Chairman Says Sears is in Good Shape

Hoffman Estates, IL, April 13, 2006--Sears Holdings chairman Edward Lampert assured shareholders Wednesday that the company is very strong financially despite sagging sales and is working hard to improve its Kmart and Sears, Roebuck & Co., stores. Just over a year after the combination of the two slumping retailers, Lampert was upbeat about the stores' prospects at the company's annual meeting but did not provide a blueprint for what he envisions for the long-lagging brands. "In terms of vision, flexibility and adaptability is what it's all about," he said during two hours of fielding questions from the approximately 100 shareholders who attended the meeting at company headquarters. Many industry observers have speculated Lampert would ultimately like to turn Sears Holdings into an investment giant along the lines of Berkshire Hathaway Inc., a company he admires, and take it far beyond retail. But the billionaire chairman, who runs Sears from the Greenwich, Conn., home of his ESL Investments hedge fund, again did little to tip his hand beyond indicating that fixing the stores is the top short-term priority. "We are a very financially strong company, and we're constantly evaluating our options," he said. "If an environment was rich for making acquisitions, we might do that. If we found that things we were doing in the stores weren't working so well, we might accelerate the rollout" of retooled stores, he added. Turnout was much smaller and the shareholders more supportive than the sometimes-raucous crowd that turned out in Hoffman Estates in March 2005, many upset by the acquisition of more than century-old Sears by a discount retailer not long out of bankruptcy. While some criticized or expressed concern Wednesday about weak sales, the crowd was dominated by professional investors from financial institutions who trust Lampert's impressive track record as an investor and in resuscitating Kmart. Lampert acknowledged the company had made numerous mistakes, including product mix, with its short-lived experiment last year with Sears Essentials--the concept that represented somewhat a hybrid of Kmart and Sears. But he said Sears products have been successful in Kmart and stressed that "we're not just cutting costs." but also are adding products and revamping basic operations at stores. The company will push ahead with the Sears Grand concept this year and also accelerate the pace of Kmart store renovations nationwide, he said. But importing the Martha Stewart brand from Kmart to Sears stores isn't currently planned despite the products' popularity. Lampert said the company has been unable to negotiate a long-term deal with Martha Stewart beyond the four years remaining on its contract and doesn't want to commit to the products for just the short term. Asked to elaborate on the reasons for the company's proposed full acquisition of Sears Canada, he said the Canadian unit has a much better chance of being successful if it's integrated with the parent. "We can buy together, we can do a lot from an information systems standpoint together," he said. "Working together, we have a lot of opportunities."

Related Topics:Shaw Industries Group, Inc.

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