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
Shares 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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86Comments
Jan 8, 2013 5:31PM
Jan 8, 2013 5:29PM
Sears used to be my favorite place to shop and that all changed after purchasing a high-end work bench that had a faulty power strip. All I asked for was a replacement $20 power strip for my new work bench and they told me "NO", and their manager told me the same thing. That was in 2004 and I have reluctantly been in there twice since then to have rachets replaced. This company will never get another dollar of mine :)
Jan 8, 2013 5:21PM
Jan 8, 2013 5:00PM
Its a shame that shoppers who are rude and inconsiderate of others are your main complainers. As a sales person, I do get many compliments from shoppers. The employees are not the bad guys, the owner is. Many of the workers also wish Lambert would sell the company to someone who cares how SEARS operates. As far as I know, SEARS hase always stood behind their products, unlike other competitors. Yeas the SEARS card has an outragious interest rate, but it is owned by another bank as like every other store card. People tend to blame the sales people for everything, when the only thing they have control over is selling the product. As far as Craftsman tools, I see they still will replace the product no matter what ! Anyone who has worked on an auto has come across terrible sockets and auto wrenches made by other manufacturers, but I don't see a whole lot of complaints about the crap. Just remember, the more companies that close, the more on unemployment. The more on unemployment, the less money spent. Just be considerate, you too can lose your job...
Jan 8, 2013 4:59PM
I use to be with Sears and remember the good times. Sear's management has been asleep at the wheel for 35 years. The biggest mistake they made was to get rid of most of their professional sales people and benefits while hiring more part-time inexperienced people. Sears has sold most of their best assets trying to stay open and pay stupid management, management that has absolutely no retail or selling experience. One would have to know Sears policy and understand how they think to also understand the fact that they are on a ever increasing fast pace, out. Their dabbling with home improvement sales and having ridiculously high prices on that, explains a lot. I use to wonder what theoretically intelligent people were making such asinine decisions.
Jan 8, 2013 4:39PM
Going in a Sears is like going back in time they still have the same logo clothing here as they did where I grew up
it's like they are stuck in the past. I would get rid of of all these stiff shirts in each dept. trying to hustle you into buying something from them so they can get a little bonus. Their tools were good and warranted them and then in the 80s they would give you a rebuild kit for a ratchet that had went bad even though when you bought it the warranty said replacement the one thing I guess we all miss is the Sears catalogue before Christmas my children never knew that experience
Jan 8, 2013 4:36PM
Some Sears employees only get 5 hours, yes 5 hours a week. Would you give a rat's *** if you worked there? Workers are underpaid, mistreated, extremely low wage, no possibility of promotions, technology and equipment and stores are old, cashiers can be fired or have hours cut for not getting the required number of emails or credit applications. Like with most of retail, it's full of horrific working conditions, where there is no voice or say on the job, no raises, and harassment. Didn't you all see the nationwide black friday protests at walmart, those were for the same injustices that sears workers and kmart and target workers and most of retail face. Wake up and smell the corporate neglect and abuse. Another huge employee abuser is Khol's. Cheap conditions create cheap results.
Jan 8, 2013 4:29PM
The trouble with Sears is the management and that starts at the top, and Mr. Lampert is it. I worked at Sears part-time for a number of years. There are many good employees, but the store is understaffed at critical times, there are no raises at all - we were told that "Sears cannot afford to give its part-time employees raises". There is also no commission except in large appliances, and then these employees are strictly commission only! This causes a huge problem - lazy employees are tolerated and often promoted; good employees, especially middle-aged ones are discriminated against, and quite frankly, working hard doesn't mean a thing at Sears. It simply didn't matter if you worked hard and did your job or stood around and chatted. All this adds to customer service or the lack of it. The big push was "Store to Home" or how to get the customer to order from their on-line service and cashiers were penalized and often given no hours if they didn't coax customers to open Sears credit cards, for which Sears received $15 for each account opened.
No, it wasn't the Sears I grew up with. Mr. Lampert is and has done a terrible job. Sears has no vision other than the bottom-line, most of which ends up in Mr. Lampert's pocket. He'll end up riding it hard and putting it in the barn wet. And he'll squeeze every penny out of it without any re-investment in to. Good luck - it's won't be around and it's a shame to see how far it's fallen.
No, it wasn't the Sears I grew up with. Mr. Lampert is and has done a terrible job. Sears has no vision other than the bottom-line, most of which ends up in Mr. Lampert's pocket. He'll end up riding it hard and putting it in the barn wet. And he'll squeeze every penny out of it without any re-investment in to. Good luck - it's won't be around and it's a shame to see how far it's fallen.
Jan 8, 2013 4:24PM
Jan 8, 2013 4:23PM
They should not try to save it. They should sell the tool business to Lowes or Home Depot; and call it a day. There is too much competition at the bottom of the market; and these stores are so old, so poorly merchandised, so ugly; there is really no reason on Earth to shop there. I think that Penny's might be next.
Jan 8, 2013 4:23PM
Jan 8, 2013 4:16PM
Jan 8, 2013 4:13PM
Last time I tried to get anything from Sears it was like pulling teeth with a toothpick - so I said to hell with them, I can get made in China crap anywhere and for even less with better service. Sears has always had ups and downs - I remember shopping in one with my parents ages ago and buying clothes made in Taiwan that never were made for the larger American body type (we weren't that big but not as small as Asians). The stores are dirty, crummy and some of them remind me of overstocked crappy hell holes that get pushed off to the dollar stores. Time for them to bury the place and call it quits. I'll play taps.
Jan 8, 2013 4:05PM
hey if they would pay their employee s better they wouldn t be in the trouble their in, they are the backbone of the store they are like the players on a sports team, we fans go see the players and the customers go to see and deal with the employee s ,why don t you pay your sales people a good commission like you use to 4 or 5 % on every thing they sell why can t they make a good liviing, whats wrong with that? It drives me crazy to see the employees the ones that do the real work get paid so little but those stupid upper management that come up with all those stupid idea s that never work get paid so much . you guys ought to really sit down and see who is really over paid,, and if a person doesn t have a retail background than i ask you why in the hell is that person running a retail establishment come on where is the freakin common sense ?
Jan 8, 2013 4:05PM
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 4:01PM
the only thing bad is theyre prices and piss poor customer service. no one knows anything about anything but yet they push the product. only difference in walmart are the prices . the bad thing about walmart is everything is a grade c or d meats are tereble produce is already rottening clothes are made for walmart the tag inside has a walmart 32 . pants are 2 belt loops short they have 1 size on the label but are not that size the shirts wont stay in ur pants they about 3inches to short now you know why they are cheap . sears problem is they dont stand behind stuff. i had 2 flats the tires were distroyed. the valve stems were breakink going down the road. i found on the internet that the stems were made in china and had been recalled because of this. sears took old tires and got rid of them. i asked why nobody was informed about recall they said they dont know where all the stems were put on at and it cost to much to check all tires that was sold . i was tolds i needed my old tires as proff of what happened. i said they kept tires and distroyed them , they more or less said sorry bout your bad luck. i tore up my card quit dealing with them they sent me a mletter wondering why i took my business elswhere . if they dont get the picture now then let them close up and theyre employees can work for mc donalds or walmart where they came from in 1st place
Jan 8, 2013 3:59PM
Jan 8, 2013 3:59PM
Jan 8, 2013 3:56PM
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