Lampert must move himself out of a hands on role in Sears
When investor Edward Lampert acquired Sears via merger
of K-Mart in 2005 and became the Chairman, he thought of ruling the retail world. However, recent developments at Sears Holding Corp. suggest how poorly he misread the whole scenario. At the moment, the retail giant is facing the brunt from both internal & external factors. Apart from economic slowdown, its army of 3,800 stores is dilapidating with every passing day due to rising complaints related to its stores and customer service. Edward announced massive re-organisation plan on January 22, 2008 (new organisational structure composing of five business units – operating businesses, support, brands, online and real estate).
Surprisingly, just a week after the re-structuring announcement, Edward ousted CEO Allwyn Lewis, who he had only institutionalised at the helm two years back from a restaurant company – Yum Brands. He has appointed W. Bruce Johnson as interim CEO. Howard Davidowitz, Chairman, Davidowitz & Associates, pointed out, “It doesn’t make sense to kick start re-organisation without a full time CEO.” Another analyst on condition of anonymity said, “There hasn’t been clear reasoning from the management on why Lewis is being ousted… ”
Lampert is hardly short of ideas, but recently, quite a few have fallen flat, for instance, his ploy to focus less on market share and more on profits. As per company data, net income for the quarter ended November 2, 2007, was a measly $2 million, compared to $196 million for the quarter ending October 3, 2006 (which included $101 million of pre-tax gains). Lampert then admitted, “We are very disappointed with our performance for the third quarter. We cannot blame our results entirely on the retail and macro-economic environments. We have much on which to improve...”
Lampert must now realise that he may have to oust himself now from a hands on role in the company, as his time is fast running out. Bringing in a new CEO is the easiest advise to present, but presents a huge execution challenge. Without that, Sear’s ploy for a more dynamic organisational structure in order to unleash growth may all be in vain.
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Source : IIPM Editorial, 2008
When investor Edward Lampert acquired Sears via merger
of K-Mart in 2005 and became the Chairman, he thought of ruling the retail world. However, recent developments at Sears Holding Corp. suggest how poorly he misread the whole scenario. At the moment, the retail giant is facing the brunt from both internal & external factors. Apart from economic slowdown, its army of 3,800 stores is dilapidating with every passing day due to rising complaints related to its stores and customer service. Edward announced massive re-organisation plan on January 22, 2008 (new organisational structure composing of five business units – operating businesses, support, brands, online and real estate).Surprisingly, just a week after the re-structuring announcement, Edward ousted CEO Allwyn Lewis, who he had only institutionalised at the helm two years back from a restaurant company – Yum Brands. He has appointed W. Bruce Johnson as interim CEO. Howard Davidowitz, Chairman, Davidowitz & Associates, pointed out, “It doesn’t make sense to kick start re-organisation without a full time CEO.” Another analyst on condition of anonymity said, “There hasn’t been clear reasoning from the management on why Lewis is being ousted… ”
Lampert is hardly short of ideas, but recently, quite a few have fallen flat, for instance, his ploy to focus less on market share and more on profits. As per company data, net income for the quarter ended November 2, 2007, was a measly $2 million, compared to $196 million for the quarter ending October 3, 2006 (which included $101 million of pre-tax gains). Lampert then admitted, “We are very disappointed with our performance for the third quarter. We cannot blame our results entirely on the retail and macro-economic environments. We have much on which to improve...”
Lampert must now realise that he may have to oust himself now from a hands on role in the company, as his time is fast running out. Bringing in a new CEO is the easiest advise to present, but presents a huge execution challenge. Without that, Sear’s ploy for a more dynamic organisational structure in order to unleash growth may all be in vain.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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