Posts Tagged 'Eddie Lampert'

Another activist investor takes on Macy’s this time

Starboard Value Investors garnered a lot of PR recently, with its micro-critical look at the operations of Darden Restaurants before taking over the chain. Now its sights are set on Macy’s, in hopes to “unlock the asset value” of Macy’s real estate. Here’s my comment from a recent RetailWire discussion:

It’s arguable that Starboard drove the share price of Darden Restaurants higher by micromanaging issues like the breadsticks at Olive Garden. But it’s hard to make the same case that they can bring much value to the operation of Macy’s, widely viewed as an industry leader. Macy’s ought to be free to make its own decisions about the value of its real estate assets, instead of reacting to the whims of an “activist” investor.

The history of activists and retailers is not pretty, if William Ackman and Eddie Lampert can be used as examples. (Don’t forget Ackman’s push to “unlock” the real estate value of Target, before his misadventure at JCPenney.) Successful retailers are about much more than “unlocking assets,” and they really depend for their success upon good merchandising, branding, store operations and omnichannel strategies.

Sears Canada: One more ominous sign

Sears Holdings is always good fodder for RetailWire panel discussions, and the announcement that SHLD is selling its share of Sears Canada (to its own shareholders?) is no exception. Here’s my point of view:

Where to start? How about at the endpoint of the commentary, where Sears can only be saved by a “master merchant”? If the last ten years have taught observers of Sears anything, it’s that Mr. Lampert will not cede authority to anybody else, as long as he feels he is a “master merchant” himself. And with a number of other companies looking for new leadership (starting with JCP), why would any “master merchant” take on the challenge of a company whose real CEO refuses to invest in the business?

I haven’t shopped Sears Canada for several years, but at one time it was a credible quality alternative to The Bay. (I believe this is no longer true.) The idea of selling the company to its existing shareholders is akin to the recent “loan” from ESL hedge funds to Sears Holdings. It’s a Band-aid where a tourniquet is probably required.

Finally, it’s worth noting in the¬†Wall Street Journal coverage that one company insuring vendors against Sears’ non-payment is canceling its coverage as of October 6th. How many smaller vendors will cut off shipments for 4th quarter, and will the downward spiral accelerate?

Sears’ latest vision, or latest retreat?

Eddie Lampert announced that Sears will continue to close brick-and-mortar stores at an accelerated rate. While this is the right thing to do, he put it into the context of a company “reinvention” that any Sears-watcher should be skeptical about. Here’s my point of view, as expressed in a recent RetailWire panel discussion:

Mr. Lampert has had ten years to prove the validity of his vision. And that vision has changed every time the “last strategy” failed to achieve gains in profitability and market share. Meanwhile, a collapsing sales base in outmoded stores makes it very seriously to accept the latest messaging — whatever it is.

The undermining of the Sears and Kmart brands through mismanagement is so thorough that it’s naive to think an “online marketplace” can leverage those same damaged brands effectively. An online version of Sears runs a risk of irrelevance compared to stronger, better-managed competitors like Amazon and walmart.com. It’s the same pathway that led to Sears’s “also-ran” status today.

On the Sears Holdings “management team”

RetailWire started a provocative discussion among its BrainTrust panelists by headlining its article: “Should Eddie Lampert Fire His CEO?” (Referring to himself, of course.) I’ve had plenty to say about Sears Holdings over the years, and my latest comment follows:

It doesn’t matter whether Eddie Lampert carries the CEO title or not…as the question suggests, he is calling the shots. The answer is “no,” if the conventional definition of a turnaround is actual improvement in operating results, merchandising and the store experience. But none of these has been on Mr. Lampert’s agenda for a long time, while he is more preoccupied with ways to leverage the company’s assets and come up with farfetched ideas like data storage and disaster recovery. So don’t expect this picture to improve anytime soon — the only question is what’s the endgame.

Sears’ new CEO? Surprise!

From a recent RetailWire comment about the announcement that Eddie Lampert has taken the reins as CEO of Sears Holdings:

Why would this announcement come as a surprise? Doesn’t the revolving door of leadership at Sears Holdings suggest that Mr. D’Ambrosio’s tenure was going to be a short one? The Wall Street Journal article suggests that major decisions (merchandising and otherwise) were made by Mr. Lampert on his team’s pilgrimages to his East Coast office.

It should be clear by now that Eddie Lampert has been the CEO in everything but name, going back to the 2003 Kmart acquisition and the 2004 creation of Sears Holdings. This simply gets rid of the charade that Sears can hire somebody with a strong merchandising or retail operating background to run the company. At a time when Sears could actually gain share at JCP’s expense, this is a big step backward.

Borders wants to buy Barnes & Noble: Really?

Here’s my reaction (via RetailWire) to the news that Borders and its “activist” lead investor William Ackman want to take a run at its much bigger and (relatively) healthier competitor, Barnes & Noble:

This reminds me of the 2004 “merger” of Kmart and Sears, in which the much smaller and weaker company had the financial resources to swallow up a retail giant. Without turning this into another exercise in Sears-bashing, the results speak for themselves, because the combination of two weak players does not usually result in a win. (Compare this to the Macys/May merger, in which the two industry leaders formed a stronger company over the long run.)

The parallel to Sears Holding extends to the company management: Eddie Lampert was a celebrated financial wizard who has not shown aptitude for running a retail business over the past six years. Likewise, William Ackman is a noted hedge fund manager who has parlayed his investments in several retail companies into a reputation as an “activist investor,” but without much of a track record of management or results to show for it.

There is one key difference worth pointing out: B&N and Borders are the “last ones standing” in the bricks and mortar bookselling industry. (The real competition is from e-commerce and digital books.) Some consolidation seems inevitable, but is Borders the company that can pull it off? And how does the business model avoid becoming another Blockbuster?

Why is it so hard to hire a new CEO?

Today’s Retail Wire comment touches on the trouble that Sears and Barneys (among others) have had hiring new CEO’s. These are very different situations; here are my thoughts:

As I’ve said before on Retail Wire, Sears Holdings already has a CEO, named Eddie Lampert. The search for a “new CEO” is a charade, and most credible candidates for one of the biggest challenges in retail know it. Mr. Lampert has a strong (if misguided) point of view about how to run Sears, and an outside candidate is unlikely to have the authority needed for a true turnaround. From its real estate portfolio to its brand image to its lackluster softlines business to its capital starvation-diet, Sears today reflects the management expertise of its boss.

As to Barneys, the financial condition of the company — and the overall weakness of luxury retail — are two good reasons for CEO candidates to steer clear, unless lured by a real challenge and a lucrative contract. Barneys does not have the brand recognition or geographic reach of other key players in luxury retail, such as Saks and Neiman Marcus. These nameplates are likely to rebound sooner as consumer spending recovers, especially if they work harder to establish a “new relevance” with their customer base.