Reuters Insider - Breakingviews: No seer at Sears

Great American Financial

29/08/2016 18:51

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        Aug 29 - Once touted as a new Warren Buffett,     
                     Sears boss Eddie Lampert has spent the last decade 
                     trying to revive the flagging U.S. retailer.      
                     Richard Beales and Kevin Allison look at his      
                     record.                                           
 
 
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Transcript (May be auto-generated)

                 Eddie Lampert, who was once touted as the successor to Warren Buffett, sort of 
great investor, he still has a hedge fund, but he spent the last 10 years- the 
last few- even as CEO of Sears trying to rescue this once great American 
retailer. Kevin, you've been looking at this story. Lampert's fund just made 
another loan to Sears to keep it afloat not quite that desperate but another 
loan to Sears, one of a series. Yet, certainly in terms of the share price, it's
not working at all and it hasn't worked at all over the last 10 years. That's 
right. Sears has lost 90% of its value in the market since 2007. Eddie Lampert, 
if you recall, he took Kmart out of bankruptcy in 2003, and then he merged it 
with Sears two years later with the idea seeming to be to turn this into a kind 
of platform almost the kind of the way that Berkshire Hathaway works for Warren 
Buffett – he wanted to kind of build this platform out of this formerly mighty
American retailer that have fallen on hard times. He had some ideas for turning 
it around. He had three good years running years and then it kind of ran 
straight into a buzz off competition from Wal-Mart, Target, and Amazon, and it's
never really recovered. So, I mean where is he now? He became a CEO himself a 
few years ago, right? That's right. So in 2013 as Sears was continuing to report
declines in same store sales, he stepped in as chief executive to try to run the
business. So he's been in place for- not sure if it's quite three years but 
since 2013- Right, and he's been selling- he's sold bits off to- there this 
slide in Sear's latest deck, I think, which talks about, you know, it makes a 
virtue of the fact they've been able to access liquidity. But it seems like most
of that has been a sale of this, a loan from Eddie Lampert's own entities here 
and there. It hasn't been like, oh yes, they can access, you know, new equity 
from the market or new debt from commercial banks so much; it's been much more 
selling off bits, sort of injections of funds from Eddie Lampert. Where does it 
go from here? Well, yes. So they've been breaking the company up slowly. I think
a rival hedge fund manager called it one of history's slowest liquidation or 
something like that. And there's been enough to keep it going – you know a 
retailer- as a retailer, they need enough cash to be able to buy inventory and 
get through the holiday season. But really, I think, for us in this piece just 
kind of backing the camera out of it, it's become this almost obsession 
seemingly with Eddie Lampert. Sears has completely overwhelmed anything else he 
might have been doing with his ESL hedge fund. Remember, 10 years ago, he was 
being vetted as maybe the next Warren Buffett. He has had this absolutely 
stellar streak of investment returns. Then, made this huge bet on Sears, and now
it seems to be all consuming. Alright. Interesting story. We'll see how that 
plays out I'm sure over the next few months and years probably, and we'll have 
more Breakingviews for you tomorrow