Sears CEO Eddie Lampert: We are still 'fighting like hell'
Sears Holdings held its annual shareholders meeting Wednesday at its headquarters in Hoffman Estates, Illinois.
CEO Eddie Lampert spoke to how the department store chain is trying to improve liquidity and address pension liabilities.
Sears also announced a new development in its relationship with Amazon.
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.