Feb 4, 2008
Financial speculator Edward S. Lampert has been cannibalizing Sears and K-Mart, selling off stores and divisions one by one–and reaping huge profits in the process.
Lampert bought K-Mart after it went into bankruptcy in 2003. In 2005, after writing off its debts, K-Mart then bought Sears by taking out more debt and using Sears itself as collateral for the debt.
Lampert slashed its cost to the bone. For example, Sears cut spending on the upkeep of its stores, to half a billion dollars a year. Target Corp., on the other hand, spends over 4 billion dollars – eight times as much, even though it’s a similar sized company.
The effect on Sears stores has been noticeable, from dirty carpets and floors to bare flourescent lighting, empty aisles and broken fixtures.
In addition, the company has sold stores, including a group of them sold by K-Mart to Home Depot for 250 million dollars in 2004. And the company is now talking about spinning out Sears’ best known brands, like Craftsman tools and Kenmore appliances.
Not surprisingly, sales at Sears and K-Mart are declining. But because the bottom line has been good, Wall Street has approved, and their stocks had been doing well – at least until the entire stock market took a dive a few months ago.
This is the way these speculators operate: they buy a company, taking the company itself into debt to finance the purchase. Then they strip it of any assets it has, making big money off those sales, before leaving the company a hollow, debt-ridden shell and moving onto the next company to “strip and flip.”
This is what capitalism has come to. “Investment” isn’t about building up a company, or producing goods to sell; it’s about tearing a company apart, throwing workers into the streets, and making wealth off the guts that remain.
There’s a reason these capitalists are called vultures!