congratulations! sears very strong commitment to the military

1—STRAIGHT TALK Winter 2012—

Volume 15, Issue 1 Winter, 2012

This issue of STRAIGHT TALK:Lansing, MI, Retirees p. 3

Can SHC Grow? p. 4

News You Can Use p. 6

Investment Tips? p. 7

A Wounded Company? p. 8

She Made Me Do It! p. 9

Renew Now! p. 10

Sears Moving? p. 11

Sears and N.A.R.S.E. It was almost15 years ago that N.A.R.S.E. wasborn as a result of then SearsChairman Arthur Martinez retroac-tively taking the life insurance ben-efit from the retiree population.

This was the springboard forthe “Betrayal of Trust” cam-paign, which led to a group ofretirees filing a federal classaction lawsuit against Searsin 1997 alleging, among otherthings, violating its fiduciaryresponsibility to retirees.

Over the years we have hadour differences with Sears.However, Sears, Roebuck andSears Holdings have had alongstanding commitment tothose who serve in the military.The company, for many, manyyears has assisted the troops andtheir families through several mili-tary programs and initiatives.N.A.R.S.E. is very proud of Sears’treatment of its veterans.

It’s a sad fact that veterans face aneven higher unemployment ratethan the already dismalnational average.

According to an article published inChicago Business, November 12, 2011,

by Ann Dwyer, “The unemploymentrate for people who have left militaryservice over the past decade is higherthan the national average … for vet-erans of Iraq and Afghanistan, unem-ployment stands at roughly 11.5%.”

Congratulations!

Sears Very Strong Commitment to the Military

Continued on page 2

In September 2004, the companyextended its military pay differen-tial (fills in the gap between mili-tary pay and employer pay) andbenefits continue for 60 months foreligible associates called to duty inthe Reserves or National Guard.

However, as reported in AnnDwyer’s article, “Keeping positionsopen while employees are on mili-tary duty … presents a challengefor managers and peers left be-hind. And setting aside time for

mentoring, coaching and hit-ting military job fairs also canbe taxing, especially in leantimes like these.”

SHC continues to go above andbeyond what is required by law

to support associates called toactive military duty. A company

At Sears Holdings,where veterans makeup about 10% of the workforce, as-sociates who are called up for activeduty are guaranteed that their jobswill be secure until they return.

Sears has encouraged and supportedassociates serving in the armedforces for decades. Records showthat Sears has provided support toemployees serving in the militaryas early as 1916. Sears’ pay differ-ential was first instituted in 1990for Operation Desert Shield–Storm.


spokesman has said that Sears re-gards service to our country, as oneof the greatest sacrifices our youngmen and women can make, andSears is happy to do its part tolessen the burden they bear whenon active military duty.

Federal law only stipulates thatcompanies hold reservists’ jobsopen until their tour of duty is com-plete. But on top of that, Sears hascommitted itself to making up thedifference between employees’ ci-vilian salaries and military pay, aswell as continuing job benefits likehealth and life insurance. OneSears manager said, “It’s the rightthing to do.”

Sears Receives Freedom AwardDuring October 2005, SHC receivedthe Secretary of Defense EmployerSupport Freedom Award. Thisaward was created to publicly rec-ognize American employers whoprovide exceptional support to theiremployees who voluntarily servethe nation in the National Guardand Reserves. The Freedom Awardis the highest in a series of Em-ployer Support for the Guard andReserve awards.

Deployed employees have also re-ceived annual merit-pay increases,incentive pay and stock options.

As part of its commitment to themilitary, SHC has also pioneered pro-grams to hire spouses of active-dutypersonnel and in 2005 had provideda grant of nearly $2.5 million to theNational Military Family Associa-tion for “Operation Purple” summercamps. These camps were for chil-dren of deployed military personnel.

MOAA Service AwardThe Military Officers Association ofAmerica (MOAA) is the nation’s

largest and most influential asso-ciation of military officers. It is anindependent, nonprofit, politicallynonpartisan organization.

During March 2006 the companywas again honored with theMOAA’s Distinguished ServiceAward. This award recognizedSHC’s support of associates in theGuard and Reserve and militaryfamilies nationwide.

Best of Vets AwardSHC was ranked as the number oneretailer and number 15 overall inthe Military Times EDGE magazineBest for Vets: Employers 2010 sur-vey. Military Times EDGE is dedicatedto showing men and women fromthe various branches of the servicesthe practical and positive actionsthat can make their lives and ca-reers better—both in the militaryand beyond.

To be ranked, Military Times invitedcompanies of the Fortune 1,000, theDefense News 100 and FederalTimes’ General Services Adminis-tration 250 to fill out an online sur-vey about their militaryrecruitment and retention policies.

