Sears plc

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Sears plc

40 Duke Street
London WIA 2HP
United Kingdom
(071) 408 1180
Fax: (071) 408 1027

Public Company
Incorporated: 1912 as J. Sears & Company (True-Form Boot Company) Ltd.
Employees: 51,000
Sales: £2.16 billion (US$4.04 billion)
Stock Exchange: London

No chain of shops in Great Britain bears the name of Sears, but the company operates 3,800 shops under other names, making it one of the country’s largest retailers. Its most famous single store is Selfridges in London, but its main strength is in nationwide chains of shops specializing in shoes and clothing. Its 2,000 shoe shops, operating mainly as Freeman Hardy Willis, Curtess, and Saxone, account for one in five pairs of shoes bought in Great Britain. Other chains owned by Sears include Miss Selfridge and Wallis in women’s wear, Fosters and Horne Brothers in menwear, Adams Childrenswear in children’s clothing, and Olympus Sport and Millet’s Leisure in sporting goods. Through Freemans, Sears also owns the third-largest mail order business in Britain.

The reason for this multiplicity of business names lies in Sears’s history. The company has no connection with Sears, Roebuck, as Americans might assume, but grew out of a shoe manufacturing and retailing business based in the English Midlands. For some 60 years this was its only business. Then, in 1953, the company was taken over by Charles Clore, one of the new breed of entrepreneurs who revolutionized British business in the 1950s and 1960s. He turned Sears into a conglomerate, adding to its footwear business a host of other interests ranging from ships to silverware; in two decades the company’s profits increased 50-fold. Later, the mixture proved less successful, and Clore’s successors have concentrated the company’s resources on retailing.

The original shoe business was founded in Northampton by two brothers. In 1891 John Sears set up as a shoe and boot manufacturer, selling to other companies in the trade. Then he was joined by his brother William, who had some experience in retailing, and they began to sell directly to the public, opening their own shops and using the trade name of True-Form. The business mushroomed: within 15 years of opening their first shop, the brothers had a chain of 80, all supplied by their own factory. In 1912 they turned the business into a limited company. John Sears died a few years later, but the business continued to thrive under William, and by the end of the 1920s it was one of the largest companies in the trade.

One of its main competitors was the Leicester-based company of Freeman Hardy & Willis, and in 1929 the two companies decided to merge. Freeman Hardy & Willis had four times as many shops as Sears but made only marginally more profit, which explains perhaps why Sears was the dominant force in the partnership. Together the two companies had more than 700 shops and several factories, and they formed the largest unit in the British footwear industry. The two retail chains continued to trade separately under their old names and by the 1950s had over 900 shops between them.

At this point the business attracted the attention of Charles Clore. He was then 48 and already a very successful entrepreneur, although hardly known to the public. His first big success had been as proprietor and manager of a London theater, which he had made highly profitable. During and after World War II Clore expanded in many directions, buying commercial property and shares in all kinds of companies. Usually he would find a way to increase the value of these assets, sell them at a good profit, and then reinvest the proceeds in his next project. By 1953 the fortune he had amassed in this way was such that, with the help of a bank loan, he was able to offer more than £4 million to acquire Sears.

The Sears directors strongly opposed the bid, but the majority of shareholders accepted Clore’s offer, and control passed to him. It was highly unusual at that time for a board of directors to be ousted in this way, and the episode aroused much controversy. Indeed, it introduced the word “takeover” to Britain and made Clore a much feared figure in the financial world.

The reason Clore wanted Sears had more to do with shops than shoes. From his property dealing experience he could see that the company’s shop sites were worth far more than its directors realized. He proceeded to prove this when he won control by selling many of the sites to an insurance company, leasing back the shops and using the capital raised—more than £4 million in the first year—to invest in other businesses.

From then onward Sears became the holding company for most of Clore’s business interests other than property. His first move was to sell to Sears his controlling stake in two other companies, Furness Shipbuilding and Bentley Engineering. Both were important companies in their own fields. The Furness shipyard on the River Tees was one of the largest in Great Britain, with berths for eight ships, while Bentley was the country’s leading producer of hosiery knitting machinery, based at Leicester and selling its goods worldwide. The acquisition of these companies immediately trebled Sears’s profits, and footwear became just one of three main subsidiaries. To reflect this change, the company was renamed Sears Holdings Ltd. in 1955. Over the next few years Clore acquired more companies in the footwear and engineering fields, and took Sears into another business, motor sales and servicing. However strange the mixture, it brought rapid growth in profits, and by 1959 Clore was in a position to mount a £20 million bid for one of the major brewery groups, Watney Mann. Had this bid succeeded, Sears might have developed along quite different lines, but Clore was rebuffed.

Meanwhile, the shoe business had become the fastest growing area of Sears’s existing divisions. Within a year of taking over Sears, Clore had acquired two small shoe companies that added some 80 shops to his collection. Then, in 1956, he took over two much larger companies of the same kind. The first was Manfield, another Northampton firm, with some 200 shops and a history going back to 1844. The second was Dolcis, a more recently created chain with 250 shops. These purchases increased Sears’s total of shops to nearly 1,500 and gave the company almost a quarter of the retail footwear market in Great Britain. Clore then integrated all the group’s shoe companies into one, British Shoe Corporation (BSC). A huge new warehouse was built at Leicester to service all its outlets, the factories were rationalized, and large cost savings began to swell BSC’s profits.

