Sears CEO and hedge fund investor Eddie Lampert has gained more control over the most valuable pieces of the department-store empire. What’s next?
It’s not often that a troubled company’s salvation may rest on another company run by its own CEO, but that’s what’s happening at Sears Holdings.
The company, which operates both the Sears and Kmart department store chains, has slowly been shrinking as losses have piled up. Now CEO Eddie Lampert is offering a solution that involves selling assets to the company he controls, possibly including Sears’ remaining real estate and Kenmore brand.
It’s a bold move — and one that raises some basic questions:
He’s not only Sears Holdings’ chairman and CEO, but its largest investor. The other half of his business world is ESL Investments, where he also serves as chairman and CEO, which deals largely in real estate. He has a financial background, having worked at Goldman Sachs.
Despite his titles, Lampert strives to stay under the radar. Unlike other Sears board members on Sears Holdings’ website, Lampert’s profile is a single sentence with no background on this past. And it’s a tumultuous past: Lampert was kidnapped by several armed men, blindfolded, handcuffed and held for ransom in a motel in 2003. He had been targeted as a wealthy executive — and the perpetrators were later caught. Maybe it’s no wonder that Lampert prefers to work quietly behind the scenes.
Though private, Lampert’s a fighter when it comes to taking on critics. He has used the Sears Holdings blog as a forum for blasting those who he thinks are giving up too quickly on Sears and Kmart. After the company declared in a public filing in early 2017 that there was “substantial doubt” that it would survive, Lampert blasted the «many commentators» who «have rushed to conclusions» about Sears’ future, saying the company was “fighting like hell.”
Lampert has prolonged the chain’s life through a series of shrewd financial deals. He has gradually closed stores and sold off key assets while trying to raise additional cash, conceivably all aimed at buying time as the chain searches for a longer-term solution.
A lot. He has gradually taken control of more of the company’s assets, and this latest move would be another example. They include gaining partial ownership of hundreds of Sears’ and Kmart stores’ better locations. The latest deal proposed Monday shows he is trying to preserve the most valuable part of Sears, even if it means chucking the rest.
There’s a lot. If Sears comes to the point of filing for bankruptcy protection, Lampert could lose the capital tied up in his 49% ownership of the company. Then again, critics say Lampert has drained the company of significant value and could yet come out on top.
Sears is being sucked down the retail drain that has claimed some of the nation’s best-known chains, including Toys R Us, Bon-Ton Stores and myriad sporting-goods chains. As more people shop online, stores become a costly burden. Sears incurred $11 billion in losses over the last nine years. Now Lampert may be looking for a longer-term exit strategy.
