Robin Lewis, who runs The Lewis Report, says it is “published monthly for senior executives in the retail, fashion, beauty, consumer products and related industries.” He can claim enough of a reputation to appear occasionally on CNBC. In his latest blog, Lewis writes:
If you have any doubts, just wake up and think about it. It’s a win-win for both Jeff “Get Big Fast” Bezos and Eddie “Take the Money and Run” Lampert. Amazon gets roughly 2400 US stores (or “buildings”), overnight (1300 Sears, 1100 Kmart). The acquisition becomes Bezos’ answer to omnichannel and the proven revenue synergy of consumers’ ability to shop online and off; the convenience of proximity for pick up and returns; and facilitation of even greater delivery speed. So just as Walmart’s 4500 stores double as distribution centers, so would Amazon’s acquired Sears/Kmart stores.
The real estate assets would be the primary reason for Amazon’s interest in acquiring Sears Holdings. However, there are several other valuable assets and operations, which Amazon could enhance and grow.
What Eddie gets in such a sale is a potentially profitable exit strategy that many analysts, myself included, believe he is pursuing. In fact, in several of my past articles I have opined that Lampert was, indeed, managing the business into liquidation. And regarding the real estate assets, Lampert has been methodically selling, leasing (partial or in total), and/or closing Sears and Kmart locations. Indeed, he indicated not too long ago that Sears Holdings was considering shuttering its entire fleet of Kmart stores. So if he is seeking an exit, a far less painful and certainly more profitable option would be a sale to Amazon.
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Amazon founder Jeff Bezos is unlikely to contemplate such a deal. The entire premise of Amazon is that e-commerce trumps bricks and mortar. Bezos does need physical locations, which are primarily used as warehouses for goods shipped to his customers. Amazon almost certainly has no interest in the real estate business, which would be difficult to manage with its cache of hundreds of stores. He does not need to add cash to his balance sheet. Amazon holds $12 billion in cash and marketable securities and is on a path to do $100 billion in revenue. And Bezos says much of Amazon’s future is to be the number one provider of e-commerce cloud computing in the world — about as far from the physical store industry as imaginable.
In addition, Sears made the list in 24/7 Wall St.’s analysis of retailers closing the most stores. Target is also struggling with Amazon, which is pressing into the grocery business as well.
Could Amazon buy Sears? Certainly, if the question was just about money. Sears Holdings has a market cap of only $4 billion. But that is not the point. What is? Really simple: Bezos is not a mark.
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