To Go “Down With The Ship?” Or Just Another Abracadabra Strategy?

I just got all twitchy and excited when I heard the news. “Fast Buck Eddie” just hasn’t given me anything really fun to write about for a long time. Things on the “Titanic” have just been so boring. Of course that tends to happen when such gigantic ships start to sink. It takes such a long time for them to finally go under.

Well, this may be the moment before the final dive. The fact that “Eddie” is taking the helm, replacing Lou D’Ambrosio whom he named CEO in 2011, raises many questions, not the least of which is “why,” and for what reason going forward. Since taking control of Kmart in 2003 and merging it with Sears in 2005, his every reclusive move and veiled public pronouncements always raised more questions than answers, and certainly never provided any clear retail growth strategies. Rather, just a bunch of cobbled together tactics, as evidenced by the accompanying charts, with six straight years of declining revenues, profits and share value.

The huge number of executives Eddie has churned through is legendary. It has also been common knowledge that even as Chairman, he micromanaged the business, most often ordering his executives to travel from Sears headquarters in Chicago to his hedge fund office in Connecticut. Perhaps this was the reason for the “swinging door” (understandably fed-up executives), or perhaps it was due to hiring executives with the wrong skills, thus exacerbating the decline. Or, perhaps it was simply Eddie’s micromanaged decisions that now seem to be tipping the ship under for its final dive to the bottom.

Regardless, the questions are out there about why and what’s going to happen next?

My question: is “Captain Lampert” taking the helm to “go down with the ship,” as all good Captains are supposed to do? Or, as I’ve asked before, is this just another “abracadabra” strategy (now you see it, now you don’t).

“Down With the Ship?”

I have written previously that I believed Eddie awakened a couple years ago to the financially declining realization that he was not going to be able to heroically return Kmart and Sears to their once stellar positions as “iconic” American retail brands. And given his brilliant financial acumen, in my opinion, it was at that moment he decided the best strategy was to manage the business “down,” to financially engineer its demise (vs. collapse), while selling off assets and “cashing” out of it as much as possible.

So, if that’s the case, and with analysts predicting a “slowing to a trickle” cash flow, Eddie may have decided “Nearer my God to Thee” is the song to be singing right now. If so, he may figure by taking the helm he, better than anyone, can best, and least painfully, manage the Titanic through its final plunge, while selling the rest of the “deck chairs” and whatever else is worth good hard cash.

“Abracadabra Strategy”

But wait a second. Not so fast. The “fat lady isn’t singing yet.” And, don’t forget Eddie “Abracadabra” Lampert. Now you think you understand him, and now you don’t. Again, his strategy might be financial “magic.” I’ve speculated before that his exit strategy might very well be to shrink the business down to a point where he, and maybe some of his financial pals, can acquire it and take it private. At which time, if he were strategically smart, he could reorganize/reposition the business on the Sears brand (and related brands), solely specializing in the “home” and home service category.

As stated in an earlier article, this should have been done in the late 1980’s when Sears was also about to sink into the briny depths.

However, if this in fact, is Eddie’s final “magic” act, consider the point that he was once touted by the media as the next Warren Buffet, followed by six years of words and actions that kept confirming his lack of retail knowledge, including one of his more recent quotes in the WSJ: “I was criticized for not investing enough in the stores. My point of view is we couldn’t invest in everything.” Eddie, may I remind you in retailing, the stores are everything.

So, considering all of this, if taking Sears private and repositioning around “home” is Eddie’s final “magic” act, then my advice to him is that the very first thing he should do is fire himself.