Thursday, May 11, 2017

The reality of Sears?

Last Friday, I shared two posts - one that talked about cost containment, and another that talked about employee views about their employers.

Let's revisit both of those, because one of the employers discussed was Sears, and Sears is somewhat involved in cost containment. Although, according to Sears CEO Edward Lampert, cost containment isn't the overriding priority at the company.

Six shareholders questioned Lampert. One, who said he had sold men's clothing at a Sears store many years ago, asked if Lampert was in denial about the company's losses.

Lampert said his reluctance to close more stores was not about denial, but about caring.

"I'll fight like hell" to fix stores, he said, adding: "We don't want to destroy value, we want to create value."

So, how is Sears creating value?

He predicted people will look back and wonder how they missed the Sears' turnaround, which he said would be driven by the Shop Your Way loyalty program.

Last year Sears teamed up with ride-services company Uber Technologies to give members loyalty points for trips. Lampert said he was trying to strike more such partnerships to boost overall sales.

So Sears is instituting a loyalty program AND partnering with Uber. Stop the presses! Perhaps Shop Your Way has outstanding features that no other loyalty program has - perhaps not. And while an Uber partnership might have seemed really cool a few years ago, the continued bad press at Uber (DISCLOSURE: I WORK FOR A COMPANY THAT PROVIDES SOFTWARE FOR FINGERPRINT CHECKS) makes that seem like less of a coup these days.

But these points are not the primary points that Lampert wants to make. According to the Reuters article that I've been quoting, Lampert feels that the press has been picking on Sears.

Sears Holdings Corp (SHLD.O) Chief Executive Officer Edward Lampert blasted the media on Wednesday for "unfairly singling out" the company over the past decade and blamed "irresponsible" coverage for the retailer's woes.

Yup, the media has been irresponsibly singling out Sears over the last several years. I was easily able to confirm this, by finding this Guardian article that talked all about Sears. Oh, and I guess Macy's was also mentioned. Oh, and JC Penney was mentioned too. And yeah, there were a few paragraphs on Urban Outfitters. And mentions of The Limited, BCBG Max Azria, Guess, American Apparel, and Abercrombie & Fitch. And the rent is (too damn) high. Yeah, the media is really picking on Sears, aren't they?

And once you anger the media, don't be surprised if the media says unflattering things about you. This lesson doesn't only apply to Sears, but there are enough things in the Reuters article that might have not been as prominent if Sears was nicer to those that cover it. A few examples:

Sears, once the largest U.S. retailer, warned investors in March there was a chance it may not be able to continue as a going concern after years of losses and declining sales.

Lampert, a hedge fund investor who is rarely seen in public, kicked off his appearance at an annual shareholders' meeting at Sears' headquarters in Hoffman Estates with a slideshow of headlines about the company's financial distress, dating back to 2008....

The company has not reported a profit for six years, which Lampert compared to Inc's (AMZN.O) early unprofitable growth....

That was a good one. Because when you think Sears, you think Amazon. Let's continue.

The bulk of Lampert's 90-minute appearance focused on news coverage, which he said had been "deliberately unfair."

Media coverage was "meant to scare our vendors" who then tried to negotiate better terms with the company....

Five journalists in attendance were not allowed to speak with Lampert or ask questions.

Perhaps Lampert should have scheduled private meetings with those five journalists beforehand. But (for the most psrt) he didn't.

I'll grant that I only have two data points on Lampert (here's the other), but it appears that Lampert doesn't have media savvy. Even when he did grant an exclusive interview to the Chicago Tribune (in advance of the shareholders' meeting), he didn't choose his phrases carefully.

I could argue that this transition phase is taking a lot longer than it should and that may be a fair argument. If we were making a meaningful amount of money it would enable us to move much faster in our transformation. But we've made a lot of decisions we would rather not so we can make those pension payments, so we can make vendors more comfortable when they're questioning, 'Are you going to be able to pay or not pay,' and why are they questioning it? Because there are a lot of articles that are speculating, and there are elements of truth, but they're certainly designed to scare people....

We're fighting like hell to change the way people do business with us. And my view is, we're the customer. If you're a vendor, and want to do business with us, then you have to treat us like a customer, you don't treat us like a pariah.

Luckily this was a Chicago Tribune article and not a New York Daily News article. Building upon the past, the headline might have been "Sears to Pensioners and Vendors: Drop Dead."
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