Sears investors are in an abusive relationship with their CEO

Dead retailer walking
Dead retailer walking
Image: AP Photo/Elise Amendola
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Buying stock in Sears is the financial world’s equivalent of returning again to again to a bad relationship. No matter how poorly the company is run by its CEO, hedge-fund billionaire Eddie Lampert, shareholders once again seem willing to believe him when he says it’s different this time.

Shares soared as much as 40% today after Lampert announced (yet another) plan to fix the company by cutting overhead, slashing employee pensions and improving operations. Lambert said that, along with cutting costs, the company is borrowing more money, while making plans to sell $1 billion in real estate, all aimed at “a clear path toward profitability.”

To seasoned observers, it all sounded depressingly familiar. One Bloomberg analyst called it “a repackaging of existing information to make it sound like progress.” Shares of Sears Holdings Corp—the entity that owns Sears and Kmart— has been in a steady decline for a decade, unable to reverse shopping trends and Lampert’s mismanagement.

Sears is one of the great names in US business; the Sears Roebuck catalog, first published in 1894, helped furnish the nation. But like many mass-market retailers, it has fallen on hard times, pinched between discounters like Walmart and the online retailers like Amazon. When Lampert swooped in to rescue Sears a decade ago by merging the company with Kmart, another troubled chain he pulled out of bankruptcy, he was being hailed as the next Warren Buffett.

No-one is making those comparisons anymore.

Lampert, who formally took the role of CEO in 2013, has been steadily dismantling the company, selling off real estate and assets like Lands’ End, while lending it cash from his hedge fund to prop it up. A brutal article in Bloomberg Businessweek described Lampert’s Ayn Rand-inspired management approach, which pit departments against each other in a “Hunger Games”-style competition for resources.

Lampert is also obsessed with technology, and invested heavily in Sears’s online shopping business, with dubious results. In December, after another quarter of losses, Lampert laid out a plan (pdf) to transform its traditional store-based business into a “member-centric integrated retail model” and close 150 stores.

Clearly, some investors today are buying what Lampert is selling. But far more shoppers are staying away.