Eddie Lampert speaks out on Sears Canada’s demise
Billionaire Sears Holdings (SHLD.O) Chairman Eddie Lampert is wading into the blame game over Sears Canada’s demise.
In a lengthy blog post, Lampert, who owned a large stake of the firm through ESL Holdings, said company management sowed the seeds of the retailer’s slide into insolvency by undertaking an ill-fated strategy when former Executive Chairman Brandon Stranzl spearheaded his Sears 2.0 plan.
“ESL disagreed with the aggressive and risky strategy to stimulate sales growth known as ‘Sears 2.0,’” Lampert wrote on Sunday. “ESL believed that strategy was highly risky and unlikely to succeed, but was surprised by the rapid decline in the operating performance and cash flow of the company.”
Lampert took further issue with Sears Canada’s communication with shareholders, and claimed management failed to consult with his investment firm prior to filing for creditor protection.
“ESL was not informed in advance that Sears Canada intended to seek protection under a CCAA filing, and was extremely unhappy with that decision,” Lampert wrote.
Lampert said the lack of communication paired with uncertainty over the retailer’s plan to pursue meaningful changes to its business model directly impacted his decision to not put together a bid for some or all of the company.
“Following the CCAA filing, ESL’s decision not to participate in a going concern bid by the former CEO of the company was based on both the improbability of a going concern bid being accepted and the lack of confidence in the go-forward strategy, which did not represent a change from the approach that resulted in the company’s insolvency,” he wrote.
Ultimately, Lampert acknowledged Sears had to make some tough decisions, but liquidation – and the resulting 12,000 job losses – didn’t have to be the end-game.
“ESL believes that the liquidation of Sears Canada was not a foregone conclusion and that a less risky strategy, while not without its own difficulties, could have avoided the unfortunate conclusion,” he wrote. “The losses suffered by ESL and other shareholders were certainly significant, but so too were the job losses and other costs borne by the various constituents of Sears Canada.”