Eddie Lampert, former CEO of Sears.
Source: Sears Holdings
Sears Holdings CEO Eddie Lampert on Wednesday said the company is ahead of Walmart and Target in that the company has "tried to incubate our own capabilities" instead of making major acquisitions.
"Let me be the first one to acknowledge we are on the right path but we haven't gotten over the hump. We need to convert our vision into reality, [which has been] made much more difficult because the operating performance isn't where it needs to be," he said.
When you see "Target and Walmart are buying start-ups that didn't exist five or 10 years ago, you realize how much change there is" in retail, the CEO added, mentioning Walmart's acquisition of a majority stake in India's Flipkart that was confirmed Wednesday morning.
Lampert made the remarks during his appearance at Sears' annual shareholders meeting at the retailer's headquarters in Hoffman Estates, Illinois.
During the meeting, he touched on numerous steps taken throughout the past year to "unlock the earnings potential" of Sears' assets, including selling more than $500 million worth of real estate. The company continues to add partners, like Uber and GasBuddy, to its Shop Your Way membership platform, and just last week announced a "Lease It" option for those consumers who don't qualify for traditional financing.
Sears' executive team said moving forward it "will continue to take actions to right-size the company, increase liquidity and capitalize on the value of its brands."
Leena Munjal, chief digital officer of Sears, also announced Wednesday that the company will be rolling out a new service via Amazon for tire installation. The department store chain's shares surged more than 20 percent in early trading on the news. Sears already sells items from its Kenmore and DieHard brands on Amazon.com.
Around last year's shareholders meeting, Lampert said Sears was "fighting like hell" to do business with vendors amid a flurry of negative media coverage. Because of new rules from the Securities and Exchange Commission, the company had at the time just disclosed there was a "substantial doubt" about its "ability to continue as a going concern."
On Wednesday, Lampert repeated this idea, saying Sears is still "fighting like hell" to turn its business around. "That fight continues," he said.
In the latest quarter, Sears' total sales fell nearly 28 percent to $4.38 billion, as the company operated fewer locations across the U.S. (It operated 1,002 stores as of Feb. 3, 2018, compared with 2,429 stores four years before.) Same-store sales meanwhile tumbled more than 15 percent overall.
With the "going concern" warning on the table, many industry experts wonder when, if ever, Sears Holdings will file for bankruptcy protection. Its financials have been in a steady decline for years. Lampert's merger of Kmart and Sears in 2005 was seen by many as a turnaround maneuver, but it was ultimately too late to meaningfully threaten rival big-box chains like Home Depot and Best Buy.
Still, Lampert said he is determined to return the company to profitability. He also had a much softer tone toward the media at Wednesday's shareholders meeting.
"I want to treat [the] media with respect," he told an audience of roughly 70 people including Sears employees, investors and journalists. "I want to tell my story and answer the questions that explain what the issues are. ... What journalists do are really important in society."
The CEO's latest bid to flush out cash comes in the form of a proposal from his hedge fund, ESL Investments, to buy some of Sears' remaining brands, including Kenmore and a portion of Sears Home Services.
"What I don't want to happen is see the value of these assets continue to diminish," Lampert addressed one shareholder's question about the proposal. "It [would] bring a lot of capital to Sears, and we've needed it."
The department store chain also continues to close underperforming stores. Many of the latest closures come in the form of Seritage, a real estate investment trust spun off from Sears in 2015, exercising a right to terminate Sears' leases and take back those boxes.
"We set that up so Seritage had the right to redevelop those properties," Lampert said about the creation of a REIT. "What [those stores] can become has a lot of potential ... like residential ... but it requires a lot of capital we didn't have."
Two years ago, Lampert used Sears' shareholder meeting to discuss the rollout of smaller-format stores, which house mainly mattresses and appliances. Today, the retailer operates a handful of these niche shops.
Sears has roughly $1 billion of debt coming due within the year, according to company filings. The company had $182 million in cash and equivalents at the end of the fourth quarter, down from $286 million a year earlier.
As of Tuesday's market close, Sears Holdings' stock has fallen more than 70 percent from a year ago.
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- After nearly four years in bankruptcy, Sears Holdings and its one-time creditors said they have reached a settlement with its former CEO and majority owner Eddie Lampert and other investors.
- If approved by a federal bankruptcy judge, the settlement could resolve years-long litigation filed against Lampert and other defendants over allegations of asset stripping and “rank” self-dealing in the years leading to Sears Holdings’ 2018 bankruptcy.
