Use access key #2 to skip to page content.

Edward Lampert does not know a washer from a dryer and Sears is dead

Recs

2

January 10, 2013 – Comments (1) | RELATED TICKERS: SHLD

Eddie Lampert is now taking over as CEO for Sears Holdings. This is Sears' fifth CEO in seven years. And still the retailer has not turned around. Lampert refuses to invest in the stores, which is key to generating a good experience for customers, which in turn is key to actually generating sales.

Some had speculated that Lampert was going to turn Sears into another Berkshire Hathaway. The thing, though, is that Warren Buffett himself has basically said that actually buying Berkshire was basically a waste of money. Berkshire was basically a textile company in decline, and Buffett could have invested the money he'd sunk into Berkshire into insurance operations, which is where he really made a killing. Berkshire's capital needs most likely sucked up money he could have put to better use.

Lampert should have stuck to his hedge fund. Meanwhile, Sears is a declining retailer. Lampert refuses to invest in it, which is fine, except that this contributes to the decline. Meanwhile, he has been buying back Sears' stock. That would be great if the stock price was rising, but with declining revenues, the stock price is not rising. He has made vague efforts to turn around the company and unlock the value of some of its brands. But that hasn't worked, and a brand needs continuous investment to improve and keep sales up. So that strategy has risk. And Sears' overall financial health is not good.

Sears is basically dead as an investment. Some value could be salvaged, I think, if the company were to spin off Kenmore and Craftsman as independent brands, or if they were to sell those brands. And of course the company could sell, lease or do something else with its real estate. But I basically see no value in the rest of the company. It's dead, put a fork in it.

1 Comments – Post Your Own

#1) On January 10, 2013 at 1:19 PM, Mega (99.95) wrote:

The really bizarre thing is installing the former Best Buy CEO as the president of ESL. That move has to confuse his hedge fund clients.

I don't think Lampert will do any worse than the 4 previous Sears CEOs, because that would be nearly impossible.

Report this comment

Featured Broker Partners


Advertisement