Responses were evaluated usingfour criteria: Recruiting—budgetand personnel dedicated to militaryhiring; Training/Mentoring—num-ber of orientation and mentoringprograms exclusively or primarily forveterans; Reserve Policies—payand benefits for activated reserv-ists; Corporate Culture—represen-tation of veterans in the work forceand on the executive team, pro-grams for military spouses and de-pendents and involvement inmilitary and veterans causes.

Top 100 Military Employers—2011G.I. Jobs honored Sears Holdings asthe number 29 employer on its Top

100 Military Friendly Employers listfor 2011.

For the last three years, SHC hasranked in the top 50. This awardrecognizes companies’ efforts toemploy and support veterans, mem-bers of the Military, Reserves andNational Guard, as well as militaryspouses. A consistent top 50 rank-ing is a testament to Sears Hold-ings’ continued commitment tomilitary recruiting efforts.

Heroes at HomeIn addition to Sears’ many othermilitary initiatives, Sears also hasthe Heroes at Home program. SearsHoldings has created in partnershipwith Rebuilding Together, thenation’s leading nonprofit organiza-tion working to preserve affordablehome ownership and revitalize com-munities, a means of assistingmilitary families facing hardship.

Rebuilding Together, the nation’slargest all-volunteer home reha-bilitation organization, is com-mitted to bringing warmth, safetyand accessibility to homeownerswho do not have the financial orphysical resources to completehome repairs and other neces-sary improvements.

Heroes at Home is one of the manyinitiatives through which SearsHoldings acknowledges the sacri-fice made by our troops every dayin the line of duty, while support-ing and honoring those heroes whoremain at home.

N.A.R.S.E. salutes Sears Holdingsfor its longstanding commitmentto those who serve in the militaryand its commitment to assist thetroops and their families throughseveral military programs and ini-tiatives. Keep up the good work!

Military Continued from page 1


Let’s Hear it for the Lansing, Michigan Retirees!The Lansing Michigan store 1170 and service personalretirees gather once each year for their annual pot-luck lunch.

The lunch is held at a local park and about 60 to 70retirees and guests attend. Currently Jack Lansingretired D/45 sales and his wife and others head upthis event.

Oldest retiree to attend this year was 93-year old MabelGender, former drapery work room manager.

Lansing retirees do not have an organized club as suchbut there are smaller groups that meet monthly forbreakfast or lunch.

What’s your club doing?


One can only guess, but when Ed-ward Lampert, chairman of SearsHoldings Corp., finishes remakingSears, it will most likely be unlikeanything Sears, Roebuck has beensince the 1890s.

As has been reported by many ana-lysts, Lampert is lessening thecompany’s dependence on full-sizelocations, where sales have fallen,and is looking at smaller store for-mats, internet sales, licensing itsbrands including DieHard, Crafts-man, and Kenmore, and leasingspace to such retailers as For-ever 21, to stimulate growth.

Sears has said it is confidant thatoffering its core brands elsewherewon’t cannibalize sales. Howeverskeptical former executives and re-tail experts question whether thatgives customers one less reason tostep inside Sears this holiday season.

“This plan to farm out the brandsdoes nothing but accelerate the de-cline of the stores,” said formerSears Canada chief executive MarkCohen, now a professor at Colum-bia University. “There is no viableretail strategy here. In retailing,when your stores get dark, dirty andgrim, you are past the point of noreturn,” Cohen added.

Is this latest brand move on Searspart a stroke of genius or the finalnail in the coffin? As more Sears’brands get into other stores, whywould anyone even visit Sears at all?

Sears has closed 171 of its largerU.S. stores since the companymerged the chain with Kmart in2005. The company is trying toerase the fuddy-duddy aspect to itsstores. Some say that even to ag-

ing baby boomers, it’s the placegrandma and grandpa shopped.

The Sears brands “still have equity,they still resonate” with consum-ers, Robert Passikoff, president ofBrand Keys, a New York brand-con-sulting firm, told Bloomberg News.He thinks that Sears should go

even further, suggesting that it“close down the stores and just li-cense the heck out of the brands.”

Sears PerformanceYes, Eddie Lampert, is a purported fi-nancial genius. But Sears and Kmarthaven’t done much to impress inves-tors or consumers since Lamperttook charge in 2005. Lampert, whoalong with his hedge fund owns about60% of Sears, has presided over 18consecutive quarters of decliningsales. And the chain is on its fourthchief executive officer.

Last month, Sears Holdings posteda wider-than-expected loss in its fis-cal third quarter as margins nar-rowed and sales slipped.

Domestic same-store sales in thelatest period edged down 0.8% over-all, including a 0.7% decline at

Sears domestic stores and a 0.9%decline at Kmart stores. The com-pany also noted that top-line resultswere affected by the effect of hav-ing fewer Kmart and Sears full-linestores in operation.

For the quarter ended October 29,the company reported a loss of $421million, or $3.95 s share, comparedwith a loss of $218 million, or $1.98a share, a year earlier.

