Attention Shoppers: Skip This One
Diane is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Stock market shoppers looking for a bargain or turnaround would do well do pass on Sears Holdings (NASDAQ: SHLD).
On Monday, Jan. 7, the specialty retailer, with outlets in the United States and Canada, announced that its CEO Lou D’Ambrosio was stepping down due to family health reasons. Filling the emptied wing-tipped shoes D'Ambrosio will leave vacant is Sears' chairman and majority shareholder Edward “Eddie” Lampert.
Media-shy Mr. Lampert walks into a highly public post. He will continue to do double duty juggling the CEO post as he mans the helm at his hedge fund ESL Investments.
While Lampert knows his way around Wall Street, he just might get lost in the competitive retail sector he knows less about. Although he maintains he has garnered invaluable experience during his term as chairman of Sears, and at board positions at AutoZone and AutoNation, he has scant experience running a major public company.
Plus, Lampert is taking on more than a just few headaches at Sears that won’t be easily alleviated by a few aspirins from one of the company’s in-store pharmacies.
The Hoffman Estates, IL based retailing giant just reported overall holiday sales that were worse than expected. During the crucial holiday season that ended Dec. 29, same store sales at Sears stores rose a paltry 0.5%. Plus, sales at its Kmart stores slumped 3.8%.
In fairness, retail sales overall were disappointing and uninspiring this past holiday season despite a strong early showing.
A prime example of the daunting task Lampert has lashed onto comes from the ongoing saga at rival JC Penney (NYSE: JCP).
The Plano, Texas based company attempted to right itself in 2012 by revamping its merchandise, overhauling stores’ interior and changing its pricing policy from big markdowns, a slew of sales and a bevy of routine promotions, to everyday low prices, all under the guidance of new and accomplished CEO Ron Johnson.
Johnson has an impressive resume. He served as senior VP of Operations at Apple. He gets credit for initiating the concept for the hugely successful Apple Retail Stores. He also had stints working as VP of merchandising for Target, in addition to being employed at Mervyns. He left Apple in November 2011 after more than a decade with the tech giant with the aim of turning JC Penny around.
While the new changes Johnson implemented were at first widely applauded, the praise quickly vanished. Sales continue to wane and investors continue to bale.
Sears shareholders also ran for the exit after Lampert was named as new CEO.
Shares plunged some 6.4% following D’Ambrosio’s departure, the announcement of Lampert’s new role and the lackluster sales report. It’s a bit unclear exactly which announcement was behind the fall, or if it was a combination of all of the above, but the displeasure was loud and clear.
If shareholders saw any promise in Lampert’s new title, the stock would have been goosed at least a smidgen.
It's quite clear that Sears needs a seasoned professional in the hot seat. And while it's true Lampert is a savvy investor, it’s highly questionable if he can successfully run a public company.
The wait for positive results could be long and arduous. The softer side of Sears for market participants just might come from the stock’s fading price.
DianeAlter has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!