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 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 3:53PM
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SEARS is gone, and has been gone, for at least 25 years.  The company is DEAD, but management is too stupid to realize it.  Nobody goes there anymore......well maybe except for WalMart and KMart customers, when they feel like really slumming it.  What was once a highly respected, attractive and relevant store is long gone.  Pull the plug, the patient is DOA.
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 3:48PM
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Sears has no one to blame for their consistent disappointing losses but themselves.  A company that does not stand behind what it sells, or advertises items at one price but then charges another is not going to help the consumer to trust them.  When a company will admit their errors and honor the pricing that is shown on the website, customers will want to continue to do business with them.  A company like that is showing that they care and honor the consumer who, in the end, will keep them in business.  Sears has consistently proven that they are a company that provides little to no customer service and repeatedly shows the same generic, thoughtless and dismissive attitude.  They are destined to go out of business and rightly so.  Who really wants to shop at a store that refuses to provide a decent shopping experience when there are so many other retailers that not only will but will bend over backwards to do so?
Jan 8, 2013 3:46PM
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SEARS employees are almost as incompetent as those who work for TSA! I spent one and a half hours trying to purchase a water filter for my SEARS purchased refrigerator. $57.00 for a water filter canister! WOW but the online SEARS.COM said shipping was free for any mail able item over $50.00.....But my order had a $15.00 SHIPPING fee added to the $57.00 ?? So, I call the customer service #....Waist of time, cut off twice and transferred the fifth dimension. The online chat was semi helpful the idiot who said he was a Sears employee explained that the SEARS.COM site I was on was selling me a filter through a vendor other than SEARS so the free shipping did not apply. I was buying from the sears web site?  I GUESS NOT! After a week, I received a Customer satisfaction survey! That was a joy to fill out! Of course no one will follow up on that...If you need a filter I recommend Home Depot I found the right one and the sales person had it pulled and waiting for me when I arrived there...after a short 5 minute conversation and for $42.00! Sears deserves to be broke!

 

Jan 8, 2013 3:41PM
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When they go good riddance. Right now to me they do not even exist and that includes Kmart. And I used to be one of their better customers.
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 3:28PM
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SEARS on-line purchasing has become its own disappointing experience.  I'm a SEARS retiree, so I certainly do try to make my tool purchases at the retail stores or on-line.   The sell quite a number to tools through a 3rd party arrangement called MARKETPLACE.   This has got to be another failure in the making for the Company and has discouraged me from even looking on its website any longer.  A recent tool inquiry lead me to MARKETPLACE where the item was priced far and above what I found  from another supplier, shoppers' REWARDS points redemption was not allowed, employees' discount was not allowed, SEARS' recently launched SHIPMAX program was likewise disqualified from the transaction, and shipping was TOTALLY OUTRAGEOUS from the 3rd party vendor!   When it was all said and done, I got the tools thru amazon.com for HALF the price quoted by SEARS and the shipping was F R E E!   SEARS' management is taking direct aim at their own feet and doing a great job of sending me elsewhere.  Only a fool would contnue doing business with them if they continue gouging the customer with a  discouraging sales tactic like MARKETPLACE.
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.  
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 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 3:08PM
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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 3:05PM
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This goes to Dil 52

 

How many stores or businesses have you owned? How many stores have you managed?? Are you one of those persons that say but never takes action?? .. Cause it seems to me that the only thing you tried to manage and never accomplished it has been yourself.

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 2:49PM
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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 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 2:46PM
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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 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 2:36PM
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They also are a store that some of everything (except foods).  Great place to shop!
Jan 8, 2013 2:35PM
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Personally I love Sears and have shopped there for 3 decades.  It has some of the best appliances on the market and they always refund if you need it and they have WONDERFUL SALES.
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