- The settlement would pay plaintiffs $175 million. Of that, $125.6 million would come from insurers, $41.9 million would come from the defendants and $7.5 million would come from shareholding funds.
A decade ago, Sears Holdings was a sprawling retailer with thousands of stores under the Sears and Kmart brands, along with major property holdings and valuable owned brands. By the time it filed for bankruptcy, many of Sears Holdings’ stores had closed, major assets — including property, beloved products brands and retail banners such as Sears Canada — had been sold or spun off.
Those sales and spinoffs are the heart of the lawsuit against Lampert and other defendants. Lampert and his hedge fund, ESL Investments, invested and often took controlling stakes in many of the divested assets, including Sears Canada, Lands’ End and Seritage Growth Properties (which included a large portfolio of Sears Holdings’ real estate).
In their complaint, the plaintiffs alleged that “[a]ltogether, Lampert caused billions of dollars of cash and other assets to be transferred to himself, Sears Holdings’s other shareholders and other third parties.”
Lampert and ESL were also on the receiving end of many Sears Holdings’ rent payments (after taking control Seritage), product purchases (via Lands’ End) and interest payments (through loans made to Sears Holdings’ while it made losses in its business).
Today, Sears Holdings is largely a paper entity that has been stuck in Chapter 11 purgatory for years, with the litigation against Lampert and other parties holding up final execution of its bankruptcy plan, approved long ago.
The remaining Sears and Kmarts were sold to Transformco — controlled by Lampert — in early 2019. Since then, most of those stores have closed, leaving just a handful of Kmarts and Sears Holdings department stores open in the U.S.
While the litigation has slogged on, creditors to Sears Holdings have been waiting to get paid something for what they floated to the company. That includes many of the retailer’s suppliers, who have awaited payment for products they shipped to the company years ago now in the weeks leading up to Sears Holdings’ bankruptcy and the months before selling its remaining stores to Transformco.
The time in Chapter 11, and the complexity of the Sears case, made it the most expensive retail bankruptcy of an era filled with them. And the mountain of legal and consulting fees owed by Sears Holdings have made it even harder for vendors to recover losses.
With a settlement, an end to the legal saga of Sears’ bankruptcy may finally be in sight.
Edward Scott Lampert (born July 19, 1962)[2] is an American billionaire businessman. He is the former CEO and chairman of Sears Holdings (SHLD), founder of Transform Holdco LLC, and founder, chairman, and CEO of ESL Investments. Until May 2007, he was a director of AutoNation.[3] He was a director of AutoZone from 1999 to 2006.[4] As of October 2021, his net worth was estimated at US$2 billion.[1] Eddie Lampert Edward Scott Lampert Roslyn, New York, US
(1962-07-19) July 19, 1962 (age 60)
Kinga Lampert
(m. 2001)Children3[1]Chairman, Sears HoldingsIn officeJanuary 2013 – February 14, 2019Preceded byHerman DarlingSucceeded byOffice abolished (assets sold to Transform Holdco LLC)Chairman, Transform Holdco LLC
Incumbent
Assumed officeFebruary 2019Preceded byOffice established
Lampert was born in 1962 to Dolores Lampert and Floyd M. Lampert. He is Jewish.[5] His mother was a housewife. His father was a senior partner in the law firm of Lampert & Lampert in New York City. He has a younger sister Tracey.[6] Lampert's grandmother was a passive investor and a fan of Louis Rukeyser's Wall Street Week television program. She instilled in him an interest in investing. His mother would later recall that young Eddie would sit with his grandmother reviewing and evaluating the performance of her stock picks in the daily newspaper.[2]
Lampert's father died in 1977,[7] and his mother took a job as a clerk at Saks Fifth Avenue.[8] His mother would later say: "Eddie really assumed the responsibility, knowing that life had changed and we had to accomplish something by ourselves now."[2] In order to help support his family, Lampert worked after school and on weekends at various warehouses, stocking shelves and filling orders. Despite working, he earned good grades, played both soccer and basketball, and won the scholar athlete award at his high school. He received financial aid to help pay for college.[8] Lampert graduated from Yale University in 1984 with a bachelor's degree in economics, summa cum laude, where he was a member of Skull and Bones[2][9] and Phi Beta Kappa.
In July 1984, Lampert worked as an intern at Goldman Sachs,[10] and then worked in the firm's risk arbitrage department from March 1985 to February 1988. While there, he worked directly with Robert Rubin. When Lampert decided to go out on his own, Rubin warned him it would be a bad career decision.
