The Amazon of its day, Sears' woes were years in the making

2018-10-16 12:05 Last Updated At：12:10

Before there was Amazon — or, for that matter, Home Depot or Walmart or Kmart — there was Sears.

From its beginnings as a mail-order watch business in Minneapolis 132 years ago, the company grew to become America's everything-under-one-roof store and the biggest retailer in the world.

For generations of Americans, the brick-like Sears, Roebuck and Co. catalog was a fixture in just about every house — a miscellany of toys and clothes and furnishings and hardware that induced longing for this or that dream purchase. The Sears brand loomed as large over the corporate landscape as its 108-story basalt-like headquarters did over the Chicago skyline.

"It was the Amazon of its day," said Mark Cohen, a professor of retailing at Columbia University and a former Sears executive.

But how the mighty have fallen: Plagued by falling sales and heavy debt, Sears filed for Chapter 11 bankruptcy reorganization Monday and announced plans to close 142 of its roughly 700 remaining stores and eliminate thousands of jobs in a bid to stay afloat, if only for a while.

Analysts have their doubts it will survive.

"In our view, too much rot has set in at Sears to make it (a) viable business," Neil Saunders, managing director of GlobalData Retail, said in a note to investors.

Its bankruptcy was years in the making. Sears diversified too much. It kept cutting costs and let its stores become fusty in the face of increasing competition from the likes of Walmart and Target. And though it expanded onto the Internet, it was no match for Amazon.

"In point of fact," Cohen said, "they've been dead for a very long time."

In its bankruptcy filing, Sears Holdings, which operates both Sears and Kmart stores, listed assets of $1 billion to $10 billion and liabilities of $10 billion to $50 billion. It said it has lined up $300 million in financing from banks to keep operating and is negotiating an additional $300 million loan.

The company once had around 350,000 employees; as of Monday's filing, it was down to 68,000. At its peak, it had 4,000 stores in 2012; it will now be left with a little more than 500.

Sears was born in 1886, when Richard W. Sears began selling watches to supplement his income as a railroad station agent in North Redwood, Minnesota. By the next year, he had opened his first store in Chicago and had hired a watchmaker named Alvah C. Roebuck.

The company published its first mail-order catalog in 1888. Together with companies like Montgomery Ward and J.C. Penney, Sears helped bring American consumer culture to middle America.

"It's hard to imagine now how isolating it was to live in a small town 100 years ago, 120 years ago," said Marc Levinson, author of "The Great A&P and the Struggle for Small Business in America." ''Back before the days of cars, people might have a ride of several days in a horse and buggy just to get to the nearest train railhead, nearest train station."

"What Sears did was make big-city merchandise available to people in small towns," he said.

There was a time when you could find just about anything for your house in the Sears catalog — including a house. Between 1908 and 1940, the company sold about 75,000 build-from-a-kit houses, many of which are still standing.

Sears' offerings could cover you from cradle to grave: It even sold tombstones. In between, there was everything from girdles to socket wrenches, dresses to guns, dolls to washing machines.

The Sears catalog "was second only to the Holy Bible in terms of the household importance," said 71-year-old novelist Allan Gurganus, author of "The Last Confederate Widow Tells All." He grew up in Rocky Mount, North Carolina, and recalls the way tenants on his grandfather's farm loved the catalog.

When the new one would arrive, Gurganus said, the old one was consigned to the outhouse as reading material and, well, toilet paper. He said they always started at the back of the book when pulling out pages.

"That's where the least important parts are — the plumbing fixtures and so forth," he said with a laugh. "I was especially interested in the underwear ads."

Gurganus uses the catalog as a research tool for his novels. A 1917 edition occupies his bedside table. He still has the six-string Silvertone guitar he ordered in 1963.

For generations, Sears was an innovator in practically every area, including home delivery, product-testing laboratories and employee profit-sharing. When post-World War II prosperity led to the growth of suburbia, Sears was well-positioned to cash in on another major development — the shopping mall.

By the late 1960s, Sears was the world's largest retailer. In 1975, it completed the black Sears Tower, which at 1,450 feet (442 meters) was the world's tallest skyscraper for 25 years.

Between 1981 and 1985, the company went on a spending spree, acquiring the stock brokerage Dean Witter Reynolds and the real estate company Coldwell, Banker. It launched the Discover credit card nationwide.

