Sears Rocked by CEO News
"Meet the new boss. Same as the old boss."
Very few people have confused Edward Lampert, chairman of Sears Holdings, with the master merchants of retail. That said, Mr. Lampert is preparing to lead the company following the surprise announcement that current CEO Louis D’Ambrosio is stepping down next month to attend to "family health matters."
So much for never getting fooled again.
Mr. D’Ambrosio, a former tech executive with no previous retailing experience, was named to run Sears Holdings in February 2011 after three years operating under an interim CEO. His hiring was greeted with disbelief in many quarters. Thomas Stemberg, a former CEO at Staples, told The Wall Street Journal at the time, "The whole notion of hiring a high-tech executive to run a retail company is absurd.’
After nearly two years on the job, it is clear is that Mr. D’Ambrosio’s presence failed to improve same-store performance. He did manage, however, to further cut costs and sell off assets to boost Sears Holdings’ liquidity.
Mr. Lampert said of the decision for him to take over as CEO, "It is important that there is continuity of leadership during this important period of transformation and improvement at Sears Holdings. I have agreed to assume these additional responsibilities in order to continue the company’s recovery and sustain the momentum we are experiencing, as well as further the development of the management team under the distributed leadership model, which provides our business unit leaders with greater control, authority and autonomy."
Discussion Questions
Is Edward Lampert the right person to turn Sears and Kmart around? What do you think is behind his decision to forgo finding another replacement for the CEO position?
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.
I don’t know Mr. Lampert to objectively comment on his ability to turn Sears around (however, his track record doesn’t look great, unfortunately). What I do believe, however, is that it’s the entire concept of a department store that is increasingly irrelevant to today’s consumers. There are a lot of very bright people running department stores all over North America, and for the most part the performance of their stores has been suffering for a long time.
Department stores are being out-retailed by everyone around them. You can find better product selection, better pricing, better service, better merchandising and more convenience elsewhere. Producing sales/sq ft of $150 to $250 compared to others who are producing $600 to $6000/sq ft tells you all you need to know about their appeal to consumers.
For most department stores, their glory days are long gone. It’s not so much a question of talent at the top as it an issue of concept validity in today’s market.
What would be the point of hiring a CEO? That person would most likely quit as well. I drove by a Kmart Monday night and the only cars in the lot belonged to the employees. When we go to the mall we always park at Sears because that’s where you will find an empty parking space.
There is no point is being CEO of a dead company. Think about it. If you are CEO of Sears, it would be a charade because Sears has become a zombie retailer.
Mock on, mock on, as we have always been.
Mock on, mock on, Lampert will try in vain.
Throw Eddie’s sand against the Sears-Kmart wind,
And the wind will blow it back at him again.
When the ego is as high as an elephant’s eye
From a fiscal concept of invincibility,
We knew Mr. L would take over by-and-by
For he thinketh hiring a new CEO is silly.
Sears and Kmart have been so undefined now for so many years that nothing surprises me anymore. I am old enough to remember so well when both Sears and Kmart, as separate entities, were major forces in the CPG/Retail industry. I am actually shocked that Kmart in particular is even still here.
This retailer is in desperate need for informed, experienced, and imaginative leadership. My hunch is that Edward Lampert should get out of his own way, but hey, ya never know.
Ed Lampert has the skill set required in the fast changing world of retail today. Retail has changed so much that the key thing for Ed is to be a strong leader of good, “today” merchants and powerful operations people that can synch-up the the multichannel selling space, driven with their massive supply chain ops.
I would also like to have him bring back my 700+ page Sears catalog….Finding tools in the Craftsman section was easier there than on the web! Tom the Toolman….
Like any business entity, Sears Holdings has to have a CEO who is aligned with their major constituencies interests in order to maximize success. In the case of Sears’ constituencies, they are shareholders, consumers, associates, and communities in which they compete.
Edward Lampert is thoroughly in line with the position of shareholders, as he and his fund are the largest of them. Therefore, he is positioned to best determine how much attention he feels Sears should allocate to consumers, associates, and the communities.
This is a quasi-private play. Sears is not the retailer they once were, and they may choose to discontinue being a retailer in the future, instead marketing the Sears brands and real estate.
