Sears CEO Lampert Lashes Out at Reports He’s Planning to Shut Down Kmart
Sears Holdings (SHLD) CEO Eddie Lampert on Monday forcefully denied media reports the retailer is planning to shut down its Kmart stores. It’s the second time in 10 weeks the company has felt the need to reassure investors, employees, and vendors that the discount chain is staying in business.
Amid steep sales declines, Kmart has been shutting stores for years—including 78 closings planned this year—stoking much speculation on Wall Street and in the media that its parent company was getting ready to put the chain out of its misery.
In July, Sears Holdings, which also operates Sears department stores, put out a corporate blog denying a Business Insider report about Kmart’s future that was based on information from employees. Since then, Sears reported more dismal results for Kmart, as comparable sales fell another 3.3% in the second quarter.
Lampert, the once high-flying hedge fund manager who orchestrated the 2005 merger of Kmart and Sears and current CEO of the holding company, even theorized some people were out to get Kmart with reports questioning its longer term viability.
“To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports,” wrote Lampert.
Still, it’s not hard to see why someone would question Kmart’s prospects. The chain has posted declines in comparable sales, a metric that excludes business from shuttered stores, every year between 2011 and 2015, with drops continuing this year. Kmart, which was still bigger than Walmart (WMT) as recently as a quarter of a century ago, has closed one-third of its stores in the last five years.
In his blog, Lampert again pressed his case for how he plans to revive Kmart and Sears, a strategy that will emphasize services to members of their ShopYourWay loyalty program, with less reliance on physical stores. A few weeks ago, the company opened a new store near its headquarters in the Chicago area that would showcase where it is taking Kmart, including a new “Happy to Help” customer service center, and a “Shoparazzi” concierge service for Shop Your Way members. But that is just a single store in a fleet of about 900 locations.
Time is running out for Sears Holdings to show signs of progress which have yet to materialize after years of claims of “improvements.” Kmart has lost a lot of ground to the likes of Target (TGT) and Walmart, while Sears has suffered the worst sales drops among leading department stores.
And after years of selling off its best assets, including some of its best located stores, to raise billions and stave off a cash crunch, Sears is currently looking into potentially selling crown jewels like the DieHard and Kenmore tool brands, meaning it is running out of assets it can sell.
“I can tell you that there are no plans and there have never been any plans to close the Kmart format,” Lampert wrote Monday. But at the same time, he conceded the obvious: “We won’t be able to restore profit immediately.”