Is Eddie Lampert Taking Sears Holdings Private?
When you’re an ailing publicly-traded retailer and just about everything written or said about your company goes through a laundry list of mistakes you made and fixes you need to make to get your business turned around, what do you do? If you’re Sears Holdings, apparently, you take the company private. (At least that’s the rumor du jour.)
Sears Holdings has seen its stock price rise on speculation that the company’s chairman, Edward Lampert, was getting ready to go private. Analysts, even those who saw some value in going private, said that would not be enough.
Morningstar analyst Paul Swinand told Reuters, "They still have to improve the operating structure and costs, pension, etc., then reinvest in stores, and then get appliances to sell again."
The speculation about what Sears Holdings might do next comes after recent reports that lenders are looking to negotiate quicker turnaround on payments from the company. One lender, CIT Group, made the decision to stop financing factors for suppliers waiting on payment from Sears Holdings for orders delivered to the company.
Discussion Questions
Discussion Questions: Would Sears be smart to go private at this time? What would it be able to do as a private concern that it wouldn’t as a publicly-trade company?
Public or private, I don’t see Sears being much of a retailer. We have seen a trend of store closings by the bushel and that will probably continue. By going private, stockholders will be able to get something for their shares. Most likely they would become worthless over time. Also being private, the company will no longer have to report earnings which I’m sure is something they dread. There was always the theory that Sears has some kind of super underlying value with its private label and real estate. We’ve been waiting 10 years for that to appear. Haven’t seen it yet.
What difference is there if you’re private or public, if you have a merchandising vehicle that is broken? Maybe being private they can better evaluate issues like Craftsman and Kenmore without the glare of Wall Street, but at the end of the day they need to create a destination for some portion of the population relative to Walmart, Target, JCPenney, Amazon, Zappos…etc.
Public or private, would it make any difference? Sears has basic problems that need to be fixed in order to reverse its declining sales. Lampert and team have had many years to reverse this sales trend and have consistently failed. Who wins if Sears goes private? Lampert.
If you are private you are no longer obligated to report what you are — or in this case aren’t — doing to fix the business.
So … might we not see a scenario in which the company goes private, totally restructures in the most brutal manner imaginable, milking whatever is available in the process, and then either goes public again in some new incarnation people would be willing to invest in … or … more likely is stripped of its asset value and whatever left is sold in a fire sale?
Don’t be so quick to say public versus private doesn’t matter. It’s a lot easier to loot once you get the right to close the curtains.
This retail business is without turnaround. Even the poorest of competition beats Sears/Kmart. They have no reason for existence. The only consumer assets they have are some of their brands, which others will be more successful selling than they.
Like Lampert, if I have the ability to leverage any value out of this company, I take it private and control the future to my personal benefit, which does not include retail.
Sears of Eddie Lampert has not seemed too interested in paying the rent to live a public retail life. It now appears Sears wants to leave its current financial home (public retailing) for another. I anticipate Sears going private with not much else changing. Sears of Richard Sears is no longer retail oriented.
The Sears and Kmart situation reminds me of the last years of Trans World Airlines.
Sears value as a retailer lies only within their fast-fading brand value (Kenmore, Craftsman, DieHard). As Sears continues to lose market share through decreased customer visits and store counts, these brands begin to lose their relevance.
Sears is finished. Moving the patient from a public hospital to a private hospice service may help to screen the public’s view of the rapid decline of the patient, but it won’t save its life.
Sears best hope is to salvage what they can from their real estate holdings and sell the brands to the highest bidder (while they still have value).
So far omitted from this discussion are the hefty fees to lawyers, bankers, therapists, etc. that always accompany these “unlocking value” maneuvers…of course it’s not like they’re spending it on the stores now, so perhaps out-the-window vs. down-the-drain doesn’t really matter.
Ok, so I admit I might be a bit over my head on this, but if Lampert were to take this thing private, wouldn’t he have to come up with a fair amount of capital to finance the transaction? And who exactly would want to invest in this thing at this point, especially if the creditor community is starting to tighten the noose?
As many have noted, taking Sears private does not solve its problems at retail but does prevent them from being stated over and over again with every quarterly and annual report. Is there a value in that for Eddie Lampert? I expect there is. The question is, who would fund the transaction?
Hmmmm…how do I say this without sounding totally out of sync with our expert panel? I would not doubt that whatever Mr. Lampert does or does not do is the right move — for all concerned — in the end. Are times “tough” out there? Yes. Are they tough only for Sears Holdings? No, many including Sears Holdings are struggling. Does the enterprise have the ability to improve on its financial performance and return to shareholders? Yes. Will it sometime soon? Define soon. Predictions as shared here with the famous Twain quote…rumors of my death or demise are greatly exaggerated? True. Time will tell, but there are many loyal shoppers, it is a tough environment for many, and Sears/Kmart aren’t the only ones closing stores after several years of working hard to make them viable/worthwhile to keep open. Of course, I have a tremendous amount of respect for the team at Hoffman Estates, and should they indeed go private, who is to say that at a later date it comes back public?
I just don’t see how much of a difference it will make. The company suffers from years and years of disappointing customers and a general lack of capital investment in the store base.
I would venture the ultimate future lies in licensing the brands out and trying to somehow make some money off of supplying those dealer (I mean “hometown”) stores.
As far as the Sears/Kmart retail operation goes, well, just go look at some stores, look at the customer counts relative to competition, look at the merchandise, look at the pricing, and that should answer any questions anyone here has….
The marriage in 2005 was bad. Private only means selling off Sears in parts and maybe they have a large portfolio of properties which will get today’s value. As a retailer…it is over.
Certainly, going private should provide additional flexibility and levers that can be used to address fundamental business issues and execute successfully. However, without retail vision, experienced leadership, and execution excellence, the nature of company ownership doesn’t really matter.