"They diverted all of their retail cash flow into other enterprises," Cohen said. "And the retail business had come apart at the seams."

Sears eventually got rid of those businesses. And to save money and generate capital, it sold off some of its most familiar brands, Craftsman and DieHard among them. In 1993, it killed the general merchandise catalog. Not long thereafter, its sold its skyscraper.

Sears introduced its popular "Come see the softer side of Sears" ad campaign in 1993 and had a turnaround starting in the mid- to late 1990s, but it didn't last long.

Hedge fund manager Eddie Lampert bought the company in 2005 and created Sears Holdings Corp. He began cutting expenses and selling off real estate, but the hemorrhaging continued.

Retail historian Vicki Howard, author of "From Main Street to Mall: The Rise and Fall of the American Department Store," said Sears was too slow to adapt as consumers drifted away from the malls and more toward online shopping and big-box stores farther out in the suburbs.

Levinson said that for too long, Sears catered to "a broad middle market" and failed to change with the times.

"There are a lot of stores specializing in particular parts of the market, and no longer very many stores that are seeking to serve everyone," he said. "And so Sears was stuck there in the middle at a time when the market was fragmenting."

Eventually, Cohen said, Sears will disappear.

"It's an American tragedy," he said. "It did not have to be this way."

Breed contributed to this report from Raleigh, North Carolina, D'Innocenzio from New York.

This hard-line Iranian general is a major player in talks with US over war

DUBAI, United Arab Emirates (AP) — As negotiations with the United States hang in the balance, a hard-line Iranian general linked to notorious attacks at home and abroad over the past decades is believed to have seized a place near the center of power.

Brig. Gen. Ahmad Vahidi, who heads Iran's paramilitary Revolutionary Guard, has become a major player in formulating Iran’s tough stance in negotiating a possible end to the war with the United States, experts say. He is believed to be part of a small clique in direct contact with Iran’s Supreme Leader Ayatollah Mojtaba Khamenei, who remains in hiding after being reportedly wounded in the Feb. 28 Israeli strikes that killed his father, Ayatollah Ali Khamenei.

Like everything in Iran since the war began, who ultimately controls decision-making remains uncertain. As people within the upper ranks of Iran's theocracy vie for power, they can gain or lose favor quickly. Vahidi himself hasn't been seen publicly since Feb. 8, weeks before the war began. On Thursday, Iranian media carried contradictory reports on Vahidi meeting with Pakistan's interior minister in Tehran, who carried a message regarding negotiations with the U.S. and met with other top Iranian officials.

A longtime veteran of the ruling system, Vahidi helped shape Iran’s support of militant groups across the region, is accused of a role in the 1994 bombing of a Jewish center in Argentina, and in 2022, led domestic security forces in a bloody crackdown on protesters.

Elevated to Guard commander this year after his predecessor was killed early in the war, he leads the most powerful force in Iran, with its arsenal of ballistic missiles and its fleet of small boats threatening Persian Gulf shipping.

“Vahidi and members of his inner circle have likely consolidated control over not only Iran’s military response in the conflict but also Iran’s negotiations policy,” the Washington-based Institute for the Study of War said.

Iran’s war strategy has been to keep a stranglehold on the Strait of Hormuz, blocking oil and gas exports and causing a global energy crisis. At the same time, it has struck hard against oil facilities, hotels and infrastructure in Gulf Arab nations.

In negotiations, it has held out against U.S. demands that it surrender its stockpile of highly enriched uranium, betting that it can outlast the U.S. in the ongoing standoff and that President Donald Trump will be reluctant to resume outright war that could bring greater damage to America’s Gulf allies.

That likely reflects Vahidi’s confrontational style. “He comes from that mindset of unending revolution, unending resistance,” said Kenneth Katzman, a senior fellow at the The Soufan Group, a New York-based think tank. Vahidi believes “the U.S. needs to be challenged at every turn,” said Katzman, a senior Iran expert who advised the U.S. Congress for over 30 years.

Vahidi boasted in January that Iran’s defense power has developed to make it a “high risk for any military action by an enemy.”

