Monday, February 4, 2008

SEARSOLOGY

So Alwyn Lewis is out at Sears.  Not really suprising.  About 8 months ago  I had dinner with an employee at SHLD who reported directly to Eddie Lampert.  The employee confided to me that while everyone knew what Alwyn was brought in for, the general consensus was that no one knew what he was doing or what his responsibilities were. He seemed to be a guy just “floating” out there with no real focus or impact.  


Was that Alwyn’s fault? Absolutely not.  I believe he was extremely qualified to help turn Sears around.  I also believe that they will not find anyone out there more qualified to replace him.  I also believe that even if they do it wont matter…. Why? The problem was not Alwyn.  The problem was Eddie Lampert’s total lack of understanding of retail and how to delegate.  He did not have that understanding then and unless he has undergone an epiphany in the last few months, there is no reason to believe anything will change no matter who he sticks in there.  

Eddie is about control.  Eddie is about spreadsheets, data, algorithms, stock buybacks, numbers hocus-pocus, Ivy League MBAs, advance teams before he goes anywhere, posses, entourages. In other words, he is completely out of touch.  In all fairness to him, he didn’t suddenly one day lose touch.  All those things he is about have made him a huge success in the hedge fund numbers crunching world where you don’t have to leave your office and don’t have to talk to anyone but the crunchers…….

Until Eddie is ready to be a “regular guy” talking to “regular customers” the only big change at SHLD will be when he unloads bits and pieces and finally dumps…..
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Thursday, January 24, 2008

SEARS HOCUS POCUS

So Eddie Lampert’s latest strategy to stop the Sears Holding free-fall in both the market and customer service is to break it up into independently run units. Each unit will have its own management structure, budget and autonomy. The market strategy worked in the short term, the price of the stock is up 20 points since the announcement. What is my take?

1. This is another short term “hedge-fund mindset” solution that will do nothing more than drive up stock in the short term much as his stock buybacks were designed to do. Just more MBA number cruncher solutions with no marketing or sales focus.

2. Retail by its very nature requires integration and communication which SHLD was severely lacking prior to this move. How does this improve that?

3. A bunch of people who already failed in getting people into the stores and creating buzz are now running their own units doing the same.. That sure instills confidence in me….. Don’t get me wrong, I have met some very sharp higher ups at Sears who while they are failing are not failing because of lack of smarts.  You can be the best bowler in the world but if there is a curtain in front of the pins, makes it kind of tough to excel. It was my perception from being in a position to talk to some of these people and watch what was going on that Eddie Lampert has kept that curtain over the target since day 1 leaving me the impression that for all good intentions, these guys never had a chance.  Wont fly anywhere, number crunching IVY league MBAs with no street level experience, advance teams….. Read some of Mark Cuban’s blogs on this subject.  Out of touch eventually means out of business………

I view this a last ditch asset management strategy that may shore up the value of assets that didn’t need shoring up like Craftsman but will basically leave SHLD completely irrelevant(if it can be any more irrelevant than it is now) as a general retailer.


A little bit off point but about 8 months ago, I had dinner with someone who reports directly to Eddie.   I voiced one observation that concerned me at the time. I told that person that you could always make an good educated guess about what business/management book Eddie was reading at any given time by the decisions he makes and you would be right 70 percent of the time. It is certainly smart to read read read and see what has worked and not worked for other people, you do not want to reinvent the wheel. It is one thing to learn how a wheel is built, it is another to copy that exact wheel.  Snow tires wont work to well in the long run in Dallas.

I said it before, Eddie Lampert needs to get out of Greenwich, get rid of his traveling posse, and actually do some real work related to retail. Quit focusing on driving up the stock prices and do realistic work on driving customers through he doors. Accessing reports and getting numbers crunched is NOT going to save Sears. As you probably will never see this, I really think Sears as a general retailer is toast. Its just a matter of time.



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