As Sears tried to right its listing ship, one of the many things its leaders contemplated was a merger with Best Buy.
Former Sears Chief Executive Arthur Martinez told the Wall Street Journal that in late 1998 he approached leaders of the Richfield-based business, as well as Home Depot, as a way to get access to off-mall locations.
“The issue that we had was that 90 percent of our stores were in shopping malls. Everybody could see what was going on with Walmart, Target and the others going to strip centers,” Martinez revealed for the first time in a story Friday. “That was increasingly more customer-friendly than the schlep from a big parking lot all the way into the mall.”
The proposal hardly caused a ripple, by Martinez’s account.
“Best Buy’s expectations were so high that there was no favorable return on our investment. I think the stock was at $7 and founder Dick Schulze wanted in the high $20s,” he told the Journal.
Schulze couldn’t immediately be reached for his recollection. Best Buy’s stock price crossed the $20 mark less than four months later, on Jan. 28, 1999.
A potential merger with Home Depot ran into antitrust issues.
In the preceding years, Best Buy had started carrying more appliances and was taking market share from Sears. Another former CEO, Frank DeSantis, told the Wall Street Journal that it wasn’t until the late 1980s that leaders at Sears began to think of Best Buy as a serious competitor.
“There was almost an arrogance with regard to the competition,” DeSantis said in the story. “We felt nobody would shop in a warehouse like Home Depot. Nobody would shop at a place like Best Buy where you didn’t have dedicated salespeople.”
Sears emerged from bankruptcy in early February after a decadeslong spiral and $5.5 billion in debt nearly sank the once-mighty retailer. A bankruptcy judge allowed chairman, former CEO and largest creditor Eddie Lampert to purchase Sears through his hedge fund.
Sears is closing many of its stores, including the anchor spot at the Mall of America, which is scheduled to go dark later this month. The retailer eventually will slim down to 425 smaller-format stores. At the time of its Chapter 11 filing last October, there were 700.