In April 1988, Lampert left the bank to form ESL Investments, based in Greenwich, Connecticut (the name ESL derives from Lampert's initials). Richard Rainwater, whom Lampert had met on Nantucket Island, gave him $28 million in seed money and introduced him to clients, such as David Geffen.
Lampert typically holds his investments for several years and usually has between three and fifteen stocks in his portfolio. His investment style has drawn comparisons to the financier Warren Buffett.[2]
Lampert's earnings in 2004 were estimated to be $1.02 billion, making him the first Wall Street financial manager to exceed an income of $1 billion in a single year.[11] In 2006, Lampert was featured on the Time 100 list for most influential people in the world for being one of the "brightest minds on Wall Street" and leading a new class of activist hedge funds.[12] Lampert was the richest person in Connecticut in 2006 with a net worth of $3.8 billion.[13]
In March 2012, Lampert was No. 367 on the Forbes world wealthiest people list with a net worth of $3.1 billion.[14] By August, 2016, Lampert had fallen to No. 810 on the list, with a net worth of $2.2 billion.[1]
In January 2013, it was announced that Lampert would take over as chief executive officer at Sears after Louis D'Ambrosio stepped down due to family health matters, which took effect in May 2013.[15] In July 2016 he held 28% of shares in Sears Holdings Corp worth approximately $408 million.[16]
In early 2017, Lampert, then president, chief executive officer and top shareholder of Sears Holdings, was estimated to have personal assets of $2 billion, primarily in the hedge fund ESL Investments Inc.[17] Early in the year, he committed to providing an additional loan of $500 million to Sears and said he would provide letters of credit to Sears for additional amounts, reportedly totaling $200 million and possibly increasing to a half billion dollars in the future.[18]
He has been criticized by employees and corporate staff for "shredding" his employees in corporate meetings and "being out of touch with reality," as well as for failing to invest in the physical stores, as many of them are deteriorating.[19] During his tenure as CEO, Sears lost around half its value within five years, and closed more than half of its physical stores.
On October 15, 2018, Lampert stepped down as CEO of Sears Holdings, while remaining chairman of the board, as part of Sears Holdings bankruptcy actions. On December 6, 2018, Lampert, through his company ESL Investments, offered to buy all of Sears for $4.6 billion in cash and stock.[20] The offer would be financed by $950 million in added debt,[20] but no additional cash.[21] Five hundred stores remain in operation; the remainder are in liquidation.[20] According to a company filing, Lampert stepped down as chairman of Sears Holdings Corp on February 14, 2019.[22]
In January 2019, a group of Sears' creditors hoping to persuade a federal judge to force Sears to liquidate alleged that Lampert had orchestrated a "multiyear and multifaceted scheme" to strip away the company's assets and benefit from its decline.[23] In May 2019, Lampert, months after purchasing the remains of Sears from the holding company, threatened not to pay out the $43 million in pension payments[24] owed to 90,000 former Sears and Kmart employees and retirees.[25]
In 2001, Lampert married Kinga Keh, an attorney with whom he has three children.[1][2] They own houses in Indian Creek Village, Florida,[26] in Aspen, Colorado,[27] and in Greenwich, Connecticut (designed by the architect Michael Dwyer and the interior designer Rose Tarlow).[28] The couple are active members of their local Chabad house.[29]
Lampert is the owner of the Fountainhead, an 87.78 m (288 ft) motor luxury yacht.[30]
In 2003, Lampert was kidnapped from the parking lot of his Greenwich office, but was able to persuade his captors to let him go after two days of captivity and promising to pay a ransom.[2]
Lampert is a self-proclaimed supporter of free market economics and is a fan of libertarian writer Ayn Rand.[31]
- ^ a b c d "Forbes profile: Edward Lampert". Forbes. Retrieved 29 October 2021.
- ^ a b c d e f g Berner, Robert (November 22, 2004). "The Next Warren Buffett?". Businessweek. Retrieved June 7, 2013.
- ^ Miller, James P. (March 26, 2007). "Sears chief won't run for AutoNation's board". Chicago Tribune. Retrieved April 17, 2007.
- ^ "SEC filing". AutoZone, Inc. Retrieved April 16, 2007.
- ^ Jewish Business News: "Edward Lampert's Plan to Re-Organize Sears Begins to Take Shape"
- ^ "Gary R. Smith Is Wed To Tracey R. Lampert". The New York Times. April 1, 1990.
