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Vast Carelessness

October 20, 2013

"They were careless people...they smashed up things and creatures and then retreated back to their money or their vast carelessness...and let other people clean up the mess they had made."


I've been reminded of Fitzgerald's words in The Great Gatsby by the continued deterioration of the situations at what were once three of America's great retailing companies: Sears, Kmart and JC Penney.

Instead of Tom and Daisy Buchanan, we have two other careless people who have smashed up things as perhaps no other individuals have ever done before in the business of retailing: Edward Lampert and William Ackman.

Which is not to say there have not been others who came before who did bad things to good companies. All three of these companies had been through various stages of bad management long before Lampert or Ackman came along. Likewise there are plenty of other occurrences of such behavior, whether you're talking about the Campeau devastation of Federated or the slow death spiral that eventually did in Montgomery Ward.

But this is different - maybe because it's current and happening right before our eyes right now. That always makes it seem more harsh.
And while the Lampert and Ackman eras overlap, they are by no means parallel tales. Lampert has made a fortune running Sears Holdings and remains very much in charge. Ackman lost - if not quite a fortune for him, certainly a fortune to most of the rest of us. And he is gone from the scene.

Ackman's installation of Ron Johnson at Penney was based on the idea that he was going to be the salvation of the business and there are many people (including this one) who believe that executed properly the Johnson plan could have worked.
Lampert, on the other hand, has never been about fixing the retail business at Sears and Kmart, he has always been running the business for maximum cash flow. His latest sell-offs of some of the company's best performing individual stores only serves to prove the point.

But what the Lampert and Ackman carelessness have in common is the messes they have created. Messes in the businesses themselves but also messes in the lives of people who work at these companies, many with career-long tenures for which this has been the only place they've ever worked

And perhaps one day the same fate will befall these business creatures as what happened to the house where Fitzgerald's creation lived: an empty shell with no life inside.

And if that were to happen, like Gatsby himself, there would be nothing great about it at all.