Lampert Trims Sears Stake Below 50 Percent

Lampert Trims Sears Stake Below 50 Percent
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Edward S. Lampert, the billionaire hedge fund manager and CEO of Sears, has trimmed his stake in Sears Holdings Corp (NASDAQ:SHLD) from 55% to 48%. Lampert has been trying to turn around Sears for the past eight years.

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Kmart’s buyout of Sears

Lampert masterminded Kmart’s $12 billion buyout of Sears in 2005. Eight years after the buyout, the Sears board appointed Lampert as chief executive officer of the 120-year-old retailer. The company had gone through four CEOs since the merger.

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Since the takeover, Sears Holdings Corp (NASDAQ:SHLD)’s sales have dropped from $49.1 billion to $39.9 billion. The retailer’s cash recently fell to a 10-year low. Although it has plenty of assets to unload before bankruptcy looms, the odds of a turnaround grow longer every quarter.

Lampert trims stake

According to yesterday’s filing with the U.S. Securities and Exchange Commission, Lampert’s ESL Investments Inc. owns 48% of the Hoffman Estates, Illinois-based department store chain, down from 55% reported as recently as October.

Sears Holdings Corp (NASDAQ:SHLD) has posted 27 straight quarterly sales declines, prompting Lampert’s investors to pull money and forcing Lampert to surrender majority control.

Miles Weiss of Bloomberg points out Lampert divided Sears into over 30 units, each with their own presidents, chief marketing officers, boards of directors and profit-and-loss statements. Former executives said this has caused infighting among units that need to work together.

Lampert hasn’t sold personal holdings

According to Michael J. De La Merced of Dealbook, despite Lampert’s efforts to turnaround the long struggling department store’s fate, a chronic lack of investment in its stores has left Sears especially wounded given the changes that have battered department stores in recent years.

Lampert disclosed in a statement that his hedge fund had distributed 7.4 million shares in Sears to investors who wanted to withdraw money from his firm. He reiterated that he had not sold any of his personal holdings.

He clarified that his significant personal ownership in the company is a sign of his confidence and alignment with shareholders.

Last month, the retailer announced plans to shrink itself by spinning off two of its best-known brands, Lands’ End and Sears Auto Center.

Sears Holdings Corp (NASDAQ:SHLD) reported a wider loss in its third quarter as the ailing department store operator was hurt by weaker sales at its stores. The retailer is also in the midst of shifting its business, with less emphasis on its brick-and-mortar stores. Sears has roughly 2,500 stores in the U.S. and Canada.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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