Pakistan hosted talks in April between an Iranian delegation, led by parliament Speaker Mohammad Bagher Qalibaf and an American one, headed by U.S. Vice President JD Vance. But it ended without any deal.

Qalibaf and Foreign Minister Abbas Araghchi returned home to face criticism from inside the theocracy suggesting they were too willing to make concessions. Qalibaf had to insist publicly that the talks had the support of the supreme leader.

Since then, Vahidi has become the main point of contact for those negotiating with Iran, said a regional official with direct knowledge of the mediation. The official spoke on condition of anonymity to discuss the sensitive diplomacy.

The extreme seclusion and unknown condition of the supreme leader have fueled speculation about jockeying among leaders for access to Khamenei and influence over him. In early May, President Masoud Pezeshkian, who many see as sidelined from influence by the Guard, went out of his way to say he “got to see our dear leader” and spoke to him for around two hours.

But Holly Dagres, a senior fellow at the Washington Institute for Near East Policy, said it’s likely the new supreme leader “is in lockstep with a more hard-line (Guard) — similar to his father, but in a more emboldened and uncompromising form.”

Analyst Kamran Bokhari wrote that figures like Vahidi “are not just managing war — they are actively reshaping succession, consolidating authority around a weakened supreme leader, and effectively ‘capturing’ the state through crisis governance.”

Born Ahmad Shahcheraghi in Iran’s southern city of Shiraz in 1958, Vahidi like many young men after the 1979 revolution joined the Revolutionary Guard and fought against the invasion by Iraqi leader Saddam Hussein that sparked a bloody, eight-year war.

Vahidi entered the Guard’s nascent intelligence arm and soon was overseeing operations outside Iran. He gained the favor of powerful patrons, including Akbar Hashemi Rafsanjani, a later president. Rafsanjani said in his autobiography that Vahidi was involved in the 1980s Iran-Contra scandal, in which the Reagan administration sold weapons to Tehran in an effort to free hostages held by Iranian-backed militants in Lebanon. The U.S. later used the money from those sales to fund Contra rebels in Nicaragua.

Rafsanjani later intervened to protect Vahidi when then-Supreme Leader Ayatollah Ruhollah Khomeini sought to prosecute members of the Guard who failed to stop an incursion by armed fighters from an Iranian exile group in the late 1980s during the war.

Around this time, Vahidi took over the newly formed Quds, or Jerusalem, Force. Over decades, the Quds Force helped create a network of proxy militant groups and allied governments around the Middle East. The Quds Force under Vahidi helped mastermind the 1994 bombing targeting Argentina’s largest Jewish community center, killing 85 people and wounding 300 others, prosecutors say. Iran has denied involvement.

American investigators also believe that under Vahidi, Iran organized the 1996 Khobar Towers bombing in Saudi Arabia, killing 19 U.S. service members and wounding hundreds. Tehran has denied being involved in that attack as well.

Vahidi left the Quds Force in 1998. In 2010, while he was defense minister, the United States imposed sanctions on him over alleged involvement in Iran’s nuclear program and its pursuit of weapons of mass destruction.

More recently, as interior minister, Vahidi oversaw police units involved in a bloody, monthslong crackdown on protests over the 2022 death of Mahsa Amini, who died in police custody after being arrested for not properly wearing the mandated headscarf to the liking of authorities.

An Iranian newspaper later published a classified document that showed Vahidi’s Interior Ministry ordered security agencies to monitor and photograph women not wearing the hijab, something he had denied was taking place.

At around that time, Vahidi said in public comments that calls to remove the hijab were a “colonial plan” by Iran’s enemies trying to undermine the Islamic Republic. “The hijab has been a big barrier against the progress of effete Western culture,” he said.

Vahidi’s role makes reaching an accord with Iran that much more difficult for the U.S. — as does the continued obscurity over Iran’s leadership.

Trump wants a single interlocutor in Iran for negotiations, but "the whole system has changed,” said Hamidreza Azizi, an Iran expert at the Middle East Institute.

“It is not a one-man show. Vahidi is one alongside others," Azizi said. "Some we know and some we don’t know.”

Associated Press writers Samy Magdy in Cairo, Sarah El Deeb in Beirut, and Amir Vahdat and Nasser Karimi in Tehran, Iran, contributed to this report.

The Amazon of its day, Sears' woes were years in the making