long after sears in the late 19th century, but found its peak in the 1990s. During this time they took market share from sears by updating their stores and logo. They also secured exclusive merchandise from popular figures of the time, such as martha stewart and disney. Gradually they took customers from sears and in certain areas of the country, it wasn't uncommon for people to cite kmart as their favorite place to shop with their successful chain of stores, which they called big kmart.

They took the idea of the big box store to the next level, with aisles and aisles of merchandise, but in the late 90s and early 2000s, even kmart had seen its best days walmart and target into a lesser extent. Amazon had been quicker to adapt to the growing consumer electronics market sears, on the other hand, was still seen as the place to shop for things like outdoor grilling equipment and tools. Sears still had a good reputation for these kinds of items, but without being able to attract customers looking for fun, leisure shopping, the sales and profit margins, just weren't enough to support sears's sprawling store base, kmart went bankrupt in 2004 and then merged with sears. It was hoped that the combined entity could produce efficiencies that could save both of their brands, but those hopes proved to be fleeting the late 2000s and the 2010s were nothing short of disastrous.

After 2006, sears never saw an increase in revenue. In fact, their decline only accelerated in 2014 and 2015 and again in 2017., in a desperate attempt to stop the bleeding sears began, closing stores all over the country. You might remember the huge liquidation sales of seer stores near where you lived as sears tried to cap their losses on underperforming stores, but they weren't able to stop their steep losses after three years of break-even performance in 2008, 2009 and 2010, they lost billions of dollars. Every single year, thereafter, 2011 was especially bad with the net loss of 3.1 billion dollars.

Sometimes these corporate losses get lost in the numbers, but it's important to realize just how much money they were losing to put it in perspective, their crown jewel. The sears tower costs about 870 million dollars to build even after adjusting for inflation for every year in the 2010s, sears was losing significantly more money than it cost to build the sears tower. In some years they lost more than twice that amount, but starting in 2013. Another wrinkle in the troubled story of sears unfolded: eddie lampert, a billionaire investor and hedge fund manager have built up a sizable stake in sears and in january of 2013 sears announced that he would become the new.

Ceo investors hoped that lampert, who had a strong track record of activist investing, could save the company after all, just 10 years before that, sears was still one of the most respected household companies in the country and lampard was coming off a string of superstar years. As a hedge fund manager, including having reportedly been the first hedge fund manager to make more than a billion dollars in personal compensation in a single year, people called him the next warren buffett and many thought that he could bring sears back. Unfortunately, bringing in lampert might have been the last nail in the coffin lampard refused to invest in updating the aging sears stores, many of them hadn't been renovated in years and were becoming old and worn out compared to the modern storefronts of kohl's, walmart and target. Among other competitors, sirius stores just looked outdated, lamper also failed to instill pride within his employees.

Glassdoor reviews for sears were brutal, commonly calling out eddie lampert, specifically there's just been no company morale at sears for the past decade, which can only lead to lackluster shopping experiences and lagging innovation and service, and there are even questions as to whether lampert was truly invested. In saving the company, or not his hedge fund, esl, which is named after his own initials, has been accused of trying to strip sears of its remaining assets and valuable brand names. For example, in 2014, just one year after lampert became ceo tommy hilfiger, reportedly offered billions of dollars for sears's brand land's end lamprey rejected the offer, without negotiations, but later sold land zen to his own hedge fund for a low price. Additionally, over the years since lampert became ceo, he has borrowed hundreds of millions of dollars on behalf of sears from his own hedge fund.

This is more of a gray area because it is unclear whether sears would have been able to get financing elsewhere for the same interest rates as they got from esl about 11. But it raises the question of a conflict of interest between the ceo and the company itself in 2018, lampert finally took sears to bankruptcy court for chapter 11 bankruptcy. This allowed it to restructure hundreds of millions of dollars worth of debt and remain operating at stores. However, in the years since then, the last series stores have been slowly liquidated accelerated by the coronavirus pandemic.

It has been estimated that in 2021 there are less than 100 seer stores left in business by the end of the year. That number might not even be in the double digits anymore. Do you remember shopping at a seer store where you grew up? Do you remember when the nearest seo store to where you live finally gave up the ghost? Let us know your experience with sears in the comments below i know i always enjoyed walking through the serious doors with my parents when i was a kid and it's a shame to see them die out, but that's just the way things go and someday. Even amazon will be seen by future generations in the same way that we view sears now anyway, if you liked this video make sure to leave a like and subscribe for future uploads in the meantime.

Thank you so much for watching and we'll see you in the next video wall street millennial, signing out.