It all sounds promising, but a lot of things sounded promising before … only for the company to reverse its rhetoric and take a diametrically opposite action.
Be that as it may, perhaps what’s scariest of all about the letter is that Lampert insists on working the same five-pronged strategy that’s been in place since Feb. 6, 2009. Those five pillars are/were…
- Creating lasting relationships with customers by empowering them to manage their lives
- Attaining best in class productivity and efficiency
- Building our brands
- Reinventing the company continuously through technology and innovation
- Reinforcing “The SHC Way” by living our values every day
At first glance it sounds good, right? Take a closer look, though. They’re not “plans,” per se. They’re goals … and they’re ambiguous goals at that.
Were they part of a bigger turnaround plan that first focused on (1) satisfactory customer service, (2) having the right merchandise in the right place at the right time and (3) rebuilding a tarnished reputation for poor service and aging stores, the five pillars might be a worthy portion of a bigger, more deliberate, more specific plan.
But they’re not. The five pillars are the turnaround plan. They’re the only thing Lampert has specifically discussed (in detail) in every shareholder letter since they were introduced in early 2009.
Well, it has been four years. If the five pillars haven’t worked yet, they’re not likely to now no matter how intelligent the discussion of them sounds.
Oh, to be fair, the company has taken some specific, deliberate actions that fall into one or more of the five goals. For instance, e-commerce has gone from essentially nonexistent for Sears to … well, measurable under Lampert’s leadership, as he opened up the Sears.com platform to third-party sellers. That initiative is under the umbrella of pillar No. 4.
It’s tough to say the online-sales effort has reinvented the company, though. As of right now, 97% of the company’s sales are still done in its stores.
The establishment of the site www.managemylife.com clearly lies under the umbrella of pillar No. 1, offering anybody basic appliance repair tips and providing online manuals. What’s not clear is if managemylife.com has actually added revenue the company would have achieved without the site.
The point is, Eddie Lampert is running Sears as if retailing was a science or a matter of financial engineering. It’s not wholly a science or an accounting exercise, though. It’s also an art, and a relatively messy art at that because retail is about inherently finicky people … associates as well as customers. It’s a concept Lampert can’t seem to grasp, which is largely why SHLD stock has tanked under his tutelage.
Until he stops treating the company like a portfolio of assets and starts treating it like an entertainment and vanity-serving experience (which is what successful department stores are doing), Sears Holdings and SHLD stock will continue to struggle.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.