Strategy and Operations

Eddie “The Doctor” Lampert

RR Eddie LampertI find it hard to believe that “Fast Buck” Eddie actually believes that people in the retail industry and Wall Street actually believe that he is going to rescue the business of Sears. Yes Eddie, that pesky word “believe” is finally catching up to you. For all these years since putting the two “Titanics” together (Sears and Kmart), you were Eddie “The Magician” Lampert. From day one (and you are no Jeff Bezos), you had everybody believing you were going to return these two iconic American brands to their once storied greatness. Well, not everybody. And certainly not me. In fact, from day one I said there was no way you could pull it off. I even suggested that I believed this was going to be a brilliant financial engineering strategy to manage the businesses down over a long period of time, separate the assets, and unlock their greater individual values. Thus, you and ESL could pocket a great deal of money as the Titanics finally sink below the horizon.

So, here we are. Eddie, “The Doctor” Lampert is now asking us to believe his latest vision going forward? OMG, Eddie, look in the rearview mirror to remind you about the year-over-year steady decline in revenues from day one. Honestly, you make your vision forward an oxymoron.

Eddie sees Sears future as an asset-light business, focusing on ecommerce memberships in the Shop Your Way program. He blogs that Sears is “fighting like hell” and making progress. Anybody who believes any of this is living on another planet. Come on Eddie! We all know it’s a shell game. We know your real intent is to stick another life support tube into Sears’ slowly dying body to keep it alive long enough for another round of squeezing cash out of it. Hey! You received kudos, including mine, for your brilliant financial engineering to manage a slow death, while identifying and securitizing the most valuable assets to eventually lease or sell, including the iconic brands and real estate. In terms of the real estate value, much of it was placed in a REIT and then you charged the dying retail business rent while you methodically sold off the properties, and pocketed a good share of the proceeds.

And now, Eddie “The Doctor’s” latest injection of a hallucinogenic life-saving drug is his offer to the ESL board, and himself as Chairman, to acquire what’s left of certain assets. Once again it will be a “buy from Peter to pay Paul” transaction. Except, Peter and Paul are both Eddie.

As majority owner of Sears and its assets, Eddie “The Magician” (his alter-ego) seems to be conducting a sleight of hand trick. He’s exploring the sale of Kenmore, the Sears Home Improvement Products business, as well as the Parts Direct component of the Sears Home Services division. And here’s the magic: he’s shopping them around and is getting no takers because the price tags were considered astronomical by potential buyers so very few bids were received. So, if you look closely enough and don’t get confused by all the abracadabra stuff, maybe the wizard (a step up from a magician) intentionally threw a price out to the market that he knew would not snag any takers.

Why would he do such a thing? Ah ha! It’s a setup. Remember Peter and Paul are both Eddie.

So, Eddie playing Peter (who is in actuality Sears and ESL Holdings) offers to acquire those Sears assets he can’t sell to anybody else. Paul (who also happens to be Eddie and ESL Holdings) is the seller. Is the magic driving you crazy yet? Are you trying to watch where the rabbit’s going?

Don’t even try to figure out what the assets are worth either to Peter or Paul. They will be worth whatever Eddie Peter and Eddie Paul say they are worth. Oh, and while the magician is pulling all of this off and when the “now you see it, now you don’t” moment arrives, he going to pull yet another rabbit out of his hat: the real estate rabbit. Again, Peter can buy some more real estate from himself and lease it out to himself, AKA Paul.

As the financial magician, he dazzles and blinds us. His moves are so quick and seemingly so complicated that we, the audience, will gasp at the end of his act because we couldn’t keep up with all the rabbits he pulled out of a hat, figure out how a dozen doves flew out of a bag or how one scarf turned into fifty…or whatever.

So, logically you say, come on, give us the numbers. Forget it. That’s part of his act. Throw all those numbers around with such a complicated magical process of borrowing from Peter to pay Paul, he completely confuses everyone. Most of his accounting magic leaves even the great financial minds and analysts baffled.

Here’s all you need to take away from this article, the “nut” of it all, is that Sears is almost dead. And no surprisingly Eddie is continuing to do what he did almost from the get-go 15 years ago. He is financially engineering Sears down into the briny. While he is doing this, he unlocked the value of most its assets in such magical ways that a good chunk of it has flowed back into his pocket.

So, Eddie, I plead of you, to stop being the magician, and continue playing the good doctor. Recognize that’s it’s too late to save what is essentially a dying carcass. Just pull the plug. Puhleeze.

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