Sears Holdings yesterday said that its CEO, Louis D’Ambrosio, will step down next month due to “family health reasons.” (The nature of the health issues affecting the D’Ambrosio family was not disclosed.) The surprise move heightened the uncertainty surrounding Sears Holdings’ ailing retail operations: the long-struggling Sears and Kmart chains. Indeed, shares of Sears Holdings this morning fell on the news.
What came as no surprise to followers of The Sears Saga is D’Ambrosio’s replacement: none other than Sears Holdings’ hands-on chairman and mastermind of the Sears-Kmart combo Edward Lampert. Lampert cited the importance of “continuity of leadership during this important period of transformation and improvement at Sears Holdings” as the reason for adding the CEO’s title. He went on to say, “I have agreed to assume these additional responsibilities in order to continue the company’s recovery … as well as further the development of the management team under the distributed leadership model, which provides our business unit leaders with greater control, authority and autonomy.”
Skeptics may be forgiven for asking “What recovery?” and for having doubts about the company’s “distributed leadership model.” Indeed, by taking over the day-to-day operations of the company, Lampert appears to be consolidating power, not sharing it. There’s been no mention of a search for a new CEO, other than Lampert.
As for a recovery, Sears Holdings has reported falling sales every year since its formation and the company was unprofitable last year. Same-store sales declined again in the latest quarter, and the company expects to report a net loss of between $721 million and $801 million in the fiscal year ending February 2013. All while it continues to bleed market share to rivals, including Wal-Mart, Target, and online giant Amazon.com. The once venerable company even lost its spot on the S&P 500.
While D’Ambrosio made some progress in his two years at Sears, including improving the retailer’s e-commerce operation and arming the sales staff with iPads to research products and speed checkout, the patient remains in critical condition.
As Sears struggled, Lampert has been criticized for his lack of retail experience. Indeed, investors initially suspected that the creation of Sears Holdings was a giant real estate play by the billionaire hedge fund manager. Now others are speculating he’s looking to sell off its valuable brands: Kenmore, Diehard, and Craftsman. Surprisingly, the brands have kept their shine while the retail operation tarnished.
So what’s up Lampert’s sleeve? I anxiously await his annual Chairman’s Letter (always an interesting read) due out next month.