Laid-off Sears workers left with nothing – and they say wealthy bosses are to blame
Thousands of workers have been fired and outrage has been directed at the stewardship of billionaire CEO Eddie Lampert
Michael Sainato
Sat 1 Dec 2018 06.00 EST Last modified on Sat 1 Dec 2018 06.03 EST
Ondrea Patrick had worked at the Kmart in Rockford, Illinois for nine years. In September, Patrick’s store announced it would close as its owner, Sears Holdings, struggled with falling sales and mounting debts.
A month later, Sears, once the world’s largest retailer and a part of America’s cultural fabric for more than 100 years, filed for bankruptcy – putting thousands of workers’ jobs at risk.
Patrick said: “I am a mother who has four biological children and one stepson, and my income is all we have. When you take away our only income, you leave us with nothing – and we don’t deserve nothing. Mentally and physically it drags on you. It’s like saying you’re not good enough. And we’re all good enough.”
Sheila Brewer worked at the same Kmart in Rockford for 17 years as a full-time employee. Four weeks into receiving severance pay, a bankruptcy court stopped the rest of the payments. In the meantime, Sears executives have petitioned to receive up to $25m in bonuses.
Brewer said: “It was a big toll emotionally and financially. It’s a big slap in the face, them telling me I can’t get the rest of my severance because of bankruptcy.
“Yet they’re petitioning in court to get bonuses for the executives when that money could go into a plan or some kind of package deal for full and part-time employees to receive some sort of package. [It would help] to pay bills to help us get back on our feet.”
Since their store closed, Patrick and Brewer have joined Rise Up Retail, a coalition of retail workers campaigning for better pay and conditions that has been gaining strength amid brutal layoffs for workers at Toys R Us and other retailers this year. Retail layoffs come even as the unemployment rate has fallen to its lowest level since 1969.
Andrew Challenger, the vice-president of outplacement firm Challenger, Gray & Christmas, said traditional retail had been the biggest cutter of jobs for three years in a row. More than 92,000 jobs have gone this year already and more are coming. Sears plans to shutter 188 stores nationwide by the end of 2018.
Retailers are hiring in big numbers – but for warehouse workers, logistics and tech jobs as shopping moves ever more online, Challenger said. “But I don’t want to minimize those losses. Many are in rural communities and impact people who don’t have the skills retailers now want. Those jobs are never coming back.”
However, it’s not just the internet that did for Sears. Its failure comes with its own particular issues.
When Sears and Kmart merged in 2005, the company operated nearly 3,500 US retail stores. By February this year, that number had fallen to just over 1,000. The merger was orchestrated by billionaire hedge fund manager Edward Lampert, who served as the CEO of Sears Holdings from 2013 to when the company filed for bankruptcy.
Lampert’s oversight of Sears Holdings since the merger with Kmart has been criticized as the reason for Sears’ bankruptcy and massive store closures.
Rise Up Retail supported former Toys R Us employees in winning a $20m severance fund for more than 30,000 workers who lost their jobs when the bankrupt company shut down 800 stores. Photograph: Justin Sullivan/Getty Images
Carrie Gleason, the campaign manager of Rise Up Retail, said: “It’s Eddie Lampert and his hedge fund that has destroyed Sears. This was a company that had many viable businesses, definitely parts that were struggling that needed investment. Instead Eddie Lampert let stores be barren, stripped away the viable parts of the business and let everything else run into the ground.”
As Sears’ CEO, chairman, banker, landlord and transaction partner, Lampert has managed to transfer many of Sears’ assets to himself and sell off others.
In 2015, he sold the real estate of more than 250 Sears retail stores and other company property to real estate investment fund, Seritage Properties, which is 43.5% owned by Lampert’s hedge fund. Sears has paid the fund an annual rent of $134m, with 2% annual increases starting in 2017. As Lampert’s hedge fund extended credit to Sears backed by at least 46 Sears properties, Lampert could receive the rights to those properties in the bankruptcy proceedings.
In 2014, Lampert sold off Sears’ profitable clothing company Land’s End to himself as the principal shareholder. In January 2017, Lampert finalized a deal to sell Sears’ Craftsman brand to Stanley Black & Decker for $900m, which was used to pay off Sears’ creditors, Lampert included.
As Lampert made efforts to transfer Sears’ valuable assets to himself, the retailer suffered from a drastic lack of investment that hampered its ability to adapt to the changing retail economy.
Workers blame the cash drain for their plight. “I could tell that this company was not led right. They just didn’t seem to care about the employees,” said Bob Bruns, who worked at a Sears store in Cincinnati as a merchandising and backroom associate from 2010 to 2014. The store closed for good in April 2018. “This was evident in their lack of investing in store infrastructure, and not updating the technology.”
Lampert and his hedge fund, ESL Investments, have lent Sears around $2.66bn , making Lampert the company’s principal creditor who stands to profit from Sears’ bankruptcy and final liquidation. In August, Lampert offered $400m to purchase Sears’ Kenmore appliance brand and an additional $70m to $80m for Sears’ home services division.
“The dynamic right now is very similar to what happened to Toys R Us. There was a push for reorganization, there were viable business offers, but the creditors pushed for liquidation because they would make more money that way,” added Gleason.
Rise Up Retail supported former Toys R Us employees in winning a $20m severance fund for more than 30,000 workers who lost their jobs when the bankrupt company shut down 800 stores. “We could save tens of thousands of jobs, but the creditors want to liquidate so they get paid.”
Currently, around 68,000 workers at Sears remain, but their future is uncertain after the holiday season while several other workers are still grappling from recent store closures.
“I’ve been working at Kmart for three years, and it’s been three years of my life I’ve put hard work and sacrifice into the store. It’s been really depressing,” said Noemi Castro, whose store in Los Angeles closed on 28 November .
She said that during the closure process, the store was consistently understaffed and ignored by management. “As much as I’d like to look past it, Kmart was three years of my life that’s always going to be there.”
Sears did not immediately respond to multiple requests for comment.