Sears CEO Backs Legacy Retail with Another Personal Investment

The once-dominant department store chain's travails are emerging as a litmus test for the challenges facing retailing CEOs.

Sears CEO Eddie Lampert has poured another $4 million of his own money into the struggling department store chain, seemingly showing faith in his strategy to turn around its fortunes in time to avoid bankruptcy.

Just days after the company acknowledged there was “substantial doubt” that it would remain a going concern, it indicated that Lampert had bought more than 500,000 Sears shares over the course of three days last week. News of the purchases sent the stock up 11% yesterday.

Once the country’s biggest department store chain, Sears’ challenges represent a clear demonstration of the headaches that digital disruption is causing CEOs in the retail sector. Many brick-and-motor stores are suffering as more consumers purchase goods online, large incumbents such as Wal-Mart invest millions improving in-store experiences and newcomers such as Amazon expand their product offerings and slash delivery times. Intense competition and years of volatile consumer confidence has forced many outlets to offer deep discounts to attract business.

“I FIRMLY BELIEVE WE WILL SUCCEED IN BECOMING A NEW KIND OF RETAILER.”

In February, Lampert, who owns roughly half of the company’s stock, outlined a turnaround plan that involves trimming debt by closing hundreds of stores. He’s also trying to harness data analytics technology to improve product selection and recently introduced a rewards program called Shop Your Way, intended to bring more customers to the company’s e-commerce offering.

Whether his efforts will work remains to be seen: credit default swap traders are pricing in a 50-50 chance that the company will go bankrupt before year-end, according to a Bloomberg report last month.

In a blog post last week, CFO Jason Hollar said the company’s warning on its financial position was in line with regulatory standards that require management to assess and disclose all potential risks. “Despite the risks outlined we remain confident in our financial position and remain focused on executing our transformation plan,” he wrote.

Interestingly, Lampert may not have as much to lose as other Sears shareholders in the event of a collapse. As a significant creditor to the company, he would gain ownership of much of its real estate sites held as loan collateral. He also owns a substantial stake in some of its best properties through his interest in an associated real estate investment trust.

“I firmly believe we will succeed in becoming a new kind of retailer as we provide real value to members with value offerings, personalized services and easy access to the brands, convenience and value they want, whenever and wherever they want,” Lampert said in a letter to investors early this month.

You might also like:
CEOs Should Lead the Charge for Business Transformation
3 Strategies from the 2016 CEO Digital Transformation Summit
Some Expert Advice on Digital Business Transformation: Forget the Technology
Why Manufacturers Need a Chief Transformation Officer
Your Customer Data is at the Heart of Digital Transformation


MORE LIKE THIS

  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events

    Roundtable

    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)

     

    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.