Sears CEO's exit raises concerns about turnaround

Tue Jan 8, 2013 3:26pm EST
 
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By Dhanya Skariachan

(Reuters) - Shares of Sears Holdings Corp SHLD.O fell more than 5 percent on Tuesday after the retailer said Chief Executive Louis D'Ambrosio was leaving the company, raising concerns that the drive to improve its namesake stores could stall.

Chairman Edward Lampert will take over as CEO in February from D'Ambrosio, who is stepping down due to a family member's health issue. D'Ambrosio, hired in February 2011, has been credited by some analysts for recent improvements in Sears' online business and customer loyalty program.

"While we acknowledge Mr. Lampert's insight and expertise when it comes to 'financial engineering,' we are concerned about his lack of merchandising experience at time when the retailer is struggling to turn around its core Sears and Kmart chains," said Evan Mann, senior high yield analyst at Gimme Credit, an independent research service on corporate bonds.

S&P analyst Jason Asaeda also saw D'Ambrosio's plan to step down at the end of the current fiscal year "adding to Sears' turnaround execution risk."

The operator of Sears department stores and the Kmart discount chain is in the middle of a turnaround after suffering from declining sales since 2005, when Lampert merged the two iconic U.S. retail chains in an $11 billion deal.

It company has been closing stores, tightly managing inventory, selling real estate and shedding assets to turn its business around.

The news of D'Ambrosio's departure came as Sears reported sales for the holiday shopping season that were not as bad as some analysts had feared. Sears' domestic comparable-store sales for the nine weeks ended December 29 fell 1.8 percent, the company said on Monday.

By contrast, Sears' third-quarter U.S. same-store sales fell 3.1 percent.   Continued...

 
A sign for the Sears department store is seen at Fair Oaks Mall in Fairfax, Virginia, January 7, 2010. REUTERS/Larry Downing