4 Things You Probably Didn't Know About Sears

Sears Holdings isn't set to announce quarterly earnings until Thursday, but investors already have a pretty good idea of what the report will hold.
To be sure, Sears Holdings stock has climbed 20% over the past month as the struggling retailer not only revealed agreements to divest stakes in several of its real estate investments but is also mulling whether to spin off its Lands' End and Auto Center franchises. But considering Sears simultaneously provided guidance for a third-quarter net loss in the range of $532 million to $582 million, it's also safe to say the company could use the breathing room.
By now, most consumers are well aware that Sears has fallen far from its former decades-ago glory, but it's easy to forget about the storied history of this legendary 127-year-old business.
Here a few things you may or may not have known about Sears.
1. It all started with errant watches
In 1886, a jeweler in Redwood Falls, Minn., received an unwanted shipment of gold-filled watches. Working as a railroad station agent at the time, 23-year-old Richard Sears decided to purchase the watches himself. Then he subsequently sold them at a tidy profit to other agents up and down the rail line.
Business was so good, in fact, that Sears resigned from his job to start the R.W. Sears Watch Company in Minneapolis, and then was joined the following year by 23-year-old watch repairman Alvah Roebuck.  

Soon the partnership expanded to include both watches and jewelry, and by 1893 its corporate name became Sears, Roebuck, and Co. By 1895, Sears had introduced its first flagship general merchandise catalog.
2. The founders left more than a century ago
Curiously enough, that was also the same year Roebuck called it quits, selling his 50% stake to Sears for just $25,000. Don't be too hard on him, though; adjusted for inflation, Roebuck's windfall would have been worth nearly $695,000 in today's dollars -- and all after a mere eight years with the company.
Mr. Sears quickly turned around and sold Roebuck's half the company for $75,000, and then later enjoyed Sears' $40 million initial public offering in 1906 with the help of IPO co-manager Goldman Sachs -- the first major retail IPO in America's history, mind you -- before resigning because of poor health in 1908. 
3. Sears was huge in the insurance business
In 1931, at the behest of company president and chairman Robert Wood, Sears launched a little company we all know today as Allstate , a name taken from its then-popular line of automobile tires.
Wood, for his part, had previously recognized the need for Sears to supplement catalog sales with a physical presence in retail stores, which allowed the company to cater to a larger percentage of the American public. In the same way, according to Sears' records, Wood also understood "the average family's need for an automobile and for low-cost insurance." By 1933, Sears began installing Allstate sales locations within its larger Sears stores.

Sixty years later in 1993, Sears came full circle with its decision to spin off Allstate in an effort to refocus on its core retail business, resulting in what was then the largest ever IPO by a U.S. company. By the middle of 1995, Allstate became a totally independent company, after Sears had fully divested its remaining shares.
Less than 10 years later, Kmart Holding Corporation announced its intention to acquire all of Sears in a staggering $11 billion deal. Relatively fresh off its Chapter 11 bankruptcy filing in 2002, Kmart viewed the purchase -- which, more than anything, resembled a merger of equals -- as a way for both companies to more effectively deal with increasingly powerful competitors such as Wal-Mart, Home Depot, and Amazon.com.
If you're wondering, then, why the new organization placed Sears' name at its forefront, look no further than Sears' more convincing reputation and higher average sales compared with similar Kmart locations.

Sears may not be the only one in trouble
As it stands, Sears' continued losses and total market cap below $7 billion make it obvious the combined companies aren't flourishing as Kmart had hoped. But Sears may not be the only retailer in trouble today.

To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

The article 4 Things You Probably Didn't Know About Sears originally appeared on Fool.com.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Goldman Sachs, and Home Depot and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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