HOFFMAN ESTATES, Ill. — Sears Holdings Corp. is on the hunt for big talent and big ideas to stem the slide in its profits and sales — but it doesn't expect things to get better anytime soon.
During the retailer's annual meeting here Monday, chairman Edward S. Lampert focused on the fact that the group has cut its debt and not overexpanded, unlike many fellow retailers, instead concentrating on specific problems at Sears and Kmart. While many competitors have doubled their debt to expand their footprint — adding 500 million square feet of retail space in the past five years — Sears has reduced its debt 47 percent since 2004, he contended.
"Look at Home Depot, Kohl's and Lowe's, with their significant expansions," Lampert said. "They have not seen their shareholders richly rewarded."
But Sears Holdings' shareholders have suffered a roller-coaster ride themselves. While the company's shares soared in the period after Lampert created the group, they fell sharply last year before recovering slightly over the last few months. On Monday, Sears Holdings' stock closed down 3 percent to $100.08. The stock peaked at $191.93 in April 2007 and sunk to below $90 in January before recovering to its current level.
Fiscal 2007 financial performance fell below expectations and Sears Holdings emerged from the holiday season with excess inventory, particularly in apparel, leading to costly markdowns.
For the fourth quarter ended Feb. 2, Sears Holdings reported that profits fell 47.5 percent to $426 million from $811 million a year ago, while revenues slid 6.8 percent to $15.1 billion from $16.2 billion.
For the full year, Sears' net income fell 44.6 percent to $826 million, as sales slipped 4.3 percent to $50.7 billion. Sears noted fiscal 2006 revenues of $53 billion included 53 weeks, while fiscal 2007 had 52 weeks.
"We are not banking on any significant recovery and expect conditions to remain tough through the balance of the year," Lampert told the estimated 200 people gathered at company headquarters here.
Bright spots for Sears Holdings include the Lands' End brand, which saw record profits in 2007 and was expanded to 100 Sears stores. (Lampert did not break out sales figures.)Going forward, Sears Holdings will focus on three areas to turn around its businesses: protecting margins, optimizing promotions and pricing and better managing how goods are bought and sold, he said. Sears sources apparel from 47 countries.
Lampert said Sears Holdings' restructuring into five distinct business units, announced in January, should enable the company to improve accountability and productivity of all assets from brands to real estate to home services. Jim Barr, who headed up Microsoft's shopping portal, MSN.com, is now president of Sears' new online unit. The other four major units include real estate, operating businesses, support and brands.
There is no firm timetable for naming leadership to lead each new business unit, but Lampert said the brands unit is key. (Sears' search for a chief executive officer is under way and W. Bruce Johnson, who was named interim ceo and president in February, continues in that capacity.)
During the three-hour shareholder meeting, several questions were geared around brands and the opportunity for "alternative distribution" channels for famed exclusive brands like Craftsman tools and DieHard batteries. Lampert said it's premature to discuss whether Sears would consider offering those products through competitors like Wal-Mart or Target. However, he did note Target sells a lot of iPods, manufactured by Apple, which has its own stores and appeals to a different shopping demographic.
"If by interacting with others, we are able to drive more innovation, more awareness, it may help the performance of that brand in our own stores," he said.
Whether talking product, merchandising or sales, Lampert repeatedly referenced Sears' need to attract top talent to its leadership ranks.
"We are trying to build a culture here where there will be a long succession of senior management that will be developed from within," Lampert said. "We will figure out how we can bring in great talent — people who would otherwise go to Goldman Sachs, McKinsey or Google. We need to make those types of investments [in people]."
Several shareholders raised concerns about the shopping experience in stores, ranging from poor lighting and climate control to feuding employees in plain sight of shoppers. While Lampert seemed to dismiss those anecdotes, calling them "anomalies," he did say improving the customer experience is a priority.Johnson said an "executive customer service response unit" has been formed to address customer issues. He said one of the biggest "aha" moments of taking on the role of interim ceo came from reading customer complaints. "It was painful to read some of those letters," he told reporters in a media briefing following the shareholders' meeting.
Executives are assigned one customer complaint to resolve personally, Johnson said. Once the issue is resolved with the individual, the executive then drills down to better understand the systemic root of the problem and propose corrective measures.
Karen Austin, executive vice president and chief information officer, said the 128 scheduled technology projects for 2007 — such as getting Kmart and Sears on a single PeopleSoft payroll system and SAS markdown management technology — were completed on time.
"We retrieve store level data hourly and our biggest user is right here," Austin said, motioning to Lampert. "And if it's not on time, we know it."
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)