How Sears' Eddie Lampert creates chaos, not profits

He may be a hedge fund billionaire, but as the CEO of a major retailer he has built a dysfunctional corporate culture.

By Jonathan Berr Jul 18, 2013 10:58AM
Sears store on in Milford, Connecticut Spencer Platt/Getty ImagesGenerations of business school students will study how billionaire Eddie Lampert sent Sears Holdings (SHLD), a once-venerable retailer, toward financial oblivion. A recent Bloomberg Businessweek article would be a good place for them to start.

The story paints a depressing picture of life at the company. It argues that Lampert has created a dysfunctional culture in which business units are forced to fight among themselves -- "Hunger Games"-style -- for corporate resources. Lampert seems to be trying to implement the ideas of "rational self-interest" espoused by the philosopher Ayn Rand.

But the reality is that chaos breeds more chaos. To say that Sears is self-destructing doesn't adequately encompass how badly Lampert has messed up the retailer, whose roots date back more than a century.

It's hard to figure where to start. For one thing, Lampert is hardly ever at Sears headquarters. Businessweek says he "hates to fly" and bothers to show up only once or twice a year.  

He also thinks all his ideas are brilliant, such as creating a little-used private social network and then establishing an account under a pseudonym that he subsequently used to pick fights with employees. The one inescapable conclusion to be drawn from Businessweek's account is that Lampert doesn't just have a huge ego, he has a titanic one, even for a hedge fund tycoon.

"Although the hedge funder lacked retail experience, he often lectured veterans on the industry's nuances," the story said. "Three former employees say Lampert compared himself to John Wooden, the lauded UCLA basketball coach, citing Wooden's proclamation that he had to teach players how to put on their shoes before he could teach them to play basketball."

Although four executives have been CEO since the Sears-Kmart merger that Lampert pushed, there's little doubt that he's the real power at Sears -- and his track record has been dismal. Sales have plunged from $49.1 billion to $39.9 billion. Sears' stock price has plummeted by 64%, and the company's cash has fallen to a 10-year low. 

If Lampert weren't the company's largest shareholder, he would have been fired long ago. Indeed, J.C. Penney (JCP) recently canned another "visionary" CEO, Ron Johnson.

Sears isn't in danger of closing its doors soon, even though its long-term outlook remains bleak. Still, Lampert is part of the problem, not the solution.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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35Comments
Jul 18, 2013 1:47PM
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 America is doomed, our leaders and politicians are mostly rich incompetent

buffoons, who thing they know everything.

Jul 18, 2013 1:32PM
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Get rid of Lambert. Another a** destroying a great company what an embarrassment
Jul 18, 2013 11:59AM
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Sears and K-Mart are dead retailers. The worst part is that there are huge vacant boxes decaying in prime areas because the "holdings" component isn't done taking accounting losses on them yet. The system is broke when we'd be better off if billionaires were broke.
Jul 18, 2013 1:30PM
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CEO's...They get paid so much 'cause they're so damn smart.
Right ???
Jul 18, 2013 2:10PM
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At my company there is a saying, "The higher you go, the less you know"
Jul 18, 2013 1:48PM
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Sears has gone so far down I don't see it being able to pull back up.   I LOVED Sears, this past year I have had near every bad experience one can have.

I feel bed for the employee's, they can't help you (some really do want to!)

 

Employee's pitted against online sales ?!?  AND they know they are being forced out...........the online sales suck, wrong items sent, returns taking over an hour at the store for an eight dollar item, argue for MONTHS about not receiving an item (S), ordering items online to pick up in store...wrong item, not all items they say are included are even there.
Last month was the LAST order, in store or online they will ever get from me.  

Lying, cheating isn't the way to stay in business.  buhhhhh bye Sears, it was nice until the last few years, when it was/is a NIGHTMARE!

Jul 18, 2013 1:48PM
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He must be the twin brother of Ron Johnson of JCP "fame."   The "too big to fail" Federal mentality that came about with Wall Street bailouts, must have spread to retail land... Sears, JCP, Kmart, Walmart.  It's time for consumers to speak up - with their purse strings.  Enough of this crap.  These millionaire/billionaire shysters are paid well to finish running these iconic companies into the ground, and take many, many jobs with them.  When did this get to be the norm?   Let's all head to Target, Macy's and Kohl's! 
Jul 18, 2013 3:07PM
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People with more money than they need tend to forget  who that money came from.  It's still the little guy that stokes this country. Unfortunately the people that handle the little man's money get greedier everyday.
Jul 18, 2013 2:06PM
Jul 18, 2013 2:16PM
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Businesses always fail when the only thing on the owners mind is to maximize profits. You have to like the business and you have to want to give your customers a good deal, that's what Sears used to be, but no more, what a shame, it really was a fun place to shop.  I've seen the same thing several times in the last few years in restaurants, someone new takes over and they cut all the things that people used to like and they make more profit but suddenly no one goes there anymore.  How dumb are some people.