Louis J. D’Ambrosio, chief execu-tive officer and president of SearsHoldings, said that the retailerwas “not satisf ied” with itsdisastrous” results.

“As we examine every part of ourbusiness and take actions to im-prove our near-term performance,we are also investing in our fu-ture,” said D’Ambrosio, citingtechnology initiatives.

That sounds like the same emptyboiler plate Sears has been push-ing for years, said Mark Cohen.

“The objection I have is not that(Lampert) is busy selling off thedesks, the chairs, the stores, thebuildings and the brands,” Cohen said,predicting Lampert will eventuallyliquidate the chain, as opposed to arm-ing it for growth, Warren Buffett style.

Since the merger of Kmart andSears in 2005, sales have declinedan average of 3.5% annually, saysMorningstar analyst Kimberly Picciola,who expects the trend to continue.

Sears FutureBesides poor merchandising, Mor-gan Stanley analyst Gregory Melich

How Does Lampert Planto Stimulate SHC’s Growth?

Continued on page 5

Edward Lampert,chairman,

Sears Holdings Corporation


blames chronic underinvestment.Sears responds that it has “world-class brands,” significant cash flowand a strong balance sheet. “Webelieve we are well-positioned forthe future,” a spokesman says. Thecompany also says Kmart sales areimproving, in part because of thepopularity of layaway sales.

Sears and Kmart are also sitting onsome valuable real estate. ButLampert sucked a lot of cash out ofthe company to buy back shares.This propped up the stock but leftSears more financially vulnerable.

According to Bloomberg News, “ana-lysts are predicting a decline insales and an adjusted loss of $1.28a share excluding some items inthe current quarter. The company… has posted losses in the five ofthe past six quarters. Cash haddwindled to $658 million at the endof the last quarter, compared with$1.2 billion a year earlier. Searsearned $1.33 million last year.”

Matthew McGinley, a managingdirector at New York-based Interna-tional Strategy & Investment Group,reported that Sears owns or occu-pies about 2% of existing retail spacein the United States. The companymissed the opportunity to cash in byselling locations when the economywas stronger, said McGinley.

Sears StoresMany of Sears leased stores aredimly lit and have old fixtures andbroken flooring, according toMcGinley who estimates Sears isspending less than a quarter of the$8 a square foot that retailers typi-cally invest to maintain stores.

Since 2005, Sears has placed $6billion into buyer back shares, ortwice what it has spent on capitalimprovements, according to his

firm. As a result, many of its storesare dumpy looking.

An August report from McGinley'sfirm ranks Sears and Kmart at thebottom of the list of a dozen retail-ers ranked by sales per square footand operating profitability.

McGinley estimates that about aquarter of the company's full-sizestores are consuming cash, and pre-dicts that the company's cash use will

accelerate to $500 to $750 millionthis year, from $300 million last year.

Maintenance and renovations areimportant for a fresh atmospherethat signals to shoppers that prod-ucts are up-to-date and worth buy-ing. Even Wal-mart, a companyknown for Spartan operations,spent billions on remodeling in re-cent years.

Spokesman Chris Brathwaite saidSears believes most of its stores arein fine condition, and has beensprucing up bathrooms and toy de-partments, even if it hasn’t spent asmuch on remodeling as its rivals. “Willyou find a handful of stores that needsome attention? Of course,” he said.“But we have our store standards.”

To be sure, some of Sears newermall locations have a prettier look,but Craig Johnson, of consultancy

Customer Growth Partners, saidthat overall Sears fleet of stores isthe most rundown in U.S. retailing.

“With these ‘dead man walking’stores, the objective of the parentcompany is not to maximize (store)productivity but milk it for whatlittle it has left before it can sell theproperty,” Mr. Johnson said.

Sears CEOAs reported by Bloomberg, new CEOLou D’Ambrosio, hired last Febru-ary, is ramping up Web operations.Lampert cited D’Ambrosio’s tech-nology background after recruitinghim. Still, Mr. D’Ambrosio has noretail experience, unlike J.C.Penney’s new CEO, former AppleInc. retail chief, Ron Johnson.

Online sales via Sears variouswebsites grew 30% year-over-yearin the second quarter of this year,and 22% in the first quarter. To jogthat growth, Sears has providedsalesmen in 450 of its stores withmore than 5,000 iPads and 11,000iPod Touches to help them track in-ventory and customer orders, andalso added free wireless access.

With competitors such as Home De-pot closing stores, Sears can buildon its position as the leading appli-ance seller when the economy im-proves, said Paul Swinand, andanalyst at Morningstar in Chicago.

“They actually have a shot at turn-ing the retail business around,” hesaid. That said, he added, “I can’tpoint to anything that’s the keythat’s going to turn it around.”

EDITOR’S NOTE: This article was as-sembled from news accounts ap-pearing in the Chicago DailyHerald, the New York Post, TheWall Street Journal, BloombergNews, and Dow Jones Newswire.

