By  on January 29, 2008

As Sears Holdings Corp. gears up to reorganize its business, the retailer said Monday that its chief executive officer would be leaving the company.

Aylwin B. Lewis will vacate his post at the end of the week. W. Bruce Johnson, executive vice president for supply chain and operations, will become interim ceo. A formal search for a ceo is under way, the company said in a statement.

The announcement comes a week after hedge fund manager and Sears Holdings chairman Edward Lampert said the company would be restructured into five business units, each with a leader overseeing the respective business. Lampert said the goal is to introduce an organizational structure that will help improve results and reverse profit declines.

The retailer also recently slashed its fourth-quarter guidance due to a 3.5 percent drop in holiday same-store sales. The company now expects earnings in a range of $2.59 to $3.48 a diluted share, a decline in profit of more than 50 percent over the same period last year.

Industry sources said for Lampert to turn Sears Holdings into a viable retail player in the market, he must find a ceo that is visionary. Lampert also has to relinquish control and be willing to dole out money to reinvigorate the business.

"[Lampert] has met his Waterloo," said Emanuel Weintraub, of the consulting firm that bears his name. "Sears needs a strong ceo, such as a Mike Ullman or someone like Allen Questrom. And it needs a long-term commitment. There is no quick fix here."

"[The reorganization] is like rearranging the deck chairs on the Titanic. The ship has been floundering for three years now, and I am not certain this will put it back on track," said Craig Johnson, president of consulting firm Customer Growth Partners.

Sears has been on a fast track to losing market share to other midtier department stores such as J.C. Penney, Kohl's and Macy's, who have found ways to revive their businesses. The retailer is also being challenged by discounters Target and Wal-Mart, as well as Best Buy on the home electronics front and Home Depot and Lowe's in the home improvement segment.

"All of these retailers have improved their systems," said Joe Feldman, hardlines analyst at Telsey Advisory Group. "You can't just grow through cutting costs."And with little newness, developers are becoming less interested in Sears as an anchor in the mall, Feldman added.

In the third quarter ended Nov. 3, Sears' earnings fell 99 percent to $2 million, or 1 cent a diluted share, from $196 million, or $1.27, in the year prior. Sales for the quarter fell 3.3 percent to $11.5 million from $11.9 million.

Some retail experts say Lampert has become too involved in the day-to-day workings of the company, which will make it difficult to attract a top executive willing to share the spotlight.

"There are only six to eight executives in this country that are capable of this big of a turnaround, and none of them would ever come there while Lampert is still there," Johnson said. "They will have to look to a B player or a younger person who realizes who's actually in the driver's seat."

Feldman said with a dearth of retail executive talent "it is tough to come up with a list of names. [Sears] needs someone who is a good combination of merchant and operator, or a pairing of two people to do both. They need someone who is going to come in and do radically different things."

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