Jul 18, 2013 1:51PM
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once these retailers start removing quality products and substituting with their own ,higher margin brands they begin the down hill slope .happens time and time again  .they rise by offering quality products but then they go after margin then they cut the salesman or reps to save costs .mistake after mistake and they have now idea what worked to begin with ,kmart is now like an odd lots store . money vs brains
Jul 18, 2013 2:01PM
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Yes, get rid of Lambert. Instill pride in the workers. Get customer service back to where it once was.

 I went to a sears store to look at window A/C's. Couldn't get anyone to come help. Left. Went back and saw two employees talking. One said they were helping someone else. The other did come over and get the A/C I wanted. Shouldn't have to do that. The minute you walk into a store or department, someone should immediately ask you if you need help.

These so called experts are ruining the retail business.  All the college types have already managed to destroy our manufacturing business.

Jul 18, 2013 3:38PM
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It amazes me watching undercover boss, how these buffoons at the top have no clue about running their company. The blue collar people are making these people millions while they pay them peanut wages and maybe some benefits. Then they want to pull on viewer heart strings by handing 3 or 4 chosen employees thousands of dollars? What about the 100's or 1000's of other employees who you don't meet,do they think everyone else is doing just ducky? I love when they have to try to do a physical task and they can't ever get it right. A hard days work and a cold glass of water would kill them.
Jul 18, 2013 3:28PM
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Unfortunately for Sears it is probably too late.  The stores in my area have not been updated, painted or properly cleaned for years, their clothing line is garbage, and the only thing I would go there for was tools & lawn equipment and even the once great Craftsman name is not the quality it once was.  My original gas leaf blower from Sears lasted 16 years & since then I have replaced/exchanged it 4 times because they run like crap or don't start.  On top of all that their employees don't care or some have no concept or training & are completely useless.  I hope they can turn it around but it does not look too good.
Jul 18, 2013 2:44PM
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Another CEO type that isn't worth the toilet paper he wipes his a$$ with. Assuming he can even perform the task with his over inflated ego causing him to topple over onto his head. I picture Mr. Macky from South Park.

How much longer before and how many more times does it have to be proven that his type are not as rare and valuable as they claim to be, holding no special talents that can't be found elsewhere, and done so at reasonable price that isn't nothing more than a drag on the company and, in short, that they aren't needed or worth it?

At any rate Sears can be saved if something is done but it needs to be now, not later, as time is running out.

Personally, as I've always said, dump Kmart -Between Walmart, Target, and Amazon, its dead man walking.

Then dump the "softer side" and focus on the appliances, tools (includes hand tools to power equipment) automotive to an extent, and maybe some electronics.

Sears isn't the buy all it once was when founded and hasn't been for some time. Drop the areas that have major competition and don't contribute much and focus on the core areas that actually carry the company and are the reasons people go there anymore.

Then they need to update the stores and in doing all this could also reduce store sqft. and reduce overhead costs.

Maybe I'm naive but I sure think this would work.

I think its time

Jul 18, 2013 4:17PM
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Here is an idea give him a large bonus and even larger salary so that when the company goes bankrupt the chinese will buy them out and take over. ITS CALLED THE AMERICAN WAY. (typical morons) 

 

 

 

Jul 18, 2013 3:32PM
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Having had the best catalog ever, they were a natural to become the biggest online retailer ever.  Maybe they can still transition.

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Read up on your Ayn Rand before you try to tie her philosophy to actions.  "Rational self-interest" has nothing to do with "Hunger Games" style of thinking.

Rational self-interest simply means you think of your individual needs before those of others.  No where does it state that you have the "right" to take from others.
Jul 18, 2013 5:13PM
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Wow I feel sorry for Sears.... bird brain leadership stuck them in a time warp, and they got hung up. Most likely will never get out. 
Jul 18, 2013 3:05PM
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if its your company and you are the ceo and u make sure u own most of the shares then u can either destroy your company or get yourself out of the slop it is in !!!!
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