Will the Worst CEO of the Year Award go to the head of Sears?

Posted Nov 30th 2007 3:00PM by Zac Bissonnette
Filed under: Sears Holdings (SHLD)

Shares of Sears Holdings (NYSE: SHLD) have been one of the great disappointments of the market for the past few months. Investors were optimistic that hedge fund titan/Chairman Eddie Lampert could turn the company around, and many observers compared the company to Berkshire Hathaway (NYSE: BRK.A), suggesting that Lampert would use the company as an investment vehicle to generate outlandish returns.

Now, the stock is down nearly 50% from its 52-week high, and investors may be losing confidence in Lampert's ability to work his magic. All of this has MarketWatch's Herb Greenberg considering the company's lesser-known CEO, Alwyn Lewis for his "Worst CEO of the Year" distinction -- especially after the latest quarter.

Greenberg writes: "The only defense of Lewis is that his job was nearly impossible from the start, via Eddie Lampert's ill-conceived Sears strategy, which only made sense to many observers as a play on real estate, not retail. Lewis now risks getting hung out as the scapegoat."

In an earlier post, I argued that Sears is looking like it could be to Lampert what TWA was to Carl Icahn: A brilliant investor, overcome with hubris, decides to take over the operational reigns of a company, and his tightfistedness combined with his lack of operational expertise combine to make an effective turnaround impossible, and shareholders suffer.

The silver lining for shareholders is that as the Sears turnaround continues to flounder, the possibility of a break-up becomes more likely. And as Barron's wrote back in October:

Too, the retailer's real estate has considerable value that is not reflected in the stock. Add up this real estate, valuable brands like Kenmore and Craftsman, and Sears' huge appliance and home-remodeling business, and the company could have a liquidation value of more than $300 a share. The worse Sears performs in the next year or so, the more likely Lampert is to monetize and harvest this potential real-estate bonanza.

Tags: Sears, SHLD

Print this

Reader Comments (Page 1 of 1)

11-30-2007 @ 3:22PM

Sox&Stocks(not "that"Phil") said...

Since I am long SHLD at 99.20, I believe I will nominate Ken Griffin (Citadel) and ETFC for the worst bet of the 4th qtr of 2007.

11-30-2007 @ 4:20PM

John said...

My sister worked for K-Mart for 291/2 Years and when Sears bought out K-Mart the management of K-Mart was replaced by Sears Management and my Sister with 6 months to retirement was let go!! How chicken Sh*t was that???
Thank You Sears!!!! I do not shop at your store any more!!!!

12-01-2007 @ 9:10AM

tonya beth said...

Lambert is a fool. Don't worry about Al, he'll get paid off just like Alan Lacy did and the supposed kidnappers of Eddie who "kidnapped" him to delay the Kmart deal. I'm guessing there's a pot of gold at the end of the rainbow for those kidnappers, just like Alan Lacy got his. Anyway, as far as the comparisons between Buffet and Lampert: Warren INVESTS in undervalued companies while Eddie
divests companies by devaluing their employees and running the companines into the ground.

12-03-2007 @ 10:01AM

jane in md said...

As an employee of Sears all I can say is that I'm completely and utterly embarressed with the way that the company is being run. Eddie Lampert and Alwyn Lewis don't have a clue as to how to run a retail chain. I'm also going to go out on a limb here and guess that they haven't worked a steady stint inside of a retail store in many (if any) years. I can tell you from what goes on behind closed doors many people are being fired who have been with the company for 20-25 years, and when they're fired the company likes to say that "they've made the sudden decision to retire". yea right. The company has also begun to cut corners, in the store I work at we have a new store manager and there are so many fire violations because people are being pushed to just finish what theyre doing and move onto the next thing that combustable materials have been placed in the boiler room, merchandise from replenishment trucks is being stacked too high, and worst of all merchandise has begun to block several fire exits. All of these combined could result in a tragedy. All of this is being done because the store manager is working people like dogs. Salaried managers are being forced to work 7-9 days straight and working 10-11 hour shifts, some even have to work overnight and are expected to be back in the store the very next day. The company is taking advantage of the fact that in the state of maryland people who work a salaried job are not protected under any labor laws unless a contract is signed. Sears was smart enough to not offer this to their salaried managers. The company will go under if it continues to do things that inconviniece our customers (such as doing remodeling projects on the cusp of the 4th quarter), and not be competitive in the market as far as wages are concerned. You know it has to be pretty bad if at a starting hourly wage someone can make more money serving fast food than working in one of the nations biggest department stores. Ever since being bought out by Eddie Lampert the focus of the store has shifted from our customers being our number one priority to sales figures being our numbers one priority. What the company forgets however is that if the customers are our number one priority we wouldn't have to worry about constant sales decreases, because there wouldnt be any. The company has also lost focus on its in-store associates such as me and my colleagues. The only feedback we ever hear from people at corperate that visit our store is negative feedback, and believe me those people really treat you like the dirt under your feet. Isn't it ironic that the people like Alwyn Lewis, and Eddie Lampert, who expect perfection and pitch a fit when they don't see it are the same ones screwing up the company and running it into the ground?

12-03-2007 @ 10:13PM

tonya beth said...

It's not just ironic it's criminal. ANYONE WHO HAS BEEN FIRED OR ASKED TO RESIGN BY SEARS WITH A LONG SERVICE
HISTORY AND GOOD WORK RECORD PLEASE EMAIL ME AT WNBYF@AOL.COM.

EDDIE, CAN YOU SAY "CLASS ACTION"?

AND FOR YOUR INFO, EDDIE HAS NO RETAIL EXPERIENCE, AL IS FROM THE FAST FOOD INDUSTRY. I GUESS HIS EXPERTISE AT FLIPPING BURGERS WAS NEEDED FOR FLIPPING COMPANIES. CHECK OUT THE BOARD OF DIRECTORS: ALL PRIVATE EQUITY YES MEN TO EDDIE. AND LET'S NOT FORGET, EDDIE HAS ONLY VENTURED TO SEARS CORPORATE HEADQUARTERS FOR SHAREHOLDERS MEETINGS.

12-05-2007 @ 10:44AM