Edward S. Lampert has one regret in steering the nameplates Sears and Kmart over the last decade: “We haven’t had or generated the money to fund our transformation quickly enough.”
Lampert, who is chairman and chief executive officer of Sears Holdings Corp, as well as chairman and ceo of the hedge fund ESL Investments that is a big Sears Holdings stakeholder, made that comment in a blog post Wednesday in advance of the retailer’s annual meeting for shareholders later today.
Lampert noted, “While operational performance has been the cause of some of that, pension expenses, the recession and other factors have impacted us as well.”
The blog post recaps the points he made in last year’s annual shareholders’ meeting, as well as the points he plans to make at today’s meeting.
Lampert noted that last year, he discussed the differences between turnarounds, those when a company succeeds at doing what it did in the past and the “transformations that occur when companies adapt their business model to fundamental shifts in technology, competitive landscapes and other macro trends to serve their customers in new ways.”
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Some companies noted last year were General Dynamics, Kodak and Apple, when it was still called Apple Computer.
“As important as it is to have a good plan and adapt to changing circumstances, you also need to find the resources to effect the transformation,” Lampert said, adding that will be the focus at today’s meeting with shareholders.
While the $2.4 billion in funds generated from last year — including the Lands’ End spinoff and other rights offering — helped put Sears on a better footing, that’s just the beginning, the ceo said. “This year, we believe we can derive even more value than we did last year,” he concluded.
He noted the formation of the real estate investment trust, Seritage Growth Properties, that is expected to result in excess of $2.5 billion in cash proceeds, as well as other real estate deals that involve joint ventures with General Growth Properties, Simon Property Group and Macerich. The new funds will allow Sears to invest in long-term strategies to enhance its Sears’ members’ experiences, as well as expand its integrated retail platforms, Lampert added.
He went on to say that Sears and Kmart have “already moved beyond the old and sorely outdated traditional store network models,” and that the new cash raised will help to accelerate the company’s transformation.
Lampert didn’t address a point that credit analysts have been noting in the past six months — the company’s cash burn rate — and that could be an issue down the road. Lampert concluded in his blog post that he will have more to say today and “over the next year. Stay tuned.”