Lampert Continued from page 4

Louis J. D’Ambrosio,chief executive officer

and president,Sears Holdings Corporation


iPad App for Sears ShoppingThe Sears shopping app is a “solidshowing” according to CNET’s JasonParker. He said that anyone who isa Sears shopper would appreciate“this fast, responsive shopping tool”on his or her iPad.

The Sears app for iPad works wellfor browsing through items andmaking purchases from Searsonline, but you also can locatenearby stores if you need to see be-fore you buy, said Parker.

He went on to describe the actualoperation of the Sears app. The applayout upon launch gives you bigbutton icons and shopping catego-ries to browse through by swipingyour screen, but you also can hit theProducts button in the upper left tosearch or drill down through catego-ries. The app also has an Occasionsbutton that lets you flip throughevent-appropriate gifts for catego-ries such as Baby, College, Fitness,Moving and Weddings.

Once you choose a category, youcan use a scrollable list to be morespecific about what you want to pur-chase. The main listings pagesshow nine products per page, and aswipe to the left shows you more.

When you tap on a product, a pop-up window comes up showing youthe details and a summary and of-fers the options to add it to your cartor locate the item at a nearby store.The app also has sharing feature ifyou want to send a particularly gooddeal to a friend.

Though the Sears app relies on pop-ups for navigation, the app is veryresponsive and gets you where youwant to go quickly. Another greatfeature is the Shopping Cart, which

opens like a drawer from the bot-tom of the screen, great for check-ing out what you’ve picked outalready while you’re still shopping,said Parker.

What Is a Bear Market?The American Association of Indi-vidual Investors (AAII) Journal re-cently defined exactly what a BearMarket is. Any time the stock mar-ket falls, the severity of the fall de-termines how it is categorized andhelps to provide a sense of howquickly a rebound may occur.

The three categories are a pullback(a decline of 5%–10%), a correction(a drop of 10%–20%), and a bearmarket (a plunge of 20% or more.)

Through calling a decline a correc-tion instead of a bear market maysound like a naming convention,history shows a correlation betweenthe magnitude of a fall and thelength of time it takes for stocks torebound. Historically, stocks haverecovered at a more rapid pace fromcorrections than from bear mar-kets. Therefore, not crossing the-20% line is a positive for stocks,both on the way down and on theway back up.

However, keep in mind that stockprices are unpredictable. Further-more, the markets never give a signthat a correction or a bear markethas ended. Thus, for long-term in-vestors, it makes sense to maintainan allocation to stocks, even dur-ing a bear market, as opposed to try-ing to time buys and sells.

Stores With Senior DiscountsGone are the days of grandmother’s“early bird special” at the local diner.Hundreds of retailers are now ca-tering to seniors with a wide vari-

ety of discounts for usually the 60-and-older crowd. We have set forthbelow a small sampling of storesthat offer senior savings. And a fewof these stores only offer discountson certain days of the week.

RESTAURANTS: Applebee’s, Arby’s,Ben & Jerry’s, Bennigan’s, BostonMarket, Burger King, Chick-Fil-A,Chili’s, CiCi’s Pizza, Culver’s,Denny’s, Dunkin’ Donuts,Einstein’s Bagels, Fuddrucker’s,Golden Corral, Hardee’s, IHOP, Jackin the Box, KFC, Krispy Kreme, LongJohn Silver’s, McDonald’s,Mrs. Fields, Shoney’s, Sonic, Steak’n Shake, Subway, Sweet Toma-toes, Taco Bell, TCBY, Waffle House,Wendy’s White Castle.

RETAIL AND APPAREL: BananaRepublic, Belk’s, Bon-Ton Depart-ment Stores, C.J. Banks, Clarks,Dress Barn, Goodwill, Hallmark,Kohl’s, Modell’s Sporting Goods, RiteAid, Ross Stores, The SalvationArmy Thrift Stores, Stein Mart.

GROCERY: Albertson’s, AmericanDiscount Stores, Compare FoodsSupermarket, DeCicco Family Mar-kets, Food Lion, Fry’s Supermarket,Great Valu Food Store, GristedesSupermarket, Harris Teeter, Hy-Vee, Kroger, Morton Williams Su-permarket, The Plant Shed, Publix,Rogers Marketplace.

TRAVEL: Alaska Airlines, Alamo,American Airlines, Amtrak, Avis,Best Western, Budget Rental Cars,Cambria Suites, Clarion, ComfortInn, Comfort Suites, ContinentalAirlines, Dollar Rent-A-Car, EconoLodge, Enterprise Rent-A-Car, Grey-hound, Hampton Inns & Suites,Hertz, Holiday Inn, Hyatt Hotels,

Retiree News You Can Use

Continued on page 7


InterContinental Hotels Group,Mainstay Suites, Marriott Hotels,Motel 6, Myrtle Beach Resort, Na-tional Rent-A-Car, Quality Inn,Sleep Inn, Southwest Airlines,Trailways Transportation System,United Airlines, U.S. Airways.

