He will always be known for the rest of his life as the person who did the most to destroy Kmart and Sears. We all know he doesn't care. He stole so much money from the company and laid off so many people-- all for his own personal benefit. In 20 years his obituary will be the man who wrecked two retailing icons. A complete business failure. It's a "ran it into the ground story" that will be taught in business schools for years as exactly what not do when running a company.
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The one creditor that everyone seems to ignore is the PBGC. Many post mention Eddie as the creditor first in line , however, that is not the case. The line actually forms after the PBGC has its way. Eddie doesn't make a move without the PBGC being involved and getting a cut up front. In the case of the stalled Kenmore deal I suspect that the PBGC wanted at least $200 million of that $400 million sale price; if not the whole $400 million. SHLD is approximately $1.5 billion in arrears with the pension plan, so the PBGC is going to be playing hardball to get their due!
He is a creature of habit. If he completes his Kenmore which may sound good; but specifically it would be for debt held by ESL himself (and partners); not for debt to which he is not a party; and also being debt not yet fully matured . Then based on his own analysis of risk; as an insider he might choose to loan the company $500 million with 10% interest plus other fees; essentially skimming $50 million from his own purchase of the Kenmore brand and other SHLD assets.
You can see the difference between Eddie's way and that of another company. due to conflicts of interest any other company is unlikely to sell assets to their own CEO; but if they did they wold use the funds for continuing operations. Eddie may not even provide a loan to continue operations; but if he does he will (1) make sure an outstanding but unmatured debt is paid in full and (2) skim 10% for himself leaving only $450 million of his $500 million purchase for use by the company; and (3) most likely make the next debt (bond) on better terms (for himself; not SHLD) and set at a later maturity date.
But he might decide it's not worth the risk of loaning additional fees. Regardless; in my opinion; he would use the settlement funds to pay back himself as a creditor; and I believe he would do so EVEN if other creditors are positioned before him.
We all knew this problem ages ago. No one dared to tell a dunce Eddie how to run a retail company. All Eddie care is to give what his "member" wanted even though it cost company arms and legs. If he knew anything about retail business he would tell customers honestly that we don't have item. Most customers would appreciate that we do not waste their times and for being honest. To Eddie, playing mind game and playing dilly dolly with customers is his skill.
So, Sears customers: if you bought anything online and it took weeks to get to your doorstep, @UUzHEaJ-2had explains why! In short, some arbitrary metric on a spreadsheet, which does nothing for Sears profitability by the way, takes precedence over customer satisfaction!
What a way to serve, delight and engage our members while they shop their way! Wooohooo!
@2had Wow, just wow. It used to just bounce the order to another store if yours had to say "no".
Decisions like this is why the company is in dire straits. There are plenty of other senseless policies that are wasteful and illogical, for sure.
Unless I'm missing something, it sounds like Sears management is willing to throw a wrench in what little operational efficency existed, increase costs and jeopardize customer satisfaction just to artificially inflate SFS metrics instead of establishing more reasonable and realistic expectations for SFS (considering that the inventory system is complete c-ap, the warehouses aren't always accurate in what they send and there's a HUGE shoplifting problem in the stores). The old system was efficient. If your store didn't have the item even after doing a reasonable search, you hit "no", it was approved by a manager (after they griped about having to do so) and it bounced to another store.
I'm glad I'm out of there. I didn't figure anything would improve.
You call another store to look for an item that your store does not have. If they have the item then you email them a shipping label so that your store pays for shipping. The other store then ships the item to your store, which takes it off of their inventory, and then your store ships the item to keep the metrics up. Every store does this. We find items for other stores, they find items for our store. We are not allowed to cancel any order
Very inefficient and expensive but that is the way the process actually is suppose to work. Online orders can take weeks to ship waiting for the other store to ship the item. Nothing to do with a DM or a manager it is corporate policy.
