The long awaited turnaround story at Sears may never happen. Why? Because reclusive hedge fund impresario and Sears Holding Corp. Chairman Edward Lampert doesn’t know how to run a retail business, says Jeff Matthews of hedge fund RAM Partners.
After Sears posted a surprise quarterly loss, a Barron’s report on August 24 stated the stock could fall another 50%. Lampert shot back with a letter claiming the article was “inaccurate” and “biased.”
Matthews says facts are facts: Shopping at Sears remains a lackluster experience, five years after Lampert bought the company and merged it with Kmart. “They’ve totally lost touch with the American consumer,” says Matthews, who has no position in Sears stock.
Here’s what bothers him about Lampert’s management of the once fabled retailer:
Lack of investment in stores. “The stores are terrible; they don’t look any better than they did five years ago. In fact, they look worse.” Matthews notes Wal-Mart spends tens of billions a year on stores, while Sears is spending about $200 million. That’s no way to compete.
No retail expert at the helm. For more than 18 months, Sears has had an “interim” CEO, Matthews notes. Until they hire someone more permanent with retail know-how they’re doomed, he says. “I kept waiting for five years: when is he going to hire the guy? Never happened.” (via yahoo