ACTIVITIES & ENTERTAINMENT:AMC Theaters, Bally Total Fitness,Busch Gardens Tampa, CarmikeCinemas, Cinemark/Century The-aters, U.S. National Parks, RegalCinemas, Ripley’s Believe it or Not,SeaWorld Orlando.

CELL PHONE DISCOUNTS: AT&TSpecial Senior Nation 200 Plan, Jit-terbug, Verizon Wireless Nation-wide 65 Plus Plan.

MISCELLANEOUS: Great Clips,Super Cuts.

Since many senior discounts arenot advertised to the public, ALWAYS

ask a sales associate if that storeprovides a senior discount. We

have not listed the exact dis-counts you will receive fromeach store as these discountsmay vary by region.

Long-Term Care DeductionsSince tax-season is again ap-proaching, you shouldknow that you candeduct more ofyour long-term-care premiumsas a medical ex-pense in 2011,according toKiplinger’s Retire-ment Report. Taxpay-ers 71 and older can now claim upto $4,240; seniors 61 to 70 canclaim up to $3,390; while people 51to 60 can deduct up to $1,270.

FTC Senior GuideThe Federal Trade Commission is-sued a new guide this year thatcompiles resources on health top-ics important to seniors. The top-ics include generic drugs, hearing

aids, hormone therapies and medi-cal ID theft. You can find Who Cares:Sources of Information aboutHealth Care Products and Servicesat www.ftc.gov/whocares. Or call 1-877-382-4357.

News Continued from page 6

For all of you with any money left after the roller-coaster ride in the stock market, be aware of the nextexpected mergers so that you can get in on the groundfloor and make some BIG bucks.

Watch for these unusual consolidations in 2012!

1. Hale Business Systems, Mary Kay Cosmetics,Fuller Brush and W.R. Grace Co. will merge andbecome: Hale, Mary, Fuller, Grace.

2. Google will buy Yahoo and become: GooHoo.

3. PolyGram Records, Warner Bros. and Zesta Crack-ers join forces and become: Poly, Warner Cracker.

4. 3M will merge with Goodyear and become:MMMGood.

5. Zippo Manufacturing, Audi Motors, Dofasco and Da-kota Mining will merge and become: ZipAudiDoDa.

Investment Tips?—With Some Humor6. 3M, J.C. Penney and the Canadian Opera Com-

pany will merge and become: 3 Penney Opera.

7. Although not approved by the FTC and Justice De-partment yet, FedEx is expected to join its com-petitor, UPS, and become: FedUP.

8. Fairchild Electronics and Honeywell Computerswill become: Fairwell Honey child.

9. Grey Poupon and Docker Pants are expected tobecome: PouponPants.

10. Knotts Berry Farm and the National Organizationof Women will become: Knott NOW!

And finally …

11. Victoria’s Secret and Smith & Wesson will mergeunder the new name: TittyTittyBangBang.


Recently, there have been manynegative articles about Sears Hold-ings. One of the more devastatingones stated that Sears Holdings isa fatally wounded company whosestock—though still trading in the

middle of its 52-week range—will not recover,and, as a result,this year islikely to spellthe end to twogreat Americanins t i tu t i ons ,this, accordingto Ken Kursonin an articlethat appeared

in the September 11, 2011, issueof Esquire. We hope he is wrong.

Kurson went on to state that thisisn’t Blockbuster or Borders goingout of business. We’re talking aboutSears and Kmart—two stores thathave defined what it means to bean American for more than 100years each. And the shame of it isthat the legendary investor EddieLampert, never really seemedto care.

Lampert was the master value in-vestor who notched an astonishing29 percent yearly return over 16years by acquiring stakes in under-valued, old-fashioned companiesand beating the hell out of manage-ment to improve performance.Lampert bought Kmart out of bank-ruptcy in 2003 by buying bonds noone else was willing to touch.

For an investment of less than $1billion, Lampert gained total controlof a company that, wounded or not,was doing over $30 billion in yearlysales and throwing off a ton of cash.

That he pulled off this maneuveronly days after being kidnaped atgunpoint and held for ransom onlyadded to Lampert’s legend. This wasa true corporate badass, and if hesaid Kmart would rise again, whocould doubt him?

Lampert took baby steps to improvethe actual performance of Kmart;the store added upscale brands toits apparel and consumer electron-ics. But none of that really mattered.Lampert’s vision for Kmart wasn’tabout increasing the store’s sales—it was about improving itscash flow.

That vision didn’t stop at Kmart.Lampert plotted to leverage Kmart’scash flow to acquire Sears. The ideawas irresistible to investors. Thesmart money almost didn’t care ifthe retailers ever recovered. Theidea was that the Sears real estatewas so valuable that even if thestores limped along, the companycould sell off assets and keep throw-ing off plenty of cash.

