$11B Disaster: How Eddie Lampert Killed Sears in 15 Years

On October fifteenth, 2018, the company that taught America how to shop ran out of cash.

Sears could not make a single loan payment — one hundred and thirty-four million dollars — and a one hundred and twenty-six-year-old empire, the Amazon of its century, collapsed into bankruptcy. This is the story of who emptied it.

At its peak, Sears was the largest retailer on the planet. It sold Americans their clothes, their tools, their refrigerators — even their houses, delivered by rail in a kit. Generations grew up on the Sears catalog. But on that October morning, only about seven hundred stores were left, and sixty-eight thousand employees watched the end arrive. Sears did not die because the internet beat it, or because Walmart out-priced it. Sears died because the man who owned it spent fifteen years treating it not as a business to be saved, but as an estate to be liquidated — and he made sure he was first in line.

It began with a refused shipment of watches.

In 1886, a railroad station agent in Minnesota named Richard Sears bought a box of watches a local jeweler had rejected, and sold them, one by one, down the rail line. He made enough to do it again. He hired a watchmaker named Alvah Roebuck to handle repairs, and in 1892 their names went on a company: Sears, Roebuck and Company.

What they built was not a store. It was a book. The Sears catalog — the "Consumers Guide" — landed in farmhouses across rural America, where the nearest shop might be a day's ride away. And it sold everything. A plow. A violin. A wood stove. A wedding dress. A tombstone. And between 1908 and 1940, you could open the Sears catalog and order an entire house — tens of thousands of kit homes, every board numbered, shipped to your nearest depot by railcar.

Sears sold something deeper than products. It sold trust. "Satisfaction guaranteed, or your money back" was a Sears promise long before it was anyone else's. The catalog gave isolated Americans the same goods, at the same prices, as the cities.

Then Sears moved from the mailbox to Main Street. Through the 1920s and beyond it opened stores, and kept opening them, until it became the largest retailer in the world — and one of the largest employers in the country. It owned Allstate insurance. It launched the Discover card. In 1973, it raised the Sears Tower over Chicago: one hundred and ten stories, the tallest building on Earth.

For most of the twentieth century, Sears was not just a company. It was American retail.

But empires get comfortable. In 1990, Walmart quietly passed Sears as the nation's largest retailer. In 1993, Sears killed the famous catalog itself. By the early 2000s Sears was wounded, slow, and shrinking — but it was still enormous, still trusted, still standing. It was a giant worth saving.

And then a man arrived who told Wall Street he could save it.

His name was Eddie Lampert.

Lampert was a financial prodigy. Yale, then the risk-arbitrage desk at Goldman Sachs, which he walked away from at twenty-five to start his own hedge fund, ESL Investments. And ESL performed. For two decades it delivered returns most investors only dream about. The financial press called Eddie Lampert the next Warren Buffett. Money managers studied his every move.

In 2003 he made the move that built his legend. He had quietly bought up the debt of Kmart — the failing discount chain — while it sat in bankruptcy. When Kmart came out the other side, Eddie Lampert controlled it. The stock soared. He had turned a dying retailer into a fortune.

So Wall Street was thrilled when, in November 2004, Lampert announced his next act. Kmart — the discount store he now owned — would buy Sears, the iconic department store, in a deal worth about eleven billion dollars. In March 2005, the two were fused into a new company: Sears Holdings. Eddie Lampert was its chairman.

The euphoria was total. Two legendary American brands, a real-estate empire, and famous names like Craftsman, Kenmore and DieHard — all handed to the smartest investor of his generation.

But here is what the celebration missed.

Eddie Lampert had never run a store. He did not really believe in stores. He was a financial engineer, and to a financial engineer Sears was not a retailer at all — it was a stack of undervalued assets. Real estate. Brands. An insurance arm. The shops full of customers were just the wrapping paper.

And Lampert had a philosophy. He was a devoted follower of Ayn Rand — the novelist who taught that self-interest is the highest virtue, and that cooperation is a kind of weakness. Eddie Lampert was about to run a retailer with more than three hundred thousand employees on that single idea.

Wall Street believed it had handed Sears to its savior. It had handed it to a man who saw it as a carcass. The carving would take fifteen years — and almost no one would notice until it was far too late.

Lampert's Sears refused to spend money on itself.

While Walmart and Target poured billions into modern stores, and Amazon built the future of shopping, Sears spent its cash a different way. It bought back its own stock — nearly six billion dollars of it between 2005 and 2011. Six billion dollars that could have rebuilt every store in the chain went, instead, into propping up the share price.

The stores paid for it. Carpets went stained. Escalators broke and stayed broken. Light bulbs died and were not replaced. Shelves emptied. Checkout lines stretched out with no cashiers to run them. Walking into a Sears by 2010 felt like walking through a store that had already closed, but no one had told the customers.

