Why not asset strip it?

Eddie Lampert is offering us all a master class in how to dismember a company. Sears Holdings, where he and his hedge funds are the majority owners, is clearly and obviously a tired old brand. One which, in this new online retail world, may or may not have anything left to offer. Thus the master class on offer of how to dismember and dispose of such a former behemoth.

The thing we don’t know though is whether this is a class on how to do it or one in how not to:

Shares of Sears Holding are up about 4 percent in recent trading after ESL Investments, the retailer’s biggest shareholder, called on the Sears to sell the Kenmore brand and the chain’s home improvement business.

Mr. Lampert’s fund also said it would be interested in buying the assets, according to a letter that ESL sent to Sears board.

Part of this is just trying to shake out other offers. I, the CEO and majority shareholder, will buy it if no one else offers more.

Sears Holdings Corp. Chief Executive Edward Lampert is offering to purchase the Kenmore appliance brand and other Sears units after the struggling company was unable to find other buyers for the assets, breaking apart his retail empire in a bid to save it.

Mr. Lampert, through his hedge fund ESL Investments Inc., which currently owns a controlling stake in the retailer, said in a letter to the Sears board that ESL is willing to buy Sears’ home-improvement business and its Parts Direct business and is willing to submit a proposal to buy Kenmore.

Sears has been exploring strategic options for the units for nearly two years, but Mr. Lampert said in his letter that it has been unable to find a buyer.

Here’s the thing about the larger company. It’s really very clear indeed that a large retailer, with no particular vertical market specialty, has no place in the modern America. The online marketplaces are just eating up this sort of older retail technology. In the larger sense we’re just entirely fine with this. We like new and more efficient technologies eating the older. So, Sears, with its stores, its brands, needs to go.

Equally obviously inside that rag bag there are things which have value. Other bits which don’t:

His offer letter also expresses interest in buying some or even all of Sears’ remaining real estate, as well as its home service and parts businesses. It doesn’t put a dollar figure on what he’s willing to pay — the letter says those specifics will come later.

Lampert does say he values the Sears home service and parts businesses at $500 million, but declined to say what he thinks Kenmore is worth.

In economic terms we want those valuable bits extracted and the non-valuable bits to crash and burn. The point is that there’s a long standing method of doing this, called asset stripping. Lampert is trying a new method and that’s where the interest comes in. Is this a master class in the new method or a master class in why the old one works so well?

After all, why not just asset strip the heck out of Sears?