Sears CEO blames media for company’s woes
Coverage meant to scare vendors
HOFFMAN ESTATES, ILLINOIS: Sears Holdings Corp chief executive Edward Lampert blasted the media on Wednesday for “unfairly singling out” the company over the past decade and blamed “irresponsible” coverage for the retailer’s woes.
Sears, once the largest US retailer, warned investors in March there was a chance it might not be able to continue as a going concern after years of losses and declining sales.
About two dozen mid-sized retailers have filed for Chapter 11 bankruptcy in the past two years amid fierce online competition and rapidly changing consumer tastes, while large department stores like Macy’s Inc and J.C. Penney Company Inc have announced store closures for this year.
Lampert, a hedge fund investor who is rarely seen in public, kicked off his appearance at an annual shareholders’ meeting at Sears’ headquarters in Hoffman Estates, Illinois with a slideshow of headlines about the company’s financial distress, dating back to 2008.
“You’d think it was from a month ago, but it’s literally been going on for a decade,” he told about 70 people in attendance.
The company has not reported a profit for six years, which Lampert compared to Amazon.com Inc’s early unprofitable growth.
He predicts people will look back and wonder how they missed the Sears’ turnaround, which he said would be driven by the Shop Your Way rewards programme.
Six shareholders questioned Lampert, including one who praised the CEO’s hard work and efforts to return Sears t o profitability but asked if Lampert was in denial about the company’s losses and paranoid.
Lampert refuted his question, saying there were “behind-the-scenes” counterparties trying to take advantage of the company’s situation and that he was trying to adapt and preserve as many jobs as possible.
“That’s not about denial; that’s about caring,” he said.
Lampert said Sears would remain focused on improving its relationship with its customers.
“The strategy we’ve been talking about for over a decade, we think it’s clear. We think it’s working. We have a lot of data that shows where it’s working, and where we need to improve,” he said.
Shares in Sears closed 6.8% higher on Wednesday at $11.24.
Last year Sears teamed up with rideservices company Uber Technologies Inc to give members loyalty points for trips. Lampert said he was trying to strike more such partnerships to boost overall sales.
“We do believe that the more points people accumulate, the more they’ll shop with us,” Lampert said.
The bulk of Lampert’s 90-minute appearance focused on news coverage, which he said had been “deliberately unfair.”
Media coverage was “meant to scare our vendors” who then tried to negotiate better terms with the company.
“It’s irresponsible and it’s been irresponsible for too damn long. We’re just looking for a fair chance,” Lampert said of the media. “Excuse my rant but a lot of what we’re doing deserves a chance to see the light of day.”
Five journalists in attendance were not allowed to speak with Lampert or ask questions.
Sears has declined to provide numbers on Shop Your Way, the cornerstone of its growth strategy, but said in its annual report that expenses associated with the program contributed to a drop in its profit margin.
When a shareholder asked Lampert to disclose more data on the programme as a way to win investor confidence, he turned the focus back to Amazon, saying he was “shocked” the online retailer has never provided numbers on its own shopping club, Prime.
While Amazon does not disclose how many members subscribe to its Prime shopping club, it reported last month that sales of retail subscriptions in the first quarter jumped 49% from a year earlier to $1.9 billion.
Prime membership fees are the largest item in this category. Analysts estimate Amazon Prime subscribers at 53 million or more in the United States.
Amazon’s total revenues grew 27% to $136 billion in 2016, while Sears’ revenues fell 12% year-on-year to $22.1 billion.
“A loyalty programme was innovative 20 years ago. Now, it is like saying ‘our stores have electricity.’ Sales still go down, so the loyalty programme isn’t turning Sears around,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.