Then Lampert ran his experiment.

He took Sears and split it into more than thirty separate units — apparel, appliances, tools, marketing, even human resources — each with its own president, its own profit-and-loss statement, its own internal board. And under his Randian model, these divisions were not colleagues. They were competitors. They negotiated contracts against each other. They could refuse to do business with each other.

Executives later described a company at war with itself. The appliance division and the tool division — both of them Sears — bought advertising against each other. Units hid data from one another. Managers, paid on their own unit's numbers, optimized for themselves while the ship went down beneath them.

And the captain was rarely on board. Lampert ran much of Sears remotely, appearing to his own executives mostly as a face on a video screen, beamed in from his home on a private island in Florida.

The results were not ambiguous. Sales fell every single year. Between 2005 and 2011, the company's income collapsed by eighty-four percent. By 2011 Sears was losing money — and it would never, in any year again, make a profit.

Most leaders facing that would change course. Eddie Lampert did the opposite.

In February 2013, Lampert gave himself a new title. With no retail experience whatsoever, he became the chief executive officer of Sears. And the extraction accelerated.

The pattern was always the same. Find the most valuable pieces still inside Sears. Carve them out into separate companies. And make certain that Eddie Lampert ended up owning those companies too.

In 2014, Lands' End — the profitable, healthy clothing brand — was spun off as its own public company. When the pieces settled, Lampert and his hedge fund ESL were among its largest shareholders. They would ultimately reap at least four hundred and ninety million dollars from Lands' End. Sears got a brief jolt of cash — and lost a crown jewel forever.

Then came the big one. In 2015, Sears sold two hundred and thirty-five of its best stores — its most valuable real estate in the country — to a brand-new real-estate trust called Seritage Growth Properties, for roughly two and a half billion dollars.

Sears received a one-time payment. But then Sears had to lease those very same stores back. From that day on, Sears paid rent — to Seritage — just to keep operating in buildings it used to own outright.

And who was the chairman of Seritage? Eddie Lampert. Who was the largest shareholder of Seritage? Eddie Lampert.

Now stand back and look at what one man had become. Eddie Lampert was the chief executive of Sears. He was the largest shareholder of Sears. He was the largest lender to Sears — his hedge fund loaned the company money, at interest. He was the landlord of Sears, through Seritage. And he was a supplier to Sears, through Lands' End.

Every channel through which Sears could pay money out — rent, interest, asset sales — had Eddie Lampert waiting on the other side. Often on both sides of the same table.

Lampert always insisted the deals were fair, reviewed by independent committees, and that he was fighting to save the company with his own money. But the structure spoke plainly. Sears was being fed, piece by piece, to the entities its own chief executive controlled. By 2018, there was almost nothing of value left inside the company. And then the rent, and the debt, all came due at once.

October fifteenth, 2018.

Sears Holdings faced a debt payment of one hundred and thirty-four million dollars that it simply did not have. After one hundred and twenty-six years, it filed for Chapter 11 bankruptcy. Roughly seven hundred stores remained, down from thousands. Sixty-eight thousand people still worked there. The company had bled more than eleven billion dollars since 2011.

Eddie Lampert stepped down as chief executive that same day. But he was not done.

In February 2019, with Sears in bankruptcy and its remains up for auction, the winning bidder was — Eddie Lampert. His hedge fund, ESL, bought what was left of Sears for about five point two billion dollars. He said he was rescuing it, and saving the jobs that remained. He moved the carcass into a new shell company called Transformco.

And then Transformco closed stores anyway. Hundreds of them.

Then the reckoning began. Sears' own bankruptcy estate — the creditors, the suppliers, the people the company owed — sued Eddie Lampert. They alleged he had illegally stripped more than two billion dollars in assets out of Sears, through exactly those deals: Lands' End, Seritage, the insider loans.

In 2024, Lampert and other insiders settled. They agreed to pay one hundred and seventy-five million dollars — and admitted no wrongdoing. One hundred and seventy-five million dollars, to resolve claims measured in billions.

Here, then, is the receipt.

Eddie Lampert is still a billionaire. He still holds the real estate of Seritage — land that once belonged to Sears. The sixty-eight thousand workers got severance fights and a hollowed-out pension. The retirees watched the company they gave their lives to simply disappear.

And Sears itself? In 2025, fewer than ten Sears stores are still standing in the entire United States — the faint echo of a chain that once blanketed the country.

The company that sold America its first house. The company you could once buy anything from. It was not killed by Amazon, and it was not killed by Walmart. They only had to wait. Sears was killed from the inside — by the man who was supposed to save it, and who walked away richer than when he arrived.

That is how you kill a giant. Not with a hammer. With a spreadsheet.