When was the last time you went to a Sears or K-Mart? Don’t think too long, because it’s been while. The last time I went to a K-Mart was in 2015, and that was just to show my girlfriend what the inside of one looked like. (She’s never been).
Not shocking that on October 15th, Sears Holdings claimed bankruptcy. Over a decade of store closings, declining sales, negative cash flow, bankruptcy was unavoidable.
What does that mean to shareholders, the owners of the company. Well, it means that shareholders will get nothing! Bankrupcty will wipe out all current shareholders, and the company, if able to, will emerge, with less debt and new owners.
So…how did I “almost” lose money in Sears bankruptcy?
I purchased Sears stock in 2004.
Sears, at one time, owned Discover Financial Services(DFS). The value of Discover, was more than the price of Sears stock, which was $41.92/share. It’s like paying 95 cents for a dollar. I loaded up!
I wasn’t the only person who wanted Sears stock, Eddie Lampert did as well. In late 2004, Eddie offered to purchase Sears, and merge it with K-Mart, to form Sears Holdings. As a owner/shareholder of Sears, I was given the choice of taking shares/ownership in the new company, or taking cash. As you can see…..
I took the cash! Sears is/was a dinasour. Combining two dying companies, Sears and K-Mart, into one, is like blow drying your hair while you are in the shower. Just…not…a..good…idea!