Sears + Kmart

Just last week, BusinessWeek magazine's cover article was on Edward S. Lampert. The cover trumpeted the question: "The Next Warren Buffett?" Seems like Lampert can't do much wrong for the investment community -- as BusinessWeek suggests, "Lampert has become a brand unto himself." After taking control of Kmart from the bankruptcy, Lampert has squeezed the retailer until it coughed up US$3 billion. He accomplished this by selling off select Kmart real estate holdings and reducing the retailer to bare bones, survival level efficiency. In under two years, Kmart stock has increased by close to $100. With Kmart's cash hoard, Lampert is now purchasing Sears, Roebuck and Co. for US$11 billion. When the deal was announced last week, both Kmart and Sears stock rose -- the investment community signaling their approval. Combined sales of both firms will be US$55 billion, making it the third largest retailer in the US, behind Wal-Mart and Home Depot -- and kicking Target down to fourth place. The combined company will have 2,370 stores and with focused marketing, could grow. That's if Lampert wishes to be a retailer. If he simply wishes to turn Sears into an outfit to bankroll his future investments, we will see the slow demise of one America's trusted and long lived brands.