That’s exactly what Lampert haddone with Kmart. He sold 68 storesto Home Depot and Sears for almostas much money as the market wasplacing on the entirety of the re-maining business—1,500 plusstores, 16 warehouses, all theequipment. Kmart’s stock shot upsevenfold in a year and a half, andthat valuation allowed Lampert totake down Sears.

It was a great story, but it was not aretail story. It was a real estatestory, perfect for 2005. And then thereal estate market crashed.

All of a sudden, the whole strategybegan to unravel. With no interestfrom big-box retailers, the merged

entity—now known as Sears Hold-ings—had to struggle to find its foot-ing as actual businesses. It’s beena disaster. In the six years sincethe merger, revenue has declinedevery single year, and income hasfallen a shocking 84 percent.

What’s even more vexing, accord-ing to Kurson, is how little the com-pany appears to have done to try toright the ship. Sears has had aninterim CEO since 2008. In Febru-ary, Lampert settled on LouD’Ambrosio, a guy with zero retailexperience who is trying to turnaround the most dysfunctional re-tail business in America. It won’twork, insists Durson. And the strat-egy would be funny if it weren’tso sad.

The thing is, Lampert really is bril-liant. What he doesn’t know aboutturning around 19th-century retail-ers he makes up for in wizardry atpropping up share prices. Last yearat Sears, he used the company’scash to buy back $394 million instock, and in the first quarter of thisyear, amid horrendous revenue andprofit results, he doubled down,spending another $101 million.

For six years, this tactic hasworked, at least as far as the stockis concerned. With negative earn-ings, it’s an impressive mirage thatSears continues to trade in the $70range. Investors love company lead-ers who obsess over stock price. Butcustomers couldn’t care less.

Kurson believes that there’s an ex-cellent chance that within a yearSHLD will trade for half of what ittrades for today. And that will be agood thing for investors who from

Master ValueInvestor!

Retail Geru??

Is Sears Holdings a “Fatally Wounded Company”?

Continued on page 9


time to time have shorted thestock. He believes that within ayear, Sears and Kmart will no longerexist as freestanding stores. Andthat will be a damn shame.

The smart money didn’t care if theretailers recovered. They liked thereal estate.

EDITOR’S NOTE: Ken Kurson has beena contributing editor since 1997for Esquire magazine, where hismonthly section, “Green,” coversthe world of money and investing.Kurson’s cover story for the Octo-ber 1998 issue (“What did you doafter the crash, Daddy”) had thegood fortune to appear on the daythe Dow Jones Industrial Averagefell some 500 points. Publicationof Kurson’s cover story on thedangers of market overconfidencein October 1998 coincided with aswift market plummet, resultingin a flurry of media appearancesand coverage, from MSNBC to“Good Morning America.”

Mary Fran and I were 20 (actually Iwas still 19) when we eloped toCharleston, South Carolina. I trav-eled from Washington, D.C., justdischarged from the Navy. Shecame from Villa Park, Illinois, andwas on vacation from her job atSears State Street store in down-town Chicago.

Thus, began our 63-year marriagebeginning with me at Elmhurst, Il-linois College on the G.I. Bill, and

ine myself back at that “C” store I’dseen during my college years. Butto quiet her, I drove to the Homanand Arthington Corporate Head-quarters, walked in the front doorand asked for a job.

To make a long story short,they hired me to be a cata-log copywriter. With visionsof three martini lunchesand lush offices, I eagerlyaccepted the position andwas hired. My first assign-ment was a training gig be-hind a D/200 counter in alocal Sears store. Threeguesses where that D/200counter was? Yep, the

Elmhurst “C” store!

My career at Sears followed assign-ments as assistant retail salesmanager, assistant buyer, regionaland national buyer, and buyingmanager in Chicago, Los Angeles,New York and Honolulu. I’ve opened(or worked with) stores and factoriesin nearly every state and many for-eign lands.

After retiring from Sears in 1987, Itaught 11th and 12th grade Ameri-can and World History in Florida. Mylife’s ambition is to live long enoughto see my grandson graduate fromcollege. He begins at Arizona StateUniversity next semester.

EDITOR’S NOTE: Lloyd now resides inChandler, Arizona. He is aN.A.R.S.E. Vice President. MaryFran, his wife of 63 years, passedaway last May 11.

Lloyd & MaryFran on their50th WeddingAnniversary

Wounded Continued from page 8

A Retiree’s Personal Story:Mary Fran Made Me Do It!

By Lloyd Van Schoyck

Mary Fran at Sears Credit Depart-ment collecting payments from per-formers “on break” between showsat the burlesque theater acrossthe street!

I worked full time during col-lege at Ruby’s in Elmhurst,a family apparel departmentstore. There was a Sears“C” store across the streetwhere they sold hardwareand appliances. And theyhad a counter where youcould place and pick-up cata-log orders. Convinced I wasan expert apparel merchant,I could not imagine myselfever working at a Sears store!