@2fpf The idea of scrounging around for boxes for SFS orders was not foreign to me, neither was the idea of shipping out merchandise in its own box, like mechanic's tool sets, but wait a minute. You're saying that you actually have to call a neighboring store to ask if they will ship the item to you, so you can ship it out to the customer, presumably to keep your store SFS metrics in the green? That is very inefficent from a cost and logistics standpoint. I'm guessing your manager is obsessed with "numbers", operational efficency be darned, and is making your team do this. How is it that other stores are willing to locate the products that you don't have in stock and ship it your store if they do? It affects their inventory and they are shouldering the shipping costs every time they ship missing items to your store.
When I worked at Sears, there didn't seem to be any obligation for a store to assist in fulfilling another store's SFS orders, the backroom crew would just find a MOD, where they then spent an inordinate amount of time looking for the item before they hit "no" on the SNC, which bounced the order to another store.
Or is this a new policy? When I worked there, it used to be if we didn't have the item that dropped in to our web order queue, we said "no" after spending a whole bunch of time combing through the store and stockroom, and it went to another store (and then the store manager would get all twitterpated over having to say "no", usually to an inexpensive, obscure or easily pocketed item).
If this is truly the new, official way of doing things, it's terrible. I wonder how customers are going to react when it takes an extra week for their order to arrive?
Online sales could be better if we had product to ship and boxes to ship the items in. When you spend half a day calling other stores to find an item and then you wait for them to ship the item to your store and then you have to put the merchandise in an old detergent box or re-pack box it is not efficient nor a good look to the customer. We shipped lots of Christmas toys with just clear wrap around them or we just stuck a shipping sticker on the box last year, Many customers called and complained because their kids or whoever saw what was for Christmas before Christmas. Not a way to catch Amazon or even JCP or even Dollar Store
CEO Bezos of Amazon, put Sears out of business. Sears can't catch up to online sales of Amazon.
Eddie wears no underwear.
I don't think that it's just Eddie that's the issue, although he is a part of the problem. It's the inability to merge and upgrade IT systems, have more staff in the stores to get stuff done, and the inability to have the needed shipping supplies to ship stuff to customers.
In my opinion the reason Sears is failing is that we are trying to be all things to all people. We have lawn & garden, tools, auto, optical, home improvement, shoes, housewares, bedding, electronics etc etc etc... we compete with just about everyone. Maybe if we could have narrowed the field and specialized in just a couple of areas and put our efforts into a more limited offering maybe it could have worked. For example, look at Bed Bath & Beyond... I believe that's a successful retailer (or) maybe Best Buy... they specialize in a couple of areas and that's all. We are trying to compete with the world and we all know how that's worked out. I think that Eddie just underestimated the difficulty and size of Sears/Kmart and how much effort it was going to take. Then the 2008-2010 downturn happened and that just took a lot out of us. Haven't recovered since. And yes, we also made some poor management decisions along the way... a constant revolving door of executives and constant changing of the strategy year after year.... we used to be over a 10+ billion market cap and now we are down to 100 to 125 million? I have no words left to describe that decline....
Nope. I'm not an Eddie guy at all. I'm just saying he was never trying to save anything. He's done exactly what he intended to do.
Kmart and Sears were already on the path to ruin before he got involved. He's the one who put out the cash to buy it all up. If he wants to execute a 10 plus year plan to slowly liquidate everything and make himself more wealthy then he can do that.
The fact that he's an @sshole who doesn't know anything about retail is beside the point...
Looks like @UUzHEaJ-fjf is an Eddie person on here to talk Eddie up. Listen whoever you are, Eddie didn’t save Kmart from anything. They had already come out of the bankruptcy restructure and were doing alright. Eddie is a real estate guy not retail so he picked up sears for all of the properties they owned. Yes, Eddie should have just sold everything off and ran off with the cash. It would have been easier on everyone, instead of this slow, torturous death of a thousand cuts he is putting all of us through.
