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Edward S. Lampert’s Epistles

Here, the chairman and chief executive officer of Sears Holdings Corp. in his own words.

Copying the style of his idol Warren Buffett, Edward S. Lampert has chosen over the years to weigh in on the state of Sears Holdings Corp. in written form. His letters, mostly to shareholders but sometimes to company associates, are usually long and varied and together add up to nearly 50,000 words. They leap from the topic of the day — Hurricane Katrina, financial regulation or the 2008 Super Bowl champs — to issues of recurring interest, including the value of media commentators and Lampert’s own iconoclastic philosophy on investing in stores. Most of the letters end in the same way, “Respectfully, Edward S. Lampert.” Here is Lampert in his own words.

This story first appeared in the December 9, 2013 issue of WWD.  Subscribe Today.

June 7, 2005
We will opportunistically pursue investments in, and acquisitions of, other companies, joint ventures and strategic alliances. We believe that we will have significant opportunities in the years ahead to create value through a combination of better operating performance and disciplined use of our capital and balance sheet.

September 8, 2005

Greatness requires the ability to change and adapt; we are just beginning….We understand that change engenders criticism and uncertainty, but we also understand that we may need to make changes both to our approach and to our resources to demonstrate with clarity the seriousness of our purpose and the strength of our vision. We know we cannot please everybody, but we believe that people generally value clarity and consistency.

December 6, 2005

Being a learning company also means appreciating frankness and being willing to recognize where our ideas have not played out as expected — so that we can refine and change course. This quarter’s performance in Sears apparel is one example of this….Sears attempted to move its apparel offering to be more “fashion forward,” relying on the introduction of new proprietary brands. Customers have not yet embraced the new, more fashion-forward brands. In addition, an unseasonably cool spring and warm fall depressed apparel sales throughout the industry.

March 15, 2006
I view Sears Holdings as a $55 billion revenue, 350,000 person start-up — and I continue to believe that we have the challenges, excitement, pace of change, and opportunity for success that characterize a start-up. We will not be bound by the dictates of past practices. Instead, we will question, test, evaluate, and change….We are investing in our stores where the investment makes sense — in other words, where it improves the experience for our customers and associates and leads to attractive returns….Warren Buffett makes clear that his goal is to increase the per-share value of Berkshire Hathaway. Similarly, our goal is to increase the per-share value of Sears Holdings.

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March 1, 2007
We will never bat 1.000 — no company will. Every year will, like 2006, bring its own mix of strong performances and weak ones….Some commentators have asserted that we want to shrink the company, but that is simply not so. No great company would aspire to become smaller, and we certainly do not. But before embarking on a growth plan, it is critical to provide a sound base from which to grow. To this end, we have set out to improve the profitability of our business model. Our objective is disciplined growth. We do not want to grow simply for the sake of becoming bigger. Rather, our aim is to become more profitable, and as such we need to ensure that any revenue growth occurs at an appropriate level of profitability.

November 30, 2007
Retail is a fickle business. Nevertheless, like any other business, by focusing on the long term, making decisions based on facts and logic and appreciating that all decisions are based on many possible future scenarios, companies can navigate the ups and downs of the economy and the stock market to create long-term value for their shareholders.

February 28, 2008
I would like to start off this letter in a rather unconventional way by congratulating the New York Giants, led by their young quarterback Eli Manning and by head coach Tom Coughlin, for winning the Super Bowl….The Giants’ story reminds me of what we went through a few years ago with Kmart. When I first became involved with Kmart in 2002, during its bankruptcy, the company had been given up for dead by most industry analysts and media commentators….Like Eli Manning, we know what it’s like to be underestimated and questioned, but we intend to keep working on our game to achieve our full potential.

February 26, 2009

One of the unfortunate realities of the current environment is that we have closed a number of our stores during 2008, and we decided in the fourth quarter to close additional stores. We will be closely monitoring stores throughout 2009. Our approach has been to continue to operate money-losing stores in the past so long as we believed that we could restore those stores to profitability, and that the level of losses could be recovered upon return to profitability.

February 23, 2010
We continue to evaluate our store portfolio, over 2,200 Kmart and Sears Full Line stores combined, and experiment with new and different ways to serve our customers and avoid additional store closings….We have chosen to invest primarily in areas of our business that we believe will yield long-term growth and attractive returns. These areas include our online businesses, our service businesses, our Kenmore, Craftsman and Lands’ End brands, and some of our alternative formats like Hometown Stores and Outlet Stores.

February 24, 2011
Despite our challenging performance over the past several years, the difficult economic environment, and the dramatically changing retail environment, we have generated very attractive returns for shareholders since May 2003, when we assisted Kmart in its emergence from bankruptcy.

February 23, 2012
The board of directors and I look at and evaluate Sears Holdings as a portfolio of businesses, with different market positions, strengths and opportunities…. Sears Holdings has a profit problem, not a liquidity nor an asset problem. In fact, Sears Holdings has over $20 billion of assets on our balance sheet.

February 28, 2013
The progression of the Internet and mobile technology is fundamentally reshaping many industries, with retail being one of the largest….We are rebuilding Sears Holdings’ culture with an acute focus on creating “wow” experiences for our members and putting members first. We will embrace feedback at every point where a member comes in contact with the company. We know we do many things well. We are going to be proactive in reaching out to those who have great experiences with us and rewarding them for letting us know and for allowing us to publicize them.