Sears’ CEO says fixing the retailer is ‘not so easy’
May 12, 2016 11:40 AM
(Bloomberg)—Getting long-struggling Sears to stop bleeding cash has been about as easy as closing the U.S. military prison in Cuba, according to CEO Edward Lampert.
Speaking at Sears Holdings Corp.’s annual shareholders meeting Wednesday, Lampert compared his quest to President Barack Obama’s struggle to close the detention camp in Guantanamo Bay.
It’s “not so easy,” said Lampert, who is also the retailer’s biggest investor. “Our focus right now is to show people that we can get this company back to profitability.” Sears in No. 14 in the Internet Retailer 2016 Top 500 Guide.
More than a decade after he merged Sears and the formerly bankrupt Kmart, the 53-year-old Lampert is still trying to find a formula that will lift the chains out their protracted slump. The hedge fund manager has invested heavily in digital operations and its Shop Your Way loyalty program, the latter of which accounts for about three-quarters of sales. Yet the company has posted losses for five straight years.
The retail chain launched a “Meet With An Expert” service in the fall that allows online shoppers to set up an appointment in a store to get advice on buying home appliances, and Sears expanded the service in April to include lawn and garden products. In 2014 Sears introduced online scheduling of picking up, reserving or exchanging a product that a store associate delivers to a shopper parked outside.
It’s Lampert’s intention to return to profit this year, though that’s not a formal forecast, Lampert told reporters after the meeting at the company’s headquarters in Hoffman Estates, Ill. To do so, Sears is closing stores “more aggressively,” he said.
Once the biggest U.S. retailer, Sears has been selling and spinning off assets as it continues to use more cash than it generates. A large portion of its most valuable store sites went into a real estate investment trust that brought in about $2.7 billion in proceeds last year. The move followed previous transactions that separated its Lands’ End clothing unit and most of its Canadian business.
Yet the retailer lost $1.1 billion last year, making a total of $8.2 billion in losses since 2012, as its cash burn accelerated. That trend prompted the company’s largest shareholder after Lampert to take a more active role.
Bruce Berkowitz, chief investment officer at Fairholme Capital Management, was named to the Sears board in February. While Berkowitz told his investors that much of the cash burn was voluntary and that he expected it to improve, it “does not build confidence or trust among all of Sears’s constituencies,” he said on a conference call in February.