Death in the middle · Retail

Eddie Lampert just can’t stop picking at Sears’ carcass

As some readers may know, I began my retail career at Sears. And these days, when folks ask how long I worked there, I typically say, “Too long.” The more accurate, less snarky answer is 12 years.

I learned a tremendous amount during my tenure and, for the most part, am proud of the work I led or was deeply involved with. I have also never regretted leaving when I did. Much of that is because I desperately needed a new challenge and to be in a place where my talents could be better leveraged. Despite quite a few twists and turns along the way, it’s all worked out just fine. Of course, another reason is that — through sheer luck — I managed to get out before Eddie Lampert decided that combining a mediocre retailer with a terrible one might be a good idea.

Anyway, I have written extensively over the years about Lampert’s horribly misguided and at times seemingly delusional leadership of the once-storied brand, and I will not recount that in any detail here. Google my name and “world’s slowest liquidation sale” or “dead brand walking” if you are desperate for that kind of entertainment. You can also see me on CNBC four years ago suggesting that the best thing for Sears shareholders would be for the company to liquidate ASAP. Oh, well.

So when it comes to Lampert, it’s safe to say I’m not a fan. I will point out in all fairness that, largely with the benefit of 20/20 hindsight, I have come to believe that no one could have prevented Sears from sinking into irrelevance once certain opportunities were missed many years ago. While there were unquestionably many chances over the past decade for Sears to do a much better job for its customers, associates, retirees and investors, it was always likely to end badly. Now, sadly, it is just a matter of time before Sears joins others in the retail graveyard, as evidenced by yet another round of stores closing this past week.

When the history of Sears demise is written, many leaders will rightly be taken to task for their lack of strategic insight, their unwillingness to take risk, their hiring of the wrong people and so on. Yet it’s safe to say that Lampert will stand alone in using his other interests (principally ESL Holdings) to stave off the inevitable by both loaning money to Sears and scooping up many of its remaining fungible assets. Now I will leave it to far more adept minds to determine if ultimately this multi-year complex web of financial engineering turns out to be brilliant for Lampert and his fellow ESL investors. Perhaps Crazy Eddie is indeed crazy like a fox?

What really galls me, though, and strikes me as worthy of a fast-track entry into the Chutzpah Hall of Fame, is how Lampert, through his totally inept leadership of Sears Holdings, drives down the value of the company’s assets only to pick them up at ostensibly bargain-bin prices. The latest example of this is ESL’s offer to buy the Kenmore brand for $400 million.

When I left Sears late in 2003 (the year before the Sears and Kmart merger), we had valued Kenmore well in excess of $2 billion, and Sears’ major appliance market share was north of 40%. Today, Sears’ leadership position has totally fallen apart. Today, the trends are relentlessly negative. Today, after two years of searching, ESL may now be the only plausible buyer.

To be clear, I’m not suggesting any intentional manipulation or malfeasance on the part of Lampert and/or ESL. Yet if I were the owner of a great house on a beautiful piece of property, I might be more than a bit suspicious of the buyout offer I just got from the guy who burned it down.

A version of this story appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.  

September 6th I will be in New York for the Retail Influencer Network Kick-off.  On September 19th I’ll be speaking at Total Retail Tech in Dallas. The following Monday I’m headed to Austin to do the opening keynote at the Next Conference.

One thought on “Eddie Lampert just can’t stop picking at Sears’ carcass

  1. Excellent analysis, as always. I was a senior merchant at Sears in the days (Martinez/Mettler) that you probably referred to as the “last best chance”. I got out just before you did. While nothing was going to save it long term (calcified internal culture, horrible store execution, too-many-hands bureaucracy), Lampert certainly accelerated the demise. He might have at one time thought he was Warren Buffet, but he was really Meshulam Riklis.

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