SEARS WAS THE GIAGANTIC REAL ESTATE PLAY IN RETAIL, BUT NOW IT IS ON ITS LAST LEG: MY FOND MEMORIES OF PRIOR YEARS

As a kid in the 1960's, I liked going with my dad to the monstrous sized SEARS store which took up an entire city block and then it also occupied 4 adjoining city blocks for its parking lots.

We would go there mostly to buy tools, and handy stuff for home improvement and car repair. Also, when we needed a washer, refrigerator or lawn mower, we went to SEARS. Everybody went to SEARS.

They were really something. Whenever my dad made a big purchase, the store manager would call my dad to thank him for the purchase. That call kept my dad coming back.

Since then SEARS has stopped that type of service, it fired its commission salesmen, and joined the ranks of dowdy tired retailers.

Their strategy back then was to acquire all the adjoining land for parking or possible expansion and to build 200,000 square foot stores which would dwarf anything in the area. What a collection of real estate.

That retail model is now dead, and so appears to be the future for SEARS.

As I grew up, in the 80's we formed an investment group to buy SEARS on a fully leveraged deal and actually put together a financing structure with the countless pieces of real estate and of course their 100 story SEARS TOWER to be pre-sold for $1 billion. Word got out about the TOWER sale and the company later mortgaged it so that it would not be so attractive to acquire..so much for our buyout.

In 2003 it was finally seen as a potential investment vehicle by Eddie Lampert and a merger with K-Mart provided a possible interesting match-up.

Nothing happened, the stores still look like they are stuck in the 1980's with some merchandise and salesmen looking the same.

The long awaited turnaround story at Sears may never happen. Why? Because reclusive hedge fund impresario and Sears Holding Corp. Chairman Edward Lampert doesn't know how to run a retail business, says Jeff Matthews of hedge fund RAM Partners.

After Sears posted a surprise quarterly loss, a Barron's report on August 24 stated the stock could fall another 50%. Lampert shot back with a letter claiming the article was "inaccurate" and "biased."

Matthews says facts are facts: Shopping at Sears remains a lackluster experience, five years after Lampert bought the company and merged it with Kmart. "They've totally lost touch with the American consumer," says Matthews, who has no position in Sears stock.

Here's what bothers him about Lampert's management of the once fabled retailer:

* Lack of investment in stores. "The stores are terrible; they don’t look any better than they did five years ago. In fact, they look worse." Matthews notes Wal-Mart spends tens of billions a year on stores, while Sears is spending about $200 million. That's no way to compete.
* No retail expert at the helm. For more than 18 months, Sears has had an "interim" CEO, Matthews notes. Until they hire someone more permanent with retail know-how they're doomed, he says. "I kept waiting for five years: when is he going to hire the guy? Never happened."

Will it ever?