Lampert says some suppliers are trying to shake Sears down.
Just days after blaming the media for the retailer’s deepening problems, Lampert blasted some suppliers in an unusual blog post, accusing them of taking advantage of Sears’ problems to embarrass it in the press and extort better payment conditions.
Shares in Sears, which runs an eponymous department store chain as well as Kmart discount stores, fell 11.4% on Monday.
“There have been examples of parties we do business with trying to take advantage of negative rumors about Sears to make themselves a better deal,” Lampert wrote in a blog post on Sears’ corporate site. “In such a case, we will not simply roll over and be taken advantage of — we will do what’s right to protect the interests of our company and the millions of stakeholders we serve.”
This is not the first time Lampert has taken to Sears’ blog to make his case about the company’s prospects- in October, he wrote a post to dismiss rumors the company would wind down the Kmart chain.
In his latest post, Lampert took specific aim at one vendor. He said that a subsidiary of China-based Techtronic Industries plans to sue Sears over the terms of their supply agreement. Lampert, a hedge fund manager, said the unit, One World Technologies, which makes power tools for Sears’ Craftsman brand, threatened to end the contract unless Sears agrees to “what we believe are unreasonable demands.” Lampert said the company would take whatever legal action required. A spokeswoman for Techtronic did not immediate respond to a request for comment.
One World Technologies has been paid more than $868 million since 2007, Lampert said. He noted that Sears Holdings buys more than $13 billion a year in goods and services from all of its vendors combined and “we have always met our payment obligations.”
Soon after the post was published, Sears filed suit against One World in District Court in Cook Country, Illinois, where Sears is headquartered.
Last week, at Sears’ annual shareholder meeting, Lampert criticized the media for recent articles raising the specter of a Sears’ bankruptcy mind plunging sales and liquidity challenges, saying such stories were making Sears’ turnaround harder to pull off and only focused on the company’s problems without covering areas of success.
Still, Sears has racked up a cumulative $10 billion in losses since 2012, avoiding a cash crunch only from loans from Lampert, cost cuts, and the sale or spin-off of key assets like the Craftsman brand, Lands’ End clothing business and hundreds of its best stores. Sears has also faced downgrades from the major credit rating agencies last year, and one of them hinted at the possibility of a Sears bankruptcy.
And Sears itself raised the specter of a potential bankruptcy when it included for the first time “going concern” mentions in its most recent annual report, boiler-plate disclosusre that nonetheless recognize there is “substantial doubt” about its future.
It is highly unusual for a CEO to take to a blog to criticize a vendor during a dispute. So Lampert’s sorties likely reflect the intense pressure he is feeling from the accelerating degradation of Sears’ business.
“While we are not asking to be spared from informed opinions about our business performance, the recent wave of dire predictions about our company’s future have done harm to our business,” Lampert wrote.