The success of this operation, in contrast to growing problems in shipbuilding, led Clore to invest increasingly in retailing. In the same year that he failed to win Watney Mann, he gained a new retail arm in Mappin & Webb, a jewelry and silverware business. Three years later he made a major addition to BSC by buying its largest remaining competitor, Saxone Lilley & Skinner. This was a recent union of two formerly independent businesses and had around 500 shops, taking BSC’s total of 2,000 and its share of retail sales to almost onethird of the British market.

In 1965 Sears made its largest single acquisition, the Lewis’s department store group. It included Selfridges and 10 other department stores in provincial cities, and cost Sears £63 million. Its recent profits had been poor and Clore lost no time in remedying this. Stores were modernized and in some cases enlarged, and buying was centralized. Another very successful innovation was the launch of Miss Self ridge. This began as a young women’s fashion department in the main store, but the concept proved so popular that it was soon extended to the other stores and eventually became an independent chain of shops.

The takeover of Lewis’s put Sears Holdings for a time among the top 30 industrial companies in Great Britain, and increased its workforce to 65,000 people. From this point onward it was predominantly a retailing business, but for another 20 years it had many other interests which, on the whole, were less successful.

The first to crumble was the engineering subsidiary, which had come to include shipbuilding. Furness Shipbuilding ceased to be profitable from about 1960, and ran into heavy losses over the next few years. Clore tried to reverse its decline by modernizing the yard at great expense, but to no avail, and in 1968 he decided to cut his losses and sell it. The Bentley textile machinery business continued to do well throughout the 1960s, but eventually demand for its products tailed off, and from 1974 onward Sears’s engineering division produced more losses than profits. Clore was reluctant to let it go, but his successors disposed of it in the early 1980s.

Another diversification that had patchy results was Sears’s attempt to build a small conglomerate in the United States. This began in 1964 with the purchase of a laundry and linen hire business called Consolidated Laundries. This company, renamed Sears Industries Inc., then bought a knitwear manufacturing business which faired poorly, and a retail jewelry chain which was never a great success. In 1981, more hopefully, Sears acquired a 500-branch chain of shoe shops, Butler Shoe Corporation, but this also brought more problems than profits and was sold in 1988.

Footwear manufacturing was another field in which Sears was forced to retreat. In the 1950s the company’s own factories supplied roughly half the shoes sold in its shops, but with the coming of cheaper products from countries with lower labor costs, this proportion diminished to around 20% in the 1970s. Sears reduced its output by stages until in 1988 the last of its factories was sold. The company’s share of the retail market was also eroded by new competition in the mid-1970s.

Against these setbacks Clore could claim some successful new ventures, even in his last years at Sears. The most important of these were betting and property. In 1971 Sears took over the William Hill chain of betting shops and although profits were somewhat erratic, it contributed as much as 10% of Sears’s profits in its better years. Sears’s involvement in property development began in 1975 with the purchase of a company called Galliford Estates. It specialized in house building in Great Britain, but also had a stake in some commercial developments in the Netherlands, and became the nucleus of what is still a thriving property development unit within Sears.

Charles Clore—by then Sir Charles—retired from the chairmanship of Sears in 1976, and died three years later. He was succeeded by Leonard Sainer, the lawyer who had been his closest colleague for 40 years. Under Sainer, a gradual rationalization of the group began. A number of troublesome subsidiaries were sold, and acquisitions were mainly concentrated in retailing, the area in which the company had always been most successful. Under Geoffrey Maitland Smith, who succeeded Sainer in May 1985, this rationalization was taken much further, to the point where the company’s interests are now confined to retailing and property development. The parent company became Sears plc in 1985.

The positive side of this process was the acquisition of new retail businesses with good growth prospects. An early find was Olympus Sportswear, which had about two dozen outlets when Sears bought it in 1978 but has since been expanded into the leading chain of its kind in Great Britain. In 1980 the Wallis fashion group was acquired. In 1985 came Foster Brothers Clothing, with over 700 shops selling menswear, children’s clothing—Adams—and outdoor pursuits gear—Millet’s. Then, in 1987, Sears added further to its menswear business by buying the more upmarket chain of Home Brothers.

Besides acquiring and developing these new outlets in the United Kingdom, Sears has made two more far-reaching changes in its retailing strategy. First, it has expanded into continental Europe on a large scale. This development began in the late 1970s with the acquisition of a chain of shoe shops in the Netherlands, and the company subsequently developed large retail interests—some jointly owned with Groupe andré of France—in the Netherlands, Germany, and Spain. Second, the purchase of Freemans in 1988, Sears’s largest acquisition of the late 1980s, has given the company a major share of the mail-order market in Great Britain, an important sector of retailing in which it was not previously represented. With these developments, Sears has transformed itself from a largely illogical collection of businesses into a wide-ranging but integrated retailing group.

Principal Subsidiaries

Adams Childrenswear Ltd.; British Shoe Corporation Holdings plc; Freemans plc; Galliford Estates Ltd.; Hoogenbosch Beheer B.V. (Netherlands); Millets Leisure Ltd.; Miss Erika Inc. (U.S.A.); Miss Selfridge Ltd.; Olympus Sport International Ltd.; Sears Financial Services Ltd.; Sears Menswear plc; Sears Property Investments Ltd.; Selfridges Ltd.; Wallis Fashion Group Ltd.; The Warehouse Group plc.