Lampert role still unclear as Sears seeks new ceo

HOFFMAN ESTATES, ILL. —Who Sears will find to take over the permanent ceo spot, now that the Aylwin Lewis reign has come to an end, is the linchpin in a larger consideration about how authority will be apportioned in a company increasingly associated with one-man rule.

A Sears statement about the management change noted that chairman Edward Lampert would lead the board’s search for a permanent ceo. The company asserted that it would focus on “identifying and attracting talented executives to the company,” leading to speculation that it will seek out a high-profile retail executive. Almost immediately, names including former Wal-Mart and Mervyn’s executive Vanessa Castagna were bandied about, with one supplier telling Retailing Today that he hoped Sears would grab someone from rival Target, although the executive situation there seems to have stabilized with the announcement that Gregg Steinhafel will take over the ceo spot on the upcoming retirement of Bob Ulrich.

The company further stated that, after the appointment of Bruce Johnson, evp of supply chain and operations, as interim ceo, Lampert would no longer have any direct reports, although Johnson will continue reporting to the office of the chairman. The shape of that statement tends to spotlight the recently announced reorganization of Sears Holdings’ management into five largely autonomous divisions, and again suggests that the company wants someone in the ceo spot who will take hold of the major operational levers and shoulder the responsibility for corporate performance.

An executive with a strong retail performance could restore some confidence in Sears management, not to mention take some heat off Lampert. Lewis came from a foodservice background, coming over to retail from Yum! Brands, and Lampert, despite having control of AutoZone, is a financier and hedge fund manager.

Sears hasn’t exactly posted stellar results over the past few years under Lampert and Lewis. Yet, possibly because of Lampert’s reputation in finance, Wall Street deferred judgment on his leadership, at least until April of last year. From that time, when shares reached a high of $195.18, Sears stock price fell to $84.72 in mid-January after it cut its earnings forecast and began a somewhat confounding pursuit of Restoration Hardware.

Sears shares rebounded almost immediately thereafter on news of restructuring. The new structure includes five types of units organized to sharpen the focus of each on core categories and capabilities. Sears defined them as operating businesses, support, brands, online and real estate.

The operating business unit takes responsibility for home appliances, electronics and apparel, the company stated. Support units will assume operational and administrative responsibilities in marketing, store operations, customer strategy and finance as regards the operating businesses. The brand units are charged to grow the value of the Sears Holdings portfolio, while real estate and online business units will focus on increasing the sales productivity of the company’s physical and cyber real estate.

In the more recent aftermath of the restructuring announcement, Sears share price has hovered around $105 as Wall Street awaits its chance to assess the changes.

Rob Plaza, a Zach’s analyst, said the Street needs to be convinced that Sears is serious about retailing, noting that its share price tracks real estate more than retail trends. Given the focus on real estate values—and real estate was the reason many observers thought Lampert got involved with Sears in the first place—it seems as if eyes continue to remain on the chairman. It would take a significant figure to diverge them.

Yet, Plaza acknowledged that talking a star-type retail executive into taking the ceo job might take some serious convincing. “Nobody wants to go into there as a retailer, because they don’t know how much power they’re going to have,” he said.