Tuesday, September 02, 2008

More On Ed Lampert's Failure At Sears

Last Friday's Wall Street Journal carried a breakingviews.com article reinforcing yet another of my contentions. This time, they entitled their piece, "Mr. Lampert, Fire Thyself."

My last explicit post on Sears and Lampert, here, I noted that his foray into the retailer as its CEO had failed.
The recent picture of the firm's 2-year stock price performance, when compared to the S&P500 Index, tells the same story.
Since that post in January, the price of Sears shares has fallen precipitously, then recently bounced, to end lower than it was early in the year.
For what it's worth as empirical evidence, my daughter and I visited a KMart in West Virginia this summer. In contrast to the well-stocked and -staffed Wal-Mart down the road, the KMart was disorganized, ghostly, and very unappealing as a place to shop. Things hadn't changed much in the store's ambience since the days of my very first job working at a KMart, circa 1973.
Having lost some 60% of the firm's value since mid-2007, Lampert's ill-considered attempt to operate the retailer has cost shareholders plenty.
In this case, I think the breakingviews folks are correct. Lampert should fire himself, once he has attracted a veteran liquidator to come in and extract what value remains in the combined Sears-KMart operation.
Perhaps some of the old Sears brands, such as DieHard batteries, Kenmore and Coldspot appliances, and Craftsman tools can be sold off to other retailers in those businesses. After that, perhaps some of the real estate still has latent value, despite what I read about much of it being tied up with clauses involving being an anchor tenant in various malls.
Like many other once-great American businesses which have essentially seen their business model evaporate, Sears should simply be dismantled, before all the value shareholders might receive is needlessly spent on the turnaround that will never come.

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