EDDIE’S GOT A PLAN
Lampert eyeing more cuts at Sears
Billionaire hedgie Eddie Lampert, 12 years and two months after taking control of Sears and overseeing a 93 percent decline in the company’s shares and $8 billion in red ink over the last five years, said Friday he has a plan to fix the ailing retailer.
Lampert’s latest plan to restart the growth engines on the foundering Sears and Kmart ships includes further cutting debt and pension costs by $1.5 billion and cutting other costs by $1 billion.
The plan aims to add $140 million of badly needed liquidity.
Lampert also crowed that the company had “significantly improved” its operating performance in the fourth quarter and “made progress” toward profitability, though the company is expected to report a comparable-store sales decline for the three months ended Jan. 31 of 10.3 percent — 12.3 percent at the 702 Sears stores and 8 percent at the 801 Kmart stores.
Ever-optimistic investors plowed into shares of Sears Holdings on Friday, pushing the stock up as much as 30 percent during the day.
It closed at $6.96, up 25.6 percent — cutting its one-year decline to just 60 percent.
Lampert’s plans also involve making moves with its real estate portfolio, likely selling stores to real estate investment trusts or renting out space to other retailers as it has done in the past.
Skeptical industry experts say the plan hardly moves the rudder from Lampert’s existing path.
“He’s already stripped the daylights out of the company,” said Mark Cohen, director of retail studies at Columbia Business School, who headed up Sears Canada. “Maybe he is going to retire some of the debt through more asset sales and ask pension holders to accept a lump-sum payment in lieu of an annuity, but it does nothing to stop the company’s downward spiral.”
The Hoffman Estates, Ill., company continues to look for buyers for its Kenmore and DieHard brands in addition to its Sears Home Services and Sears Auto Centers businesses.
Last month, Sears Holdings said it would close 150 of its total of 1,503 stores, but Lampert did not announce specific plans on Friday to close more stores.
Instead, he described plans to improve the product assortment at the stores by using “data analytics” to figure out what Sears’ “best” customers want to buy.
“We believe the actions outlined today will reduce our overall cash funding requirements and ensure that Sears Holdings becomes a more agile and competitive retailer with a clear path toward profitability,” Lampert said in a statement.