Can Eddie Lampert save Sears?

The billionaire investor takes over the beleaguered chain after the abrupt departure of former CEO Lou D'Ambrosio.

By Jonathan Berr Jan 8, 2013 11:17AM
Sears store on in Milford, Connecticut Spencer Platt/Getty ImagesShares of Sears Holdings (SHLD) fell more than 5% in morning trading Tuesday on news that billionaire Edward Lampert, the chain's largest shareholder, would take over as CEO following the abrupt departure of Louis D'Ambrosio for "family health reasons." He is the company's fifth CEO since 2005, when Lampert pushed for the merger between Sears and Kmart.

Lampert, who has been arguing that Sears was on the verge of a turnaround since the administration of George W. Bush, will now have to match his words with deeds. That is not going to be easy. 

The venerable retail chain continues to be vexed by an identity crisis. Wal-Mart (WMT), for instance, is known for its low prices. Target  (TGT) is seen as a slightly more up-market alternative to Wal-Mart. What does Sears have to offer today's shopper? No none seems to know, and this confusion is reflected in the financial performance of the company.

Sales have declined for an eye-popping 23 straight quarters, which as Bloomberg News notes has eroded the company's cash position. D'Ambrosio, who had no retail experience when he joined the company last year, wasn't able to do much to stem the bleeding. He will remain with the firm through February.

The company has been forced to sell what it can to keep itself afloat. In October, it spun off its Sears Hometown and Outlet stores, which sells hardware, tools, home appliances, and garden equipment. It also spun off part of Sears Canada.

Shares of Sears have surged more than 47% over the past year as investors bet that Lampert would take the company private or improve the chain's financial performance enough to make it an attractive merger partner. The company's struggles, though, continue.

Sears said Monday that it expects to lose $280 million to $360 million, or $2.64 to $3.40 per share, in the current quarter. The net loss for the fiscal year will be between $721 million and $801 million. But excluding one-time costs and other items, profit would be $1.25 to $2 per share. Give the company credit for putting a positive spin on the situation.

Earnings before interest, taxes, depreciation and amortization should improve for the U.S. for four quarters straight, D'Ambrosio said in a statement, and the company had cut its net debt by $400 million at the end of 2012.

Whether that's good enough for Wall Street remains to be seen.

Jonathan Berr is long Target.  Follow him on Twitter @jdberr.

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84Comments
Jan 8, 2013 12:49PM
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Sears has been known for the great quality products it sold in the past such as the prior "made in china" Craftsman Tools. However the greatest problem is their sales people.

Unfortunately Sears is also known for the employees that work at the stores. Untrained, uninformed, lazy people who don't seem to know or care about the products they're selling.

Example: I went to a Sears to purchase an airconditioner. The particular store didn't have the one I was looking for so the "ONE GOOD" employee there said she would call the closest store to see if they had one in stock. The problem was that no one at the other store would answer the phone. She had then got a bright idea of calling the department right next to appliances. The employee of that department picked up the phone and while she was trying to explain the situation, the person on the other end just said "you have the departement" and hung up before she could also explain that she was an employee from another store and couldn't get through to that department.

 

As all this was going on, I couldn't help but notice that, in that very store were I was, there were two employees talking casually to each other and doing nothing as the frustrated employee was trying to help me. There were as least three customers in the appliance department, that obvious to even me, were waiting for help, while the one good employee was trying desperately to help me.

 

I just thanked her for her trying to do a good job and said to go ahead wait on the other customers. I also told her in what order they'd come into her department.

 

Customer service is the most important thing when running a business!

I HATE Wal Mart. One example is that Wal Mart employees have a sign on the BACK of their uniform that says "How many I help you?" as they're walking away. That is so ironical, but says it all. Then there's the guy, in the commercial"  who is helping the lady SAVE money when buying groceries from a reciept she has from another store! That guy certainly doesn't exist in any of the Wal Marts I've been in lately.....I know the bargins there, I buy those few items an get out of that place ASAP,

 

The point is that employees can be the greatest asset, or the worse problem to any business. A smart CEO will be cognizant to this. It is IMPOSSIBLE to contact Sears directly.......which is their greatest mistake. I wanted to contact Sears to let them know the had at least one great employee, but at least four who weren't.                       

