Sears Canada’s former CEO says he’s ‘tremendously cynical’ about the company’s restructuring efforts and says he believes outgoing executive chairman Brandon Stranzl is ‘fronting’ for billionaire investor Eddie Lampert.
Stranzl announced Thursday that he’s stepping down as the company’s top executive to launch a bid for the company, which is seeking court protection from creditors.
Former company CEO Mark Cohen suspects ulterior motives.
“He’s been presiding over the collapse of the company for the last year, year and a half. Of course the company’s been falling apart for over a decade, now,” Cohen told BNN in an interview on Monday. “I don’t know what he brings to the table other than the ability to bring someone into the proceedings that can make a bid. I have no direct info on this, but if I had a guess he’s fronting again for Eddie Lampert.”
Lampert and ESL Partners – which own a combined 45.3 per cent stake in Sears Canada – announced on July 10 that they were "evaluating, discussing and considering a potential negotiated transaction" with Fairholme Capital to buy the company. Those plans were shelved on July 28. Lampert is also the CEO and chairman of the U.S. parent company Sears Holdings (SHLD.O).
Cohen says the courts must determine whether Sears Canada’s restructuring plan – which has already resulted in 2,900 employee dismissals without benefits and the closure of 59 stores – is in the company’s best interests.
“The question is, for the court: What strategy serves the better good with regards to creditors? Is this simply a temporary strategy to keep the company alive while more assets are stripped off or taken off the table or is this an opportunity to enable the company to stay in business?” he told BNN.
“Forgive me, but I remain tremendously cynical about the motives of the players involved and the likelihood of any kind of a favourable outcome here.”
The company’s plans come amidst a drastic shift in the retail space that has seen department store retailers like Hudson’s Bay (HBC.TO) come under pressure from activists to sell off valuable real estate holdings. Cohen says Sears Canada was well positioned for that shift, but has dropped the ball.
“What’s going on is a tremendous change in the marketplace. There’s a sea change. Customers are going to the internet to make purchases rather than shopping exclusively in stores. Sears Canada had an incredibly powerful position in that regard through its catalogue and internet business, but most of that is gone,” he told BNN.
“I think they’ve broken their bond with Canadian consumers… This Sears 2.0 feels more like a public relations stunt than the basis of a real forward-looking strategy.”