Sears Holdings Corp. chairman and chief executive officer Eddie Lampert has a new axe to grind — vendors.
Only a few days after calling out the media for “selective” and “biased” reports on the health of the retailer — which lost $2.2 billion over the course of 2016 and in March admitted, as required under accounting standards, to doubt about its future as a going concern — Lampert took aim in a blogpost at vendors “trying to take advantage of negative rumors” for their own gain.
Despite Sears’ efforts to reduce risk to vendors and its “history of always meeting our obligations,” the company said they “will not simply roll over and be taken advantage of.”
Lampert went on to single out One World, which manufactures tools for the Craftsman line at Sears, as a vendor that has purportedly threatened litigation unless the retailer complies with what it sees as “unreasonable demands.”
“[One World] seeks to embarrass us in the media to force us to let them out of their contract,” Lampert wrote. “But Sears has nothing to be embarrassed about — we have lived up to our word under our contract, and we will take the appropriate legal action to protect our rights and ensure that One World honors their contract.”
According to Lampert, One World is a subsidiary of China-based Techtronic Industries and has received more than $868 million in payments from Sears since 2007.
Sears also filed Monday an action for declaratory judgment against One World, asking an Illinois state court to declare that the manufacturer has no right to demand amended terms in a 2013 supply agreement and that it has no grounds for any insecurity in dealing with the retailer.
Even with such strong defense of its business, Sears stock dropped 12.43 percent by the end of trading to $8.31.
A One World representative could not be immediately reached for comment.
Lampert added that there are “important competitive reasons” why Sears wants to hold One World to its agreement, namely that if the manufacturer isn’t making tools for Sears, it will be able to do more business with other companies “without incurring the cost of expanding its manufacturing or outsourced procurement capacity,” according to the post.
“If we allowed One World to break their agreement, it would effectively reduce the flow of products they are required to deliver to Sears, harming our ability to sell tools, supply parts and provide goods to Sears’ members and customers,” Lampert wrote. “I believe Sears Holdings can continue to operate as a very significant member-centric integrated retailer with a large number of stores as long as we receive the support of our vendors and other stakeholders.
“Across our entire vendor base, we have always met our payment obligations and are confident that the steps we are taking to improve our financial strength and reduce our operating losses will ensure that we will continue to be a strong business partner for many years to come,” Lampert added.
In April, Sears said it’s set to add another $250 million in cost savings through an accelerated sale of certain real estate assets to a broader restructuring that initially planned to realize $1 billion in cost cuts.
While the retailer has yet to reveal its first-quarter numbers, it has previously projected net income between $185 million and $285 million thanks to the disposal of some real estate and the $900 million sale of its Craftsman business to Stanley Black & Decker earlier this year.
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