Does it really matter?
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Hedge Fund manager Eddie Lampert, known for having fabulous self-esteem – in part due to this fawning article that called him the Next Warren Buffett – is stepping in to run Sears Holdings (SHLD) after yet another CEO departs.
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Maybe he’ll install new carpet at headquarters. Or change the logo. But it seems doubtful at this late date that the man who has controlled Sears for nearly a decade – and presided over this stock chart – has any new tricks up his sleeve.
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The problem, as has been plain for some time, is that Sears and Kmart stores – already dreary places when Lampert latched onto them – have become even less welcoming for lack of investment and, shall we say, energy among the dispirited staff. Visit one if you doubt this.
Target (TGT) and Kohl's (KSS) surely have their own problems, but their managements were smart enough not to engineer their own dreadful shrinkage. With substantial fixed costs, multiple years of declining same-store sales have taken their toll on Sears profits.
It all seemed so promising at the beginning. Lampert bought Kmart out of bankruptcy and did so cheaply. Analysts fell for the notion that the underlying real estate was valuable, bidding up the stock. Emboldened, Lampert used the puffed-up shares to buy Sears (management there was long out of ideas and only too glad to hand over the wreck; they had the last laugh), and Lampert fans bid the stock up further. Something amazing was about to happen, or at least that’s the message one got reading the BusinessWeek piece.
Instead, we got exactly what you’d expect from combing Sears and Kmart: two retailing drunks trying to hold each other up. Busting it all up (Sears has lots of mall locations and that is hardly sought-after property these days) has remained a nice pipedream for some, but the societal implications of cashiering more than 200,000 employees to realize some liquidation value would seem daunting to overcome.
Lampert is still clearly working out the Warren Buffett issues. His annual letter to Sears shareholders -- patterned, one supposes, after the Oracle of Omaha’s closely-read missives – is a remarkable exercise in self-justification, and unintentionally comedic so long as one doesn’t hold Sears shares.
Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at firstname.lastname@example.org.