Lampert Reaps Cheers at Sears Meeting Amid Sales Skid
This year, Eddie Lampert stood alone.
At the Sears Holdings Corp. (SHLD) annual meeting yesterday, he faced shareholders for the first time as the company’s chief executive officer, as well as its chairman, majority shareholder, and engineer of the merger of Kmart Holdings Corp. and Sears Roebuck & Co. eight years ago.
While the company has posted two years of losses and six of declining sales, investors voiced little dissent and offered ample praise for Lampert and his solo performance.
“I am so happy to see you as chief executive officer,” an elderly female investor from Texas told Lampert at the meeting at Sears’s headquarters in Hoffman Estates, Illinois. “Sears needs to be sizzling because it is hot.”
Lampert held court onstage for two hours in a room stocked with bicycles, a washing machine and mannequins decked out in Sears and Kmart brands. During his opening remarks, Lampert detailed how the company has reduced online transaction and shipping time and added a program that allows customers to communicate online with store workers.
The department-store chain also will lean heavily on its membership program this year, he told shareholders. A clothing line by singer Nicki Minaj will be available to Shop Your Way members first, and they can expect other special offers and pricing, he said.
The three-year-old rewards program, which Sears says has tens of millions of participants, is becoming increasingly important as the company tries to revive sales, which have fallen for 24 straight quarters. More than half of Sears’s sales now come from Shop Your Way members and sales per member increased more than 8 percent last year, compared with a 4.1 percent drop companywide.
“We are becoming a company focused less on products and less on stores and much more on members,” Lampert said.
Since the beginning of last year, Sears has sold stores, spun off its smaller-format locations and a portion of Sears Canada, and formed a new unit to develop entertainment-linked brands, including clothing lines by Adam Levine and Minaj.
Lampert took over in February after Lou D’Ambrosio stepped down after less than two years for a family health matter. He is now the retailer’s fifth chief executive since he combined Kmart and Sears Roebuck eight years ago. D’Ambrosio, whose background is in technology, emphasized online sales and data collection to gauge customers’ buying habits.
Lampert told the approximately 300 attendees at the meeting that the company still needs to improve. Sears posted a $930 million net loss on $39.9 billion in sales in the year ended Feb. 2. The loss was narrower than the $3.14 billion deficit a year earlier.
“We know that the level of profitability is still well below what it needs to be to justify the assets we’ve dedicated to the business,” he said.
Lampert said the company would be more aggressive about some of its plans if it had the resources. Sears’s operations consumed $571 million in cash in the past two years.
“If we were making more money, we could go much faster,” he said at a press conference following the shareholder meeting. “We’ve had to make choices I’d prefer not to make.”
For example, the company has been criticized for spending less on store upkeep than competitors. Sears also has lost appliance sales to big-box competitors such as Home Depot Inc. (HD) and Lowe’s Cos. (LOW) The shares, which rose 2.4 percent to $51.26 at 10:36 a.m. in New York, dropped 10 percent in the 12 months through yesterday, compared with a 13 percent gain for the Standard & Poor’s 500 Index.
“Sears currently lacks a credible turnaround plan for long-term viability,” David Kuntz and Ana Lai, analysts at Standard & Poor’s in New York, wrote in a report this month. “Sears needs a more drastic plan to improve its merchandising and invest in its store base, while maintaining its position in appliance and tools retailing.”
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