Sears’ Lampert Talks Recession, Not Real Estate

In his annual letter to shareholders yesterday, Sears Chairman Ed Lampert has a lot to say. In a Chicago Tribune article about it today, one reporter bothered to check the behemoth note’s word count, and it clocked in at 8,500.

We’ve looked it over with the intention of saving Counter Culture readers some time, trying to find what would be of most interest the retail real estate community, and we found the future of Sears’ real estate summed up in one unsatisfying sentence: “We will be closely monitoring stores throughout 2009.”

8,500 words and that’s all we get?

Oh, he also says that they might close some unprofitable stores and, in some cases, not renew some leases. But we aren’t really given any kind of specific forecast for Sears’ real estate strategy in the coming year.

If you’d like, you can read all of it here and see if we missed anything. Just scroll down a bit. What you’ll mostly find is a thorough examination of the economy and how we got ourselves in this recession thing with some interesting observations. We particularly like: “When oil goes from $50 to $145 and then back to $35 all within a year, what type of strategy can contemplate and manage that?”

A bit more on Sears’ strategy would’ve been nice, though. As one analyst puts it in the Tribune article: “As for enlightening investors with specifics about his merchandising strategy and fiscal 2009 outlook, we guess he ran out of room.”

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9 Responses to “Sears’ Lampert Talks Recession, Not Real Estate”


  1. 1 James February 27, 2009 at 8:12 am

    Clearly no one knows what to do at this point, even the CEO of iconic Sears with all the resources he has at his command cannot propose a clear strategy going forward. Sears’ place in retail business was uncertain at best before all of the uncertainty entered the market place. Now this middle ground has become a no man’s land.

  2. 2 Derrich February 27, 2009 at 9:59 am

    I guess there’s only so much one can say during such a vertiginous economy.

  3. 3 AlanB February 27, 2009 at 12:23 pm

    Sears/Kmart is a real mystery. very similar to the Mervyn’s deal where the real estate and retail businesses were separated. In the case of Mervyn’s a ton of immediate money was made by the private eguity group and the retail operation eventually collapsed. All you have to ask is when was the last time you or someone you know shopped at Sears as opposed to Target, Walmart, etc. i don’t get the sense they’re all that concerned about the stores.
    Alan
    http://www.rofo.com

  4. 4 SearsIsFine February 27, 2009 at 11:04 pm

    The CEO of Sears does mention replicating some of their successes with changing the corporation through technology. For example, he mentioned their success with one brand, Land’s End, where they implemented the use of technology integrating web to store etc. They are managing their brands in a portfolio style and measuring each brand’s profitability. They’re investing in hiring talent from many different corporate cultures, which is always good for a stodgy corporation. They’ve undergone major structural changes breaking into five business units for accountability: ie Operations, Real Estate, etc…. Interesting one to note his complaints about apparel. Also, a $1 billion reduction in inventory, then he mentioned they’re not there yet. How much more could they reduce inventory without depleting the shelves of the store? That’s a fine line to walk. However, it is fair to note some of Sears achievements in managing their balance sheet and also maintaining and funding a pension fund as well as trying to keep employees. It sounds as if they will continue closing unprofitable stores, but who isn’t? PS I’ve started shopping at Sears, with this downturn, and I really was quite impressed with their variety of products and quality of products at affordable prices. Way to go Sears.

  5. 5 Broker March 1, 2009 at 1:50 pm

    Perhaps there is no real estate strategy. There doesn’t appear to have been a merchanding strategy other than strip out as much inventory as you can without leaving the shelves completely bare. Wall Street always said Sears – K-Mart was worth more dead than alive because of the real estate but that doen’t look very promising right now with a lot of vacant space already on the market.

  6. 6 johnny Winton March 2, 2009 at 3:06 pm

    The only thing Mr. Lampert has to do to see what is wrong with Sears is to go to the Store on Coral Way in Miami, Florida and try to get any sort of service and he will not be surprised at the company’s performance. I wish him and the Sears name the best of luck, but if you cannot provide service in good times, it is hard to keep customers coming back—but forget it in bad times like we have now.

    If it isn’t too late, take up the Home Depot mantra of “Service, Service, Service!”

  7. 7 Kinstontine March 3, 2009 at 7:13 am

    First of all, and I say this as an enthusiastic investor in SHLD, not simply to be petty, Eddie Lampert is the Chairman of SHLD, the interim CEO is Bruce Johnson. If you’re loving, or hating, a particular company, I would think this to be information you would want to have.

    Another thing that no one seems to want to realize, is that gross margins are a double edged sword. When you are a retailer with $47 billion in sales, declining gross margins are deadly, as SHLD (and a long list of other retailers) have seen. However, the day will come when Sears and K-Mart do not have to chase sales as they and everyone else have been doing today. Housing will turn around and people will purchase big ticket items from Sears again. The increased demand coupled with significantly less inventory on hand (domestic inventory is down $1 billion) could easily push gross margins back up….. A 250 basis point improvement in gross margin on $47 Billion in sales creates $1.1 billion dollars of increased profit, and when you think about the paltry (and declining) shares outstanding, SHLD could easily be generating $14-15 per share in free cash flow AGAIN. Don’t believe gross margins can improve? They already are at K-Mart. No one seems to have noticed this. All they have noticed is Eddie’s letter to shareholders and a “dirty” store.

    I hope people continue to short this stock down, so I can keep buying it for less than 1/2 of book value.

  8. 8 Broker March 3, 2009 at 10:00 am

    What good are gross margins if nobody goes in the store? What is keeping shld afloat are stores in difficult to enter markets where Tgt and Wmt have not found a way to get in and cheap leases. Eventually the competotion will find a way to enter the market and slowly the cheap leases go away and shld gets clobbered. Dirty crappy stores are not a long term strategy and junk at half price is worth the price you are paying.

  9. 9 Glenf March 3, 2009 at 10:08 am

    Sears, just like the rest of us, needs to wait to see what “Scary Barry” is up to next! I certainly hope that the “Change” people who voted for him are happy:(


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