Lampert is playing his own game, and until he flashes that he is interested in consumers, associates, and communities, all are left to speculate as to what Sears represents. If Sears wants to serve consumers, they have to begin to understand who their customers are, and who their retail competitors customers are.
Lampert has been know to take action. Watch what he might do, if anything, in addressing these constituents. We’ll have a better answer at that time.
Remember that phrase that says that a person representing himself in court has a fool for a client? That sure rings a bell here.
When you own the keys to the castle, its your castle. You can do with it what you want—make it pretty or let it go into disrepair. I think we know who is the king, where the castle is located and in what shape the castle has devolved into over the past 20 years.
Not one dime is going to be spent unless absolutely necessary to make the castle even remotely attractive to enter, let alone have a joyful celebration within its walls. Mr. Lampert knows the value of money and what return he can get out of it. Regarding the castle, not much.
While General Growth, Simon Malls and others struggle to keep their properties relevant, e-commerce and mobile phone sales rise. Showrooming, price match, virtual stores and fewer employees on the floor of a physical store to serve your needs are all trends that spell the doom of anchor stores that happen to be at the “dead end” of the mall.
Sears and Kmart do continue to innovate. Most observers aren’t picking up on the leadership that Mr. Lampert does provide through his persistent desire to to meet/exceed customer expectations. Chicago and Hoffman Estates staff are pushing the envelope every day in: mobile, social, omni-channel servicing, same day order/pick up/delivery, a brilliant rewards program (ShopYourWayRewards) that identifies and promotes personally to customers—all of this is best in class.
It’s the old school physical store that is a drag on EBITDA, this will never change unless he or someone he sells it to decide to invest and actually compete with JCP, Macy’s, Target, Walmart and the other large format department stores. My guess which I’ve predicted for several years now is go private, avoid the scrutiny and do with it what he wants over time.
Though department stores have been on the decline, just take a look at the awesome job Terry Lundgren has done with Macy’s. It just goes to show that with the right leadership things can happen. Sears/Kmart must have missed that memo.
I agree with everything that Roger Saunders says except “Sears is not the retailer they once were.” This company is not a retailer and has not been since Lampert took it over. It has no desire to be a retailer and any strategic move it makes to be a better retailer is a waste of time, effort and money. Let’s accept Louis D’Ambrosio’s reasons for stepping down.
It seems to me he did exactly what he should have after nearly two years on the job. He continued to further cut costs and sell off assets to boost Sears Holdings’ liquidity. Why would anyone trade that off for an increase in same-store sales in a dying retail business model?
I think this is the moment we’ve all waited years for… and now that it’s happened there doesn’t really seem to be much to say. Sales will continue to deteriorate—it’s only a question of slowly vs. quickly, the usual quick-fix remedies (privatization, merger ) will be touted by people who have zero interest in Sears (but a great interest in making money off “deals”) and we’ll all continue to ask the question…how much longer?
No. This is all about ego, and not business. That is rather unfortunate for Sears, since ego will not drive performance from a business perspective. When Ed Lampert checks his ego at the door, and searches for a qualified, experienced, turn-around professional, then Sears will enjoy the level of success it used to have.
Steve Burd is stepping down at Safeway. Sears Holdings could benefit from his expertise.
Meh. Eddie is always the CEO, regardless. Eliminating the position takes out cost. Sears is transforming, it just isn’t recognizable. God help the people who work for SHC.
The deck chairs are being moved on the Titanic.
He is a retailer by position, not a good one. Fast Eddie plays in a different sandbox. Taking the helm? Building cash? This is another step toward taking over JCPenney. The pawns are in place. Moving in for the kill. Check soon. With JCP results, maybe checkmate. Watch and wait.
I am saddened to read once again Sears is unfocused in turning around as a retailer, not just a business. With all the great ‘retail merchants’ out on the street, can’t somebody lead Sears out of the wilderness?
Sears particularly finds itself in a difficult market position. They are in the middle, with products that are less differentiated every day and with significant customer experience issues at retail.
In addition, the e-commerce business remains a lesser player in the digital landscape. I believe the reason to hold off on finding another CEO is that the company intends to sell off one of the two major holdings. Given that, it would be wrong to hire in a new executive into a position that will no longer exist.