Jan 8, 2013 12:29PM
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Sears is just about done. too many old School managers, making to much money. They broke their word on craftsman tools, and are now importing crap from China. Still ripping us off on Credit card purchases. Over priced products, and the floor workers are becoming very RUDE. A new training program ?
Jan 8, 2013 2:28PM
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Sears was my main store.  But that was 40 years ago.  The last time I was in one had to be three years ago and I had to serve myself.  Employees were either awol or indifferent.  Somewhere along the line they sold their soul to the devil and now the devil wants his due.  Seems like he's getting it. 
Jan 8, 2013 2:49PM
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Lampert will be the final nail in the Sears coffin.  As a former manager, I saw the continued stripping out of anyone that had experience and common sense and replacement of brainless high schoolers and anyone who could otherwise breathe.  Commissions were stripped from sales people, managers were way overburdened with constant barrages of changes that never made a bit of sense, petty rules, constant nagging of customers for overpriced credit cards with shady practices, and antiquated check-outs.   Seriously...I won't buy an appliance there simply because it takes 1.5 hours to complete the most basic of sales transactions with any of the salespeople...and I love Kenmore's brand.  Craftsman is now made on the cheap by overseas slave labor and quality has nosedived as well.  I've always had a soft spot for Sears, but it's in shambles, and I really doubt that Lampert will do nothing except strip things further to make it good on paper long enough to take the money and run.
Jan 8, 2013 12:57PM
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Selection is terrible, sale items are always out of stock and not even marked. Poor management. Their identity is one of  dirty store's without merchandise in stock. Won't be long.
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Can someone answer this question: Who goes to Sears anymore? Really? There isn't much of a selection in any department. Buying a television or refrigerator there seems too confusing and power tools just are too expensive. Floor managers seem to not really care (I've been to multiple stores and can't find anyone to help me) and even just the smallest details, like paying for merchandise, is too complicated (weird line setups and old systems.
Jan 8, 2013 2:46PM
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My Family had purchased Craftsman Tools, Carharts and Kenmore Products from Sears for years and years, but once they started making them overseas the quality bottomed out and now we just buy any tools that we can find that are made in the US. We no longer buy anything from there as they changed too many things and putting their sales people only on commission has made several of them annoying and stealing sales from each other so that we cannot go there anymore.

Craftsman use to be a name of pride now it is just another thing made overseas that lacks the quality it had when they were made in America!

Jan 8, 2013 2:39PM
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i wouldn't even bother.  Going under is like a meteor hit; not a matter of if but when.  Customer service SUCKS! I used to laugh at the complaints until it appened to me.  The idiots (including me for not having checked on them) that delivered a washing machine/dryer left the shipping rod still attached to the washer.  When I took it for its first spin you could hear the banging all the way outside the house and it walked all around the washing closet.  I finally figured out what it was and called it in because I wanted a replacement since I didn't know if it was now damaged.  Well, they wanted me to call a repairman and fix it because I didn't buy an extended warranty.  It didn't matter that it was the day after it got dropped off.  The rep "noted" it in the account and after three weeks of waiting I emailed the head honcho in charge of the web orders.  He assured me that someone would contact me within 48 hrs.  I'm glad I'm not holding my breath. Done with SEARS.  I donated the washer and bought another one ELSEWHERE.  Not conducting ANY business with schmucks like these.

Jan 8, 2013 2:46PM
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If Sears wants to succeed they have to go back to their roots. Come into the 21st Century. Sears was a company that was best positioned take advantage of the internet. They should downsize the number of Big Box Store stores and transition to the old Cartalog stores? I know there are still some out their, Sears should become an Online retailer, supplemented by Catalog Sales Stores. Which would predominately focus on Craftsman, Kenmore & Appliances, supplemented by some of their other products that are either seasonal or some "Sale" items. Catalog sales should readily lend itself to Online sales.
Jan 8, 2013 3:08PM
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After four generations of Craftsman tool purchases, this family is done! Recently went to the Sears store in Clackamas to buy a band saw blade. It took a little while to find it, displayed not near the band saws or other blades but several isles away. Bought the blade and was told that I had several 'customer loyalty' points that would expire in just a few days. I decided to buy another blade that would be needed in the near future and... that's when the problems started.

 

The loyalty points couldn't be used and not one of the several clerks knew why. Someone from another department (adjacent to the tools) offered to help if I had 'just a couple of minutes'... He was unable to explain or offer a true solution, asking me to 'log in to your e-mail on our computer...' When I logged in to the Sears Customer web site with my ID and asked him a few questions about the customer loyalty points site, the response was 'don't know, never saw this web site before! They're always changing this system & I don't know what to say'.

 

Returning to the original counter, determined to simply pay the retail price and leave, a lady asked for my ID (?), took it out of my wallet and proceeded to copy some information on the receipt. After fumbling for several minutes more (we're now past 20 minutes of my time and my wife left the store in disgust), I asked for my ID back and explained that I had no more time and just wanted to forget the points and pay. Not once but three times, she pulled my ID from my hands and took it back to the register a few feet away. Obviously it was more important that she prove the point system would work than it was for her to respect our time and preferences.