- ^ Social Security Death Index, February 1977.
- ^ a b Sellers, Patricia (February 6, 2006). "Eddie Lampert: The best investor of his generation". CNN Money.
- ^ Robbins, Alexandra (2002). Secrets of the Tomb: Skull and Bones, the Ivy League, and the Hidden Paths of Power. Little, Brown and Company. p. 180.
- ^ "The Next Warren Buffett?". Bloomberg. 2004-11-22. Retrieved 2018-06-14.
- ^ Martin, Patrick (2005-06-09). "Highest Wall Street pay tops $1 billion a year". Retrieved 2007-04-14.
- ^ Kadlec, Daniel (2006-05-08). "The 2006 Time 100". content.time.com.
- ^ "The 400 Richest Americans (Connecticut Rankings)". Forbes.com. 2006-09-21.
- ^ Mason, Melvin. "Greenwich Home to Billionaires on Forbes List". The Greenwich Daily Voice. Retrieved 26 July 2012.
- ^ Smith, Aaron (January 8, 2013). "Hedge fund manager Lampert adds CEO role at Sears". CNN Money. Retrieved March 18, 2013.
- ^ "LAMPERT EDWARD Insider Trading". InsiderMole.com. Retrieved 18 July 2016.
- ^ "Edward Lampert". Forbes. January 9, 2017. Retrieved January 9, 2017. ...took over as Sears CEO in 2013 ... has presided over a remarkable dismantling.
- ^ Sweeney, Brigid (January 5, 2017). "With Craftsman sale, Sears takes another step toward the grave". Chicago Business. Crain Communication, Inc. Retrieved January 9, 2017. The company may need $2.5 billion in cash to get through 2017 amid sales declines and store closures, including almost $600 million in minimum pension contributions.
- ^ "Inside Sears' death spiral: How an iconic American brand has been driven to the edge of bankruptcy". businessinsider.com. Retrieved 5 November 2018.
- ^ a b c "Billionaire who led Sears into bankruptcy offers to buy it". www.cbsnews.com. Retrieved 1 February 2019.
- ^ "Seeking Alpha (9 December 2018) Lampert Is Effectively Paying Nothing Additional For Sears". seekingalpha.com. Retrieved 1 February 2019.
- ^ Reuters. "Eddie Lampert steps down as chairman of Sears' board". Business Insider. Retrieved 2019-02-15.
- ^ "Lampert's Sears Takeover Effort Runs Into Pension Insurer Objection". finance.yahoo.com. Retrieved 1 February 2019.
- ^ Business, By Chris Isidore, CNN (May 29, 2019). "Sears' owner wants to get out of paying $43 million in severance to former employees | CNN Business". CNN.
- ^ "Government fears Eddie Lampert would wipe out Sears' pension plans". February 1, 2019.
- ^ "Edward Lampert". Forbes. Retrieved October 10, 2014.
- ^ "Parcel Detail".
- ^ Fabrikant, Geraldine (February 17, 2002). "Personal Business; Big Returns, Minus the Pleasantries". The New York Times.
- ^ Jewish Business News: "Edward Lampert's Plan to Re-Organize Sears Begins to Take Shape" November 26, 2013 | They live in Greenwich Connecticut, where they are active members of the local Chabad House
- ^ Finucane, Martin (2017-08-14). "Meet the new superyacht in town: the Fountainhead". The Boston Globe. Retrieved 2017-08-24.
- ^ Kimes, Mina (2013-07-11). "At Sears, Eddie Lampert's Warring Divisions Model Adds to the Troubles". Bloomberg. Retrieved 2021-03-31.
- SHC Speaks Sears Holdings' corporate blog.
- SHC: Chairman's Messages to Shareholders (Previous years)
- Cramer, James J. (December 6, 2004). "Blue-Light Specialist: A conversation with Eddie Lampert". New York magazine.
- Rosenberg, Yuval (November 17, 2004). "The man behind the deal". CNNMoney.com.
- Parramore, Lynn (December 10, 2013). "Ayn Rand-loving CEO destroys his empire". Salon.
| Preceded by Herman Darling |
Chairman of Sears Holdings January 2013 – February 2019 |
Succeeded by Vacant |
| Preceded by Herman Darling |
CEO of Sears Holdings January 2013 – October 2018 |
Succeeded by Vacant |
| Preceded by | CEO & Chairman of ESL Investments April 1988 – |
Succeeded by incumbent |
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