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Illustration: Sam Jayne / Axios

Shoppers at Sears can no longer find Whirlpool appliances or women's Levi Strauss jeans and now the Wall Street Journal reports they are low on one of the holiday season's hottest toys — the L.O.L. Surprise — because its manufacturer is questioning Sears' financial health.

Why it matters: Sales at Sears accounted for roughly 1% of U.S. GDP in the 1960s, but decades of competition with big-box retailers and online merchants, combined with recent mismanagement by CEO Eddie Lampert, have whittled down Sears' financial position thoroughly. Now suppliers are reducing shipments, tightening financing terms, or refusing to work with the retailer altogether out of fear of being stiffed if Sears is forced into bankruptcy, the WSJ reports.

"We see no viable path for Sears to succeed as a retailer," Bill Dreher, who covers Sears stock for Susquehanna Financial Group, tells WSJ. "I'm concerned that the vendors are starting to lose patience," he says, arguing that this is what put Sears subsidiary Kmart into bankruptcy in 2002, when it was an independent firm. Lampert took control of Kmart after its bankruptcy and then leveraged its stock to acquire Sears in 2005.

The fraying patience of vendors is obvious from the following moves, reported by the Journal:

  • LG Electronics and Samsung are demanding cash up front for delivery of certain goods.
  • Sears was forced to sue two longtime manufacturers of its Craftsman tools brand earlier this year to keep them shipping merchandise to stores, even though the Craftsman brand was sold off by Sears months prior.
  • Clorox is imposing tougher repayment terms for its popular household products.

Lampert's management style is partly to blame for Sears' recent struggles, according to the article.

  • Lampert adopted a strategy of skimping on investment and store upgrades and instead used that money to buy back Sears stock from investors, a strategy that kept Sears stock buoyant, until the financial crisis struck and Americans preference for online commerce grew dramatically, WSJ said.
  • According to the report, Lampert, "keeps his own counsel," and doesn't visit Sears headquarters more than a couple times per year. He also rarely visits stores and prefers that top executives do the same, arguing that it is cheaper and more efficient to "connect with store managers over videoconferences."

The bottom line: Few traditional retailers have thrived in this era of e-commerce. But Sears, which was once the most innovative retailer in America, has been caught more flat footed than the rest partly due to Lampert's missteps.

Go deeper

Ina Fried, author of Login
36 mins ago - Technology

Intel CEO wants to compete against Apple

Intel CEO Pat Gelsinger hasn't given up on the idea of the Mac once again using Intel chips, but he acknowledges it will probably be years before he gets that chance.

  • In the meantime, he is focused on powering Windows machines that give Apple CEO Tim Cook a run for his money.

Why it matters: In getting pushed out of the Mac, Intel not only lost a customer, but picked up a new rival.

41 mins ago - Health

Education secretary reveals limits to Biden’s mask push on states

U.S. Education Secretary Miguel Cardona, in an "Axios on HBO" interview, said he's reluctant to withhold federal funding from states that won't enforce school mask mandates because he doesn't want to hurt students.

Why it matters: Cardona's comments suggest there are limits to how far the Biden administration will go in pressuring states to adopt universal masking — or vaccine mandates.

Mike Allen, author of AM
51 mins ago - Axios on HBO

GOP senator smacks Trump

Sen. Bill Cassidy (R-La.) told “Axios on HBO” he’s not sure former President Donald Trump would win the Republican nomination if he ran in 2024 — a rare voice of criticism from within the party.

  • When I raised the conventional wisdom that Trump would be expected to win the nomination, Cassidy jumped in.“
  • I don't know that,” the senator said during our interview in Chalmette, La.

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