High prices and management difficulties are cited in an article in today's New York Times as among the problems facing Sears stores, such as the one at Northpark Mall in Joplin, since the company was taken over by Edward Lampert a couple of years ago:
His woes, unlike those of most other investment managers, cannot be attributed solely to market turbulence and wrong-way bets that may soon right themselves. Much of the loss absorbed by his investors last year was a direct result of his hands-on management at Sears Holdings.
Since combining the two retailers (Sears and KMart), Mr. Lampert, 45, has raised prices even as he has cut capital spending and marketing budgets. The dearth of investment shows up in stores, many of which look shabby next to those of rivals like Target and J. C. Penney. Mr. Lampert’s major use of cash has been to buy back Sears Holdings’ shares.
And in 2008 he faces three problems that were only partly evident last year: belt-tightening by consumers, a falling housing market and a possible recession. “Sears is woefully unprepared to handle this kind of consumer spending slowdown,” said Bill Dreher, an analyst at Deutsche Bank Securities. “The underinvestment in stores has hurt sales, hurt customer good will and will hurt their long-term competitiveness.”
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