 

After requesting a number of times that she stop and simply allow me to leave, she asserted that the points had finally been awarded but too many... !! It wasn't too many but, just prior to me calling security, she accepted my requests and completed the transaction.

 

One week later, our family experienced a similar purchase experience in the appliance department. Again, several calls, no one knew what to do or how....

 

I currently use Craftsman tools and woodworking equipment that was originally purchased in the 1940's but.... dunwidem! I find it unacceptable to drive 20 miles (round trip) to be disrespected and totally disappointed with service. Gee, Sears... in 'proving' the customer loyalty system, you've lost a third generation customer as well as that of our family... the fourth generation customers. I'll order through Amazon or buy locally at Home Depot or Lowes... 

Jan 8, 2013 4:05PM
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WOW.....this is an interesting thread.  This Mr. Lampert REALLY should be reading these comments and taking them to heart.  Let's see, out of 39 comments so far, I read 3, maybe 4 positive comments about the company.  THAT'S HORRIBLE!!!  So, let's see; customer service is bad, physical stores are filthy, employees are rude, products are inferior, online retailing is a joke, pricing is too high, warrantees are not backed.....  Mr. Lampert, oh MR. LAMPERT, ARE YOU LISTENING???
Jan 8, 2013 3:24PM
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Sears used to be good quality when things were "made in America", now it is a bunch of junk "made in China"  Sears Sucks!!!! 
Jan 8, 2013 2:58PM
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As soon as you publicly can the Kartrashians I'll be back.  Not before.
Jan 8, 2013 2:29PM
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A sears near me has been turned into an outlet store, some things marked down  as much as 60%, still no more traffic then when it was a regular Sears.

 

Jan 8, 2013 3:56PM
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I buy all major appliances at Sears only, and I did a lot of shopping there and at K-Mart this holiday season.  I routinely use Target for some items - and I AVOID Wal-Mart as much as possible.  I hope Sears is able to come back strong.
Jan 8, 2013 3:11PM
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Our Sears and our K-Marts are real nice stores and I got alot of great Christmas buys there this year. Target is a hipster doofus paradise. Lots of style, no substance and our Wal-Marts are a halfway house for shoplifters and the mentally/socially wierd. HAHA

Jan 8, 2013 3:35PM
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Last time I went to Sears was to buy a lawnmower a couple years ago at the Vista Ridge Mall near Dallas.
Had great customer service from a salesperson/employee named "Aun" (pronounced "On") .  Sears needs more people on the floor like him, great service, and got me out the door quick and efficiently.


Jan 8, 2013 3:54PM
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Sears is the new Woolworth. The Sears catalogue is gone, the long term employees are gone and they took their helpful knowledge with them. I think Mr. Lampert will eventually strip all he can, declare bankruptcy and then buy the real estate at pennies on the dollar. If that's not his plan, then he's smoking something that is making him dillusional.  Good luck with saving Sears. No more good, better, and best.....we have bad, worse, and fogetaboudit.
Jan 8, 2013 3:50PM
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lets place blame about the cheap foreign made goods where they truely reside.  the company that allows the goods to made cheaply.  for everyones complaining about stuff being made overseas and how cheap they are it is the companies that allow it to done.  the workers who make it are not to blame.  there is no longer any quality assurance in companies that sell a formerly good brand and that used to last for 10-20 yrs and now sell them to last 1-2 yrs.  If people want things made well regardless, then tell the companies, employees anyone why you are not buying their junk anymore.

close your sears credit cards and tell them why.  We have been all sold out for higher profits and salaries for the CEO's.  let this be a wakeup call.

Jan 8, 2013 3:24PM
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The greatest problem with Sears is Mr. Lampert, the owner.  He is not a retailer.  He is a dealer in real estate, he has a vested interest in MasterCard and thus gives more attention to promoting credit than promoting good customer service or good merchandise presentation.  The store managers are hired based on their operational skills, not their merchandising skills.  The corporation treats its associates with disrespect and criticism.  The sales people are constantly being reminded that they will lose their job if they do not open enough charge accounts or sell product warranty contracts.  An outstanding sales associate perhaps will receive a 25 cent raise and if you do not achieve the standards set by the company you can wind up with 7 to 10 cents an hour.  I had worked in retail as a manager for 35 years.  When I retired I decided to get a part time job at Sears.  I had to quit because the corporation was so mean spirited.  
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