Four years later there were threeof us. Daughter Denise was bornduring my senior year at ElmhurstCollege, and she was baptized in thecampus chapel by the college presi-dent who was an ordained minister.

I soon discovered that in a sluggisheconomy a bachelor’s degree wasno guarantee of being hired—any-where. But despair not; an inter-national conglomerate soonrecruited me to sell their product—shoe polish!

For four years I criss-crossed theupper Midwest selling to wholesaleand retail independent and chaindrug, sundry, grocery variety stores,even shoe repair stores. The paywas not bad but the job stunk.

Mary Fran talked me into applyingfor a job at Sears! I couldn’t imag-


As the historical photosdisclose, N.A.R.S.E. wasborn about 15 years ago asa result of then-C h a i r m a n A r t h u rMartinez retroactivelytaking the promised lifeinsurance benefit fromthe retiree population.

This was the springboardfor the “Betrayal of Trust”campaign, which led to agroup of retirees filing a federal classaction lawsuit against Sears in 1997alleging it violated its fiduciary re-sponsibility to retirees. This battlewas not with Sears, Roebuck, thecompany, but with its then-currentmanagement, namely Mr. Martinez.

We brought our case to the Court ofPublic Opinion through informa-tional picketing from the shores ofHawaii to the roadway leading toSears corporate headquarters inHoffman Estates, Illinois.

The class action lawsuit was finallysettled, and the federal judge pre-siding on the case advised us thatretirees had “good facts” but the lawwas not on our side. The company’slawyers relied on a reservation ofrights “fine print” clause to justifytheir actions. During negotiations,it was disclosed that the companybelieved that it even had the rightto eliminate the reduced life insur-ance benefit at any time. However,the class action settlement pre-vented them from doing this.

Since that time, our organizationhas provided speakers to local re-tiree clubs, reunited thousands ofretirees with former associates andfriends and kept our membershipup to speed as to what is going on atSears and at the federal level that

could impact our benefits, includ-ing medical plans, pensions, Medi-care changes, Social Security andthe taxation of such benefits, etc.

As the articles in this issue dis-close, while Sears is very generousto its associates serving in thearmed forces, the company is strug-gling to stay afloat. It has many morecritics than supporters. It is sellingits brands, closing its stores, not im-pressing investors or consumersand considering moving out of thestate of Illinois. Regardless of all ofthis dismal news, we still wantSears to survive!

We thank you for your pastand present support for ourindependent retiree orga-nization that is the oldest,active retiree organiza-tion in the country. Whowould have thought thatwe would still be aroundafter all of these years!

We are an all-volunteerassociation with no paidemployees. We are funded

totally by retiree membership duesand voluntary contributions. Thedues we collect are used to supportour communication efforts with thou-sands of retirees across the country.

STRAIGHT TALK could not be printedand mailed to you without your supportand the support of many others. And ourweb site, www.narse.org would not ex-ist without your financial contributions.

Because of our mission, I am ask-ing you, if you have not done so yet,to renew your membership inN.A.R.S.E. for 2012. Enclosed is aN.A.R.S.E. Membership/RenewalApplication form and mailing enve-lope. There is certainly strength innumbers. We need your support!

If you have already renewed, thenplease pass the application form tosomeone you feel could join us inthis cause. If you have any com-ments or questions about our group,you many contact me, RonaldOlbrysh, at [email protected].

We are here to keep you informedand to be your independent voice tothe company. Your continuing fi-nancial support is a directive toN.A.R.S.E. to live up to our sloganfirst heard back in 1997:

RENEW OR JOIN N.A.R.S.E. TODAY FOR 2012!

WE ARE NOT GOING AWAY!


Sears, as has been reported overthe past seven months, is consid-ering moving its Hoffman Estatesheadquarters, with its 6,200 jobs,out of Illinois. Sears has called theChicago area its home since 1887.

Last January Illinois lawmakersraised the state income-tax rate to5% from 3% and the corporate taxrate to 7% from 4.8% to help closewhat was then a $13 billion budgetgap. Including a personal propertyreplacement tax of 2.5% of income,corporations now pay a state in-come tax of 9.5%.

Sweetheart DealTwenty-two years agoSears, Roebuck and Co. le-veraged an impendingmove from Sears Tower,with fears that it wouldmove out of state, into asweetheart deal with the state of Il-linois, valued at $240 million.

The company purchased a 720-acrespread in Hoffman Estates, Illinois,and constructed on 200 of thoseacres a sprawling new headquar-ters with 2.4 million square feet ofoffice space spread across a seriesof buildings.

The 720 acres is known as the Prai-rie Stone campus and is now hometo an additional 79 companies. How-ever, about 200 of these acres stillremain empty, and plans like anoutdoor music theater have beennixed because of the economy.

