Sears CEO cites pension costs for not boosting store investment
By Dhanya Skariachan
NEW YORK (Reuters) - Sears Holdings Corp (SHLD.O: Quote) Chief Executive Edward Lampert admits the retailer's stores could be improved, but partly blames higher pension obligations in recent years for taking resources away from its stores.
"There are many of our stores that are in absolutely perfect condition. Could they be better? Of course. Could they be updated? Of course," Lampert said in a interview on Thursday, after Sears posted a steeper-than-expected quarterly loss on weak sales and bigger discounts.
Lampert, who has faced criticism in the past for not investing enough in his company's stores, is also the largest shareholder and the chairman of the operator of Sears department stores and the Kmart discount chain.
Sears' high pension costs, which Lampert said were the result of artificially depressed U.S. interest rates, take resources away from the stores, he said, adding that many Sears rivals did not even have pension plans.
Sears has allocated about $1.6 billion during the last five years to cover pension plans and will have to spend another $350 million this year.
While Sears has been investing in e-commerce and its "Shop Your Way" rewards program, critics contend its stores need more investment and attention, as the company still derives a larger chunk of its revenue in stores rather than online. Also, rivals like Target Corp (TGT.N: Quote) spend a lot more on their stores.
"It is not just in isolation what we want to do. We have got to manage a business with obligations to pensioners, obligations to our employees, obligations to vendors," Lampert said.
"We have got a lot of people who depend on a pension from Sears, which has hampered our ability to be more aggressive," he said. Continued...