Sears CEO blames media speculation for company hardships
Despite a sixth consecutive year of losses and dwindling confidence from investors, Sears CEO Eddie Lampert claims the media is to blame for the company’s demise. On Wednesday, he blasted the press for "unfairly singling out" the company over the past decade and blamed "irresponsible" coverage for the retailer's woes.
Sears, once the largest U.S. retailer, warned investors in March there was a chance it may not be able to continue as a going concern after years of losses and declining sales.
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 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," Lampert 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 predicted people will look back and wonder how they missed the Sears' turnaround, which he said would be driven by the Shop Your Way loyalty program.
Last year Sears teamed up with ride-services company Uber Technologies 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.
While Lampert’s argument is that the majority of the negative news circulating about Sears is speculative, there’s no denying widely reported facts such as the loss of two CFOs in two months, a 50 percent reduction in sales since 2007, a $500 million dollar debt and an announcement that the company is shuttering hundreds of stores, inlcuding its Sears Auto Centers. The beleaguered retailer has even had to sell off some of its namesake brands like Craftsman, in an effort to keep their head above water.
Since its warning to investors in March, Sears has said that it was increasing its annual cost savings target to $1.25 billion from $1 billion while enhancing its customer loyalty program and maximizing value from its real estate. Part of the cost savings have already come through the closure of 150 unprofitable Sears and Kmart stores this year.
Six shareholders questioned Lampert. One, who said he had sold men's clothing at a Sears store many years ago, asked if Lampert was in denial about the company's losses. Lampert said his reluctance to close more stores was not about denial, but about caring. "I'll fight like hell" to fix stores, he said, adding: "We don't want to destroy value, we want to create value."
Regardless of what the CEO has to say about the historic U.S. retailer, most prognoses send a different message. According to S&P Global Market Intelligence, the nationwide retailer has a 24 percent chance of defaulting within a year. Considering the company has been borrowing from Lampert’s Hedge Fund—ESL Investments—in order to keep funding operations, Sears’ downfall really may be truth more than fiction.
With additional reporting from Reuters
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