Now with the state and local incen-tive set to expire in 2012, Sears isagain quietly evaluating where itwants to call home. Many stateshave been wooing Sears includingGeorgia, Massachusetts, Michigan,

New Jersey, North Carolina, SouthCarolina, Tennessee, Texas, andeven the Washington, D.C., area.

Relocating Feasible?But relocating would cost an al-ready struggling company millionsof dollars and would be disruptiveto its workforce.And, while Searswas able to sellSears Tower, oncethe world’s tallestbuilding for a bigprofit, f inding a

new user for the Sears campus inHoffman Estates is likely to bemuch more difficult. The worst partof a possible move is that many ofits associates won’t want to movewith the company.

A Sears spokesperson has only is-sued a non-committal statementabout any possible move saying, “Wedo owe it to our associates andshareholders to consider options

and alternatives and intend to bevery thoughtful and thorough in ourdeliberations. Speculation aboutwhether Sears will remain inHoffman Estates is not fair toour associates … ”

Over the years Sears has been loos-ening ties to Illinois. Last year,it moved its apparel and mer-chandising operations to SanFrancisco. And Eddy Lampert,its chairman, resides in Green-wich, Connecticut, and usuallyonly makes it to the company’sheadquarters for its annualmeeting in May.

Tax-Break PackageBy the time you read this, a de-cision may have been made.But at the end of last month, a$250 million corporate tax-break package aimed at keep-ing Chicago’s financialexchanges and Sears frombolting Illinois wobbled out ofa House committee amidsigns the measure faceslegislative trouble.

The tax-break plan was not em-braced by Governor Pat Quinn’sadministration that publicly ex-pressed qualms about it.

The number two House Demo-crat, Majority Leader Barbara FlynnCurrie (D-Chicago), raised concernsabout the precedent of appeasing apotential assembly line of dis-gruntled companies threatening toleave Illinois unless they get theirown tax breaks. She raised the pros-pect of paring down the legislation

Tax-Break Deal In Limbo—Sears Exploring Moving,but Experts Have Their Doubts

Continued on page 12


so it would only pertain to the finan-cial exchanges and Sears.

On November 29, the Illinois legis-lature adjourned with no agreementon a tax-break package that includesSears, raising questions about thecompany's future in Illinois.

Representative John Bradley, aDemocrat from downstate Illinoissaid, “At this point in time, we havereached a temporary impasse.”

The key question now is whetherSears and the CME Group, the par-ent of the Chicago Mercantile Ex-change and the Chicago Board ofTrade, will sit tight while the GeneralAssembly tries to reach consensus.

Sears ResponseSears says that it is sticking to itsplans to decide by the end of 2011whether to move its headquartersout of Illinois, and lawmakers don'tplan to return to the state Capitoluntil a deal is ready—possibly notuntil next year.

“We are disappointed that, today, thelegislature was not able to reachagreement and pass a package thatwill help us remain an Illinois com-pany,” said Sears spokesmanChris Brathwaite.

“It is our hope that lawmakers willachieve a compromise very soon asour timeline for making a decisionabout our future by the end of theyear has not changed,” he said.

Illinois lawmakers echoed the hopethey'll eventually reach a deal.

Incentive CriticsGiven Sears’ struggles, some crit-ics of Illinois’ reliance’s on incen-

very confident that there is somebenefit down the road,” he said. “It’stough to show the economic justifi-cation for a headquarters move.”

Incentives critics say the taxbreaks don’t make sense, that asSzatan said, not many companiesare going to make a decision basedon them anyway. The critics alsoargue that incentives are unfair tosmaller companies that in manycases can’t get them.

Therese McGuire, a professor atNorthwestern University’s KelloggSchool of Management said, “If afirm needs this tax incentive to stayin Illinois, then it’s not clear it’s aviable firm for Illinois.”

EDITOR’S NOTE: This article has beenassembled from reports appear-ing in the Associated Press, Chi-cago Sun Times, Chicago Tribune,Detroit Free Press, WashingtonPost, Daily Herald, and WallStreet Journal.

Moving Continued from page 10

tives say it doesn’t make sense forthe state to offer the companymuch, if anything.

“Sears is a great name and a greatcompany, but they are not on theupswing, they’re on the downswing,”said state Rep. Jack Franks, aDemocrat from Marengo who hassharply criticized tax breaks giventhis year to Motorola Mobility whenit talked about leaving Illinois.

And Sears, said another site-selec-tion consultant, has to weigh its ownfinancial situation against what-ever offers it gets. It’s tough to guesswhat it would cost Sears to move,said Jerry Szatan of Szatan & Asso-ciates Site Selection Consultants inChicago, but even a financiallyhealthy company would seldom beable to justify a move on taxbreaks alone.

“If you’re struggling financially andthe move is going to cost you money,you would think that would make ita tougher thing to do unless you’re

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Peace on Earth and Good Will to All

congratulations! sears very strong commitment to the military

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