Sears Holdings chairman/CEO and majority shareholder Eddie Lampert took to the bully pulpit that is his corporate website yesterday to assure the financial and vendor communities that’s everything’s under control.
His rare blog follows word of stepped-up Kmart closures and downgrades from Moody’s and Fitch Ratings, which cited Sears' multi-billion-dollar debt load, accelerated burn rate, steep operating losses and “significant” risk of default and possible bankruptcy within the next two years.
The blog also comes amid reports of vendor concerns over Sears’ liquidity as the retailer stocks up for the approaching holiday season.
In his essay, Lampert said the company remains committed to Kmart and the brick-and-mortar channel; is still evolving toward its Sears- and Kmart-neutral Shop Your Way retail brand; could fund operations through its assets, if need be; and is looking for ways to further monetize its Kenmore, Craftsman, DieHard and home services businesses.
[Update: Bloomberg News reported this morning that Sears is entertaining offers for Craftsman from Stanley Black & Decker, Electrolux’s former Husqvarna AB unit, and other potential bidders that could provide as much as a $2 billion cash infusion, according to unnamed sources.]
You can read Lampert’s complete blog, below:
Committed To Our Members, Kmart And Our Transformation
“Last week, we announced a partnership between Shop Your Way, Sears Auto Centers and Uber. This is another example of how we are transforming Sears Holdings to focus on serving our Shop Your Way members in a wide variety of ways. You should expect additional partnerships over time emphasizing our Shop Your Way business and demonstrating ways that we will bring value to our members’ lives every day.
“I also wanted to comment on the frequent false and exaggerated claims surrounding our Kmart business. Recent reports have suggested that Kmart will cease its operations. I can tell you that there are no plans and there have never been any plans to close the Kmart format. In fact, we’ve been working hard to make Kmart a more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way. To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports.
“There are a few things that are very important for you to keep in mind. First, Kmart continues to operate over 700 stores. Second, a significant number of these stores are profitable and have been profitable for many years. Third, we have been clear that we are intent on improving the performance of our unprofitable stores and, if we cannot, we will close them. Actions to improve our store productivity, including reducing inventory stored in the stockrooms, are designed to make our stores easier to operate and to eliminate unproductive inventory and processes. Decisions to close stores are never easy, but we recognize that the way people are shopping is changing significantly. This is why we have made major investments in our online and mobile platforms and this is why our focus on serving members through Shop Your Way is so important.
“We are acting more aggressively and continuing to evaluate stores as leases expire and as other opportunities present themselves that improve the economics of Sears Holdings. We expect to end up with a large chain of stores, some owned and some leased, but with a company focused on serving members broadly through Shop Your Way rather than exclusively or predominantly through our stores. Our stores remain extremely important to our future, but as part of an overall focus on serving our Shop Your Way members.
“We are working to restore the company to profitability. Our significant asset base gives us the wherewithal to fund our business, but we don’t intend to use our asset value to support losses. Focusing on our best members, best stores and best categories means a smaller overall store footprint, and one that still represents one of the largest number of stores and square footage in the United States. We have a process underway to create value by positioning our Kenmore, Craftsman and DieHard businesses as well as our Sears Home Services business to benefit from broader distribution and partnerships that will allow them to grow beyond Sears Holdings. We also possess a significant portfolio of real estate assets with an opportunity to create value through improving our retail productivity and by monetizing them in a variety of ways.
“While the retail environment generally has been challenging and we won’t be able to restore profit immediately, we are focused on executing our plan and establishing a foundation from which Sears Holdings can grow for years to come. It isn’t easy and there will be bumps along the way, but we have tens of thousands of hard working men and women dedicated to transforming the company and making our members lives better and easier every day.” — Eddie Lampert, chairman/CEO, Sears Holdings Corp.