Lampert Takes The Wheel At Sears
Edward S. Lampert, the chairman of Sears Holdings and founder and head of its majority shareholder, ESL Investments, took on the additional role of CEO of the retailer yesterday.
“The surprise move fuels uncertainty at the Hoffman Estates [Ill.]-based company, which has struggled for years to re-establish itself as a department store in an ultracompetitive retailing industry dominated by low-price giant Wal-Mart and big box and specialty stores,” writes Corilyn Shropshire in the Chicago Tribune. Not to mention the ever-increasing tsunami of online retailers.
Articles used to routinely refer to Lampert as “Fast Eddie,” but that sobriquet has been appearing less frequently as the massive three-master of a retail operation he controls continues sailing steadily in the southward direction -- not that it hasn’t been trying to put a 21st century skin on its 19th century hull as a mail-order catalog.
Louis D'Ambrosio, a Harvard MBA who was formerly CEO of telecommunications firm Avaya and a through-the-ranks executive at IBM, has been at the helm for two years, but is leaving Feb. 2 because of “family health matters,” the company says in a statement.
"Lou has guided Sears Holdings during a time of rapid industry change to become a more customer- and member-focused company and positioned us to lead in integrated retail,” Lampert says in the statement.
D'Ambrosio “gave clerks tablets so they could advise customers on products, and emphasized a loyalty program that collected shopping history and other data from customers,” Stephanie Clifford writes in the New York Times. “Sears has also been emphasizing online-offline convergence, like allowing customers to order online and pick up in store.”
In a memo to employees, D'Ambrosio says he has worked “very closely” with Lampert -– who has, some have written in the past -– a tendency to micromanagement. “I can say this,” D'Ambrosio continues. “There is simply no one in the world that cares more about Sears Holdings and has thought more deeply about our company than Eddie."
“Lampert was the master value investor who notched an astonishing 29% yearly return over 16 years by acquiring stakes in undervalued, old-fashioned companies and beating the hell out of management to improve performance,” Forbes contributor Laura Heller pointed out in August 2011.
But then he brought Kmart out of bankruptcy in 2003 "by buying bonds no one else was willing to touch,” writes Heller, before orchestrating the acquisition of Sears in an $11.5-billion deal in 2005, creating the nation's third-largest retail operation, Shan Li reports in the Los Angeles Times.
“He proceeded to slash costs and tamp down investment in stores, which won the company a short-term boost, analysts said,” writes Li. “But the move also alienated Sears and Kmart customers who complained of dowdy stores and subpar customer service.”
Writing in the Wall Street Journal, Dana Mattioli also observes that Lampert “lacks a retail background and has been criticized for skimping on investments in the chain's 2,000 stores and turning off customers” but the new CEO feels that “his longtime board seats at AutoZone Inc. and AutoNation Inc. have taught him a lot about retailing.”
For his part, Lampert says the Sears board is looking for “continuity of leadership” and he’s the guy who can best provide it.
“I have agreed to assume these additional responsibilities in order to continue the company's recovery and sustain the momentum we are experiencing, as well as further the development of the management team under the distributed leadership model, which provides our business unit leaders with greater control, authority and autonomy,” he says in the statement.
D’Ambrosio, who will remain on the board until May and “be available to assist with a smooth transition,” feels that 2012 was a “turnaround year” for Sears, reports Barney Jopson in Financial Times. “Over the past 12 months the company increased liquidity by $1.8 billion, showed [growth in earnings before interest, tax, depreciation and amortization] each quarter and lowered net debt by $400 million,” D’Ambrosio emphasizes.
In an update on its quarter-to-date performance, Sears says it expects to lose $721 million to $801 million for the fiscal year, which includes pension-related costs and other adjustments reported late last year. Excluding those items, the company says it expects to lose $123 million to $203 million.
But while it beat Wall Street expectations in the previous quarter, as Shropshire points out, its stock has lost more than 35% of its value since November.