Thinking Outside the Box is Not Always Best - Sears

Eddie Lambert, the once famed investor, who has been struggling for the last number of years trying to turn his controllinginvestment in Sears into something positive, just announced, after a three year search, the appointment of another new CEO. Lambert’s selection of Lou D’Ambrosio, a former IBM executive and CEO of Avaya, is another suspect out-of-the-box selection that has many people scratching their heads. D’Ambrosio an effective high-powered executive with substantial CEO and management experience primarily in the telecom and tech fields has no experience in retail. A lack of retail

experience would seem to be imperative for an organization like Sears. While D’Ambrosio has been working with Lambert and Sears as a consultant he is now going to be in charge. What can Lambert be thinking?

According to an article by Jeannine Poggi for TheStreet.com,

In a letter to investors, Lampert said D’Ambrosio is the right man for the job due to his “information and technology background, leadership style and experience in leading and transforming a Fortune 500 company.”

D’Ambrosio led Avaya as it went private, “delivering attractive returns to its shareholders,” Lampert wrote. This could be interpreted that Lampert’s real goal for Sears is to take the company private, not to bring it back to retail dominance.

Analysts are wondering once again what Lambert really has in mind. He claims to be relying on D’Ambrosio’s tech expertise to help the firm online and his previous expertise in taking Avaya private, two valid points but the firm remains a major brick and mortar retailer, so it is difficult to see how this appointment would be truly effective. In an ABC News Story more questions were raised about the CEO selection.

Many analysts say the move to a bigger online presence is a good one. They also believe D’Ambrosio could help Sears with mobile technology as more shoppers buy products from cell phones.

But Sears also has one of the largest brick-and-mortar footprints in North America, and one of the least productive. That makes D’Ambrosio a misguided choice, said Credit Suisse analyst Gary Balter and other analysts.

“While Sears has played the financial game well, and has smartly invested in the Internet, the store experience remains one lacking due to underinvestment in the basics of retailing,” Balter said.

Investors should keep a very close eye on Sears and its new CEO to try and get an idea what they might have up their sleeve. So far, it does not look that promising.

Recommended Reading - Sears' Quarterly Profit Falls 62% As its Struggle Continues

Today's New York Times DealBook contained a piece on the continuing struggles Sears SHLD (NYSE), (which today means hedge fund investor Eddie Lambert), has been facing.  Lambert, who at one time was viewed by many with the midas touch, has continued to fail in his efforts to make something out of his huge investment in Sears Holdings. According to The Times piece,

The continued slack performance by the firm had Breakingviews calling for Mr. Lampert to fire himself as chairman. Noting the investor, has not been shy about pushing for the ouster of other executives at firms his hedge fund invests in, the column argued Thursday that he should turn some of that acumen toward his own lackluster performance at the helm of Sears.

While it is unlikely Lambert would fire himself, he really needs to find new and particularly strong top management with heavy retail expertise, unlike himself, to run the show.  Such a change would mean he would have to cede a good part of his power and agree to put in more funds to get the operation going again, if that is even possible.

Stay tuned.

For more:

BBC

Bloggingstocks