Despite years of deep sales declines, Sears doesn’t need more customers, or so says the retailer’s chief executive.
Sears Holdings, (SHLD) which operates the namesake department store chain and Kmart, has been bleeding business for years and lost a total of almost $10 billion in the last six years. Sales at existing Kmart stores fell 7.4% last year, while at Sears they were down 9.3%, much bigger drops than at almost all other major retailers, despite the closing of dozens of the weakest stores in each chain.
Despite all that, Sears CEO Eddie Lampert, a hedge fund manager who engineered the Kmart-Sears merger in 2004, insists that the retailer has all the shoppers it needs. He has been promising investors a turnaround for years, saying Sears was remaking itself as a member-centric retailer less reliant on physical space thanks to its well regarded Shop Your Way loyalty program.
“We don’t need more customers. We have all the customers we could possibly want,” Lampert told shareholders at the Sears annual meeting on Wednesday, speaking of the Shop Your Way program. His comments were confirmed by a Sears spokesman.
In recent years, Sears has sold off many of its best stores, and hived off brands like Lands’ End apparel and Craftsmen tools to raise money. And earlier this year, credit ratings agency Fitch said Sears would burn through $1.8 billion this year and even hinted at the possibility of bankruptcy. Sears Holdings itself in its annual report in March recognized “substantial doubt exists related to the Company’s ability to continue as a going concern.”
Yet Lampert slammed media reports about Sears’ financial problems and headlines about potential bankruptcy, saying they were exacerbating the retailer’s problems and making it harder to get vendors to work with it through its problems.
“Every time people use the word bankruptcy, somebody who reads that doesn’t get past that word. It makes it very unfair for us, and it’s a very uneven playing field for us,” he told the Chicago Tribune in a rare interview ahead of the shareholder meeting. He added: “We’re fighting like hell.”
He also claimed Sears is “ahead” of chains like J.C. Penney (JCP), Macy’s (M) and Target (TGT), even though those retailers, while indeed struggling, have not seen sales declines anywhere near as dramatic as Sears’. Still, Shop Your Way is seen by many analysts as a leading loyalty program, technologically speaking.
Last year, Lampert had flagged some execution problems with Shop Your Way, on which he is betting Sears’ future, but noted in the Tribune interview that this year the program had lined up new partnerships (Uber among them.) He did acknowledge on Wednesday that improving the program, and thus Sears’ transition “is taking a lot longer than it should and that may be a fair argument.”
As for the company’s sales declines, Lampert told shareholders he was keenly aware of the retailer’s problems.
“I give you my assurance I am not in denial,” Lampert added.