Sears Holdings Corp. Chairman Edward Lampert appears to be minding the store but avoiding revealing any grand strategic vision necessary to give the 120-year-old company an identity in the crowded retail landscape, and investors are getting impatient.
The Greenwich, Conn.-based billionaire smiled and nodded at the company’s annual meeting Monday as Sears Chief Information Officer Karen Austin ribbed him for being “probably our biggest user” of hourly sales data from thousands of Sears and Kmart stores. Lampert admitted an affinity for detail.
He spent the first 30 minutes of the three-hour meeting defending his decision to cut capital spending on stores. He asserted the retail industry built too many stores in the past five years and is now paying the price as the economy slows.
Lampert, a star hedge fund manager who owns half of Sears Holdings, is disinclined to disclose much. Even when pressed by shareholders to be more forthcoming and break out the financial performance of its various businesses, Lampert did his best to keep his specific plans for the retailer’s future under wraps.
Still, one point became clear. Running a retailer isn’t at the top of Lampert’s list. He is looking at how each of Sears’ assets can make the most money.
Just ask William Ackman, the prominent activist investor who thwarted Lampert’s plan to buy out Sears Canada Inc. two years ago.
Wouldn’t take call
Ackman’s New York-based Pershing Square Capital Management hedge fund ranks as Sears’ fourth-largest investor, with a 4.7 percent stake. At most companies, that is enough to command access to executives. Ackman traveled from New York to Chicago to attend the meeting to hear Lampert speak, the investor said in an interview after the event (this sentence as published has been corrected in this text).
“There’s a lot of value to [Sears’] assets and the question is whether it can be unearthed or not,” Ackman said. He didn’t disclose whether he plans to increase his holdings.
In a December 2005 interview with Barron’s, Ackman said he estimated Sears’ real estate is worth more than $22 billion and that the real estate combined with brands including Craftsman and Kenmore provides a “nice asset value cushion” in case Lampert fails to turn around the retail operation.
Ackman didn’t say what he thought Sears is worth today, but like many shareholders at the event, Ackman pressed Lampert on whether he intends to sell Sears’ exclusive Craftsman and Kenmore brands in rival stores. Lampert repeatedly skirted that question, noting it is “on the table” but no decision has been made.
“If it’s a really good answer for us to sell Craftsman and Kenmore by going to specific retailers, and we believe the benefit of doing that is greater than the customer’s [coming] to our own stores, we would do that,” Lampert said.
Earlier this year, Lampert raised the possibility of selling those cornerstone brands at retailers other than Sears. It’s a strategy that some retail experts say could hurt the company because the brands drive shoppers into the stores.
But Lampert clearly wants some gauge as to whether Sears would make more money keeping the brands in the stores or distributing them more widely. He called them “very powerful brands” that haven’t been managed well. Lampert has put a high priority on hiring an executive to run the Craftsman and Kenmore brands, he said at a press conference following the meeting.
Sears’ annual meeting is generally the only forum at which shareholders get a chance to talk to Lampert. He shut down Sears’ investor relations department when he took over the company in 2005 and communicates primarily through letters to shareholders and Securities and Exchange Commission filings.
Stock price falls
Lampert also admitted that if he had to do it over again, he would have bought back less stock last year. Sears spent $2.9 billion buying back 21.7 million shares in 2007, a year in which the stock price fell in half from a high of nearly $190 a share. Sears’ share price fell 3 percent Monday, to $100.08.
A search for a CEO continues after Sears ousted Aylwin Lewis earlier this year. Lampert said he remains “very happy” with the job interim CEO W. Bruce Johnson is doing.
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smjones@tribune.com
