Eddie Lampert and the entire Sears Holdings Corp (NASDAQ:SHLD) turnaround reminds me of the kid in school who blamed the dog for eating his or her homework instead of admitting that it didn’t get done.
Lampert’s May 10 interview with Chicago Tribune reporter Lauren Zumbach is a must-read for anyone long SHLD stock. It’s as if the Sears CEO is channeling the Donald Trump administration’s penchant for plausible deniability.
Retail is undergoing significant change at the moment and department stores of all price points, not just Sears, are having a tough time adapting to the new playing field. Fair enough.
Is Lampert Out of Touch?
In the Chicago Tribune article, Lampert oddly is about as conciliatory as he’s ever been, but he still comes off sounding like a spoiled child.
When asked by Zumbach if Sears was having troubles dealing with supplies, according to the article:
“We’re fighting like hell to change the way people do business with us,” Lampert responded. “And my view is, we’re the customer. If you’re a vendor, and want to do business with us, then you have to treat us like a customer, you don’t treat us like a pariah.”
Any investor reading that last sentence ought to run away from SHLD stock as fast as they possibly can. These are not the words of a man fully in control of the situation.
InvestorPlace contributor Richard Saintvilus suggested in early May that Sears stock was rising primarily as a result of shorts covering their positions, not anything positive on the turnaround front. He advised investors to stay away until Sears delivers a clearer growth strategy.
At the time of Saintvilus’s article, SHLD stock was trading at $10.43. It closed May 17 at $7.96, a 23.7% decline in just nine days of market activity.
Good call, Richard.
Now let me save you some trouble, not to mention financial loss.
Eddie Lampert is never going to deliver a growth strategy that gets Sears out of this hole.
The Truth Hurts for SHLD Stock
More store closures result in lower revenue down the road. Reports suggest that the rate of stores closing in 2017 will be higher than the 150 just completed. That might not be so bad if the stores left open were growing.