Eddie is a hedge fund manager who had some great success early in his career (he did well with Auto zone too, which he stayed out of and didn’t mess up like he did Sears and Kmart). While Eddie was not CEO until 2013, make no mistake, he was calling all the shots. No one in the upper ranks of sears has ever made a move without Eddie’s approval or a direct order from him. He will go down in history as an “ok” hedge fund manager and the worst ever CEO in retail history (he’s made the worst ceo list more times than anyone else)
The reason people who work or worked at Shld blame him is because he rode in on a white horse making all kinds of promises and didn’t live up to a single one of them. Everything he did flopped, and what made it worse was he didn’t listen to his people who knew retail and even blamed them for shlds failure and took no responsibility for his inept leadership. Heck, even the guy sweeping the floors could see he was making big mistakes but Eddie listened to no one and blamed everyone for his bad decisions. What made things worse, he belittled and disrespected his employees at all levels. He even made up alias for himself on the companies internal social media (pebble) and ream anyone he saw fit to anonymously. Eddie is a total piece of work and no one knows that better then those who work (or have worked) at Sears holdings.
The OP is spot on!
@ cuu Oh I place a lot of blame on Eddie. I think he's following a plan to get things exactly where he wants them. He has a lot to do with the whittling away of SHLD. My point is that a lot of where SHLD is now started as other issues 30 or 40 years ago and were never addressed. Putting some money into the stores and approaching things with a different strategy might have made the situation better, but I think Eddie never intended to put money in to company other than helping it limp along long enough to extract the value he was looking for. I don't think turning the company around and returning it to a profitable large retailer was ever the plan.
I think Eddie is a villain..... I'm just answering the question of what his obituary will say. If he does successful things for the next 20 years then largely it will just be the former SHLD folks who will be the most irritated with him.
JC Penny is probably on the same track as SHLD. Macy's is also not setting the world on fire either and in a few years might also be in the same situation. Even Walmart and other physical retailers have probably "peaked" and will spend the next 15 or 20 years trying to be successful in maintaining what they have. SHLD is just the biggest example of how far a once unstoppable company can fall to it's death.
He may not have been CEO the whole time, but it was his decision to not put money into the upkeep of any of the stores. While you don't like to place much blame with him, it is his fault and the others that he directly hired to oversee operations that caused things to nosedive like they have. MANY other retailers on Sears' size have had problems over the past few years (Macy's and JCP are just two) and they're doing much better than Sears is. Discounters are doing AMAZING business, but because of years of mismanagement and poor investment, Kmart is doing poorly (albeit better than Sears). In years of recession, discount stores tend to do very good business... Walmart, Target, and Dollar General are all doing very well and Kmart could've had a larger slice of that pie if not for the dreadful decisions by Eddie and his lackeys at SHC corporate.
The story isn't finished yet. Eddie Lambert has made a lot of bad business decisions and has probably done a lot of not very nice things, but it's no guarantee that he'll be seen as a villain by the world at large.
First thing Kmart was pretty much toast when ESL bought it years and years ago. They had already had a lot of issues and had declared bankruptcy prior to ESL becoming involved. If not for ESL Kmart might have just disappeared completely 15 years ago.
Secondly Eddie didn't take over as CEO until 2013. Sears had not had a profitable quarter since 2011 and there are some that might have chosen to liquidate the whole thing in 2013 or 2014 when the nosedive was picking up steam. Eddie funneled some cash here and there to at least keep enough cash flow coming in.
Say what you will about Eddie picking and choosing what he wants to line his own pockets as he runs the whole things like a strung out liquidation sale to himself, but the doors are still open (although dysfunctional) and people have kept their jobs (although with bad hours and terrible conditions). I personally cannot stand a lot of things about the man, but SHLD is still operating for now. Would you have rather had him just shut everything down and liquidate the entire company after four or five years of losses when the cash reserves were being burned up?
He's also young enough that he has the opportunity to buy/sell/operate other things in the future and if he can be successful at that then the only people who might have a big issue with him are former SHLD employees.
Even if Warren Buffet himself and Berkshire Hathaway had come in instead of ESL I don't think things would be too rosy either. They probably would have busted up all segments of the company and spun them off or sold them off here or there until Sears and Kmart probably would have ceased to exist in any form anyway. Sears has been in some form of decline or another since the late 1960's or early 1970's. Kmart has been in some form of decline or another since the late 1970's or early 1980's. Eddie is part of the problem, but not entirely the problem. Kmart and Sears would still be cr@ppy companies or out of business entirely if ESL never got involved.