Sears — The Amazon of 1893, Strip-Mined by Its Own Hedge Fund

Sears, Roebuck & Co. sold America almost everything for more than a century, and on October 15, 2018 its parent, Sears Holdings, filed for Chapter 11 bankruptcy. Founded in 1893 as a mail-order house, Sears built the most influential retail catalog the country ever produced — a fat annual book from which a farm family could order a sewing machine, a suit, a tombstone, or, between 1908 and roughly 1940, an entire house shipped in numbered pieces by rail. It was, in every meaningful sense, the Amazon of its age, and it parlayed that into the largest retailer in the United States, a position it held through the 1980s with something on the order of 350,000 employees. At its physical high-water mark in the late 1990s it ran on the order of 3,500 stores under the Sears name (figures vary by what one counts, and later Sears Holdings counts ranged from roughly 2,700 to 4,000 across both banners).

What killed it came in two waves, and the second makes this a parable rather than a tragedy. The first was ordinary competitive failure: Walmart passed Sears in sales around 1990, Target took the style-conscious middle, and Amazon — running, with some irony, the exact mail-order-at-scale model Sears had invented — took the catalog’s whole reason for being. Sears, slow and over-stored, did not adapt. The second wave was financial. In 2005 the hedge-fund manager Eddie Lampert merged the ailing Sears with the ailing Kmart into Sears Holdings, and over the following decade the combined company was steadily hollowed out: its best brands sold off, its real estate spun out from under it and rented back, and its losses funded by loans from Lampert’s own ESL Investments, which became both the company’s controlling owner and its largest creditor.

By the time it filed, Sears Holdings listed some $11 billion in liabilities. Lampert’s ESL then bought a remnant of roughly 425 stores — about 223 Sears and 202 Kmart — out of bankruptcy for around $5.2 billion, mostly by crediting the debt it was already owed, preserving perhaps 45,000 jobs. That remnant, operated as Transformco, has since dwindled to almost nothing: as of late 2025 there were five Sears stores left in the country.

What was lost is not abstract. Sears shed hundreds of thousands of jobs over its long decline; at the 2018 filing it employed around 68,000, down from its mid-century peak. Its pension plans, covering roughly 90,000 workers and retirees and underfunded by about $1.5 billion, were handed to the federal Pension Benefit Guaranty Corporation. The catalog colossus that taught America how to shop at a distance was, in the end, dismantled at a distance — by spreadsheet.