I can not figure it out.  For the last few days, I have been depressed, angry, sick to my stomach and unable to focus.  I have cried uncontrollably, kicked my dog and chased my cat around the house flicking  Dirk Nowitzki basketball trading cards at her.

To top it off, this morning I woke up sitting naked in an seat in an empty American Airlines Center screaming “KMART’S A THUG”, again flicking.  This time flicking imaginary beer and popcorn on imaginary Denver Nuggets fans seated next to me.

After posting bail, I rushed home to see if I could self diagnose the mysterious symptoms that have overtaken my body.

I did an exhaustive Google search. I  researched medical journals. I even scheduled an emergency visit with a sports fan psychologist.  Much to my relief, I finally found the answer in an obscure article entitled “Sports Fanatic Psychosis, Diagnosis and Treatment“.  The article was put out by the South End Of The Island Of Grenada School Of Medicine. I am suffering from “Season Over Syndrome“(SOS). It turns out there are seven stages of “SOS”.

1.  SHOCK AND DENIAL

This feeling is generally manifested in a  heightened awareness of situations and individuals that will be left behind after the season is over.  You find yourself with overwhelming feelings of sorrow and sympathy for players making millions of dollars per year who are already sitting on desert islands sipping Cuba Libre drinks, banging hot women and partying with the Dos Equis Man as they live vicariously through themselves.

2. PAIN AND GUILT

As your body goes through the withdrawal of countless nights of playoff drinking and debauchery, you suddenly realize that your condo has not been cleaned in weeks. Your  unwashed laundry stinks.  Your girlfriend has left you.  You can longer see your feet or your “Johnson” from drinking and eating so much.  The fat slob in the mirror overwhelms you with pain and guilt.  The rest does not bother you that much.  That’s what maids and strip clubs are for.

3.  ANGER

Your guilt turns to increasing anger as you realize that you look like shit, your baseball team sucks, football is months away and your your now eliminated NBA team wont have a 1st round draft pick because they traded it for a Slobovian point guard named Meloosh.

4.  DEPRESSION AND LONELINESS

Just as all your friends think you are over the disappointment and ready to move on, you become very reflective of the season that was.  You begin inviting your friends over to show them your new Tops Basketball Card Collection and  watch endless reruns of movies like Hoosiers, The Fish That Save Pittsburgh, Celtic Pride, Like Mike, And Space Jam.  After one night of this, your friends begin discussing an SOS intervention behind your back.

5.  FEELING BETTER

You start to adjust to a boring summer without the benefit of good tickets to playoff games to pick up hot women. That’s ok though because the night club scene is improving.  Out of contention and out of work NBA players, groupies and douchebag wannabes converge on the club scene  with guns, entourage and gangsta attitude in tow.  “Celebrity Beatdowns“  are a weekly nightclub event.  They help wean you off the Jerry Springer and TMZ addictions that are  symptoms of SOS.

6.  RECONSTRUCTION AND REDEMPTION

November is rapidly approaching. Time to get your body back shape for the long grueling season. Pre-game happy hours, post game happy hours, post game private parties.  An intense heckling regime to be rehearsed.  Have to look good for the Jumbotron or any impromptu national television appearances.  The gym is now your best friend. Your team is not looking good for the new year so you have to be looking extra buff.  It’s exponentially harder to pick up chicks after a loss. You think Meelosh will be a bust.

7. ACCEPTANCE AND HOPE

As opening day gets closer, the trash talk of a new season begins. You once again begin to feel the hope of a the promised NBA title  despite a bunch of crappy mid-level exception signings, no bench and Meelosh as your starting center.

You will once again experience the joy of basketball, women and making a complete drunken idiot out of yourself all in the name of basketball fandom.  If the team wins you might even get laid this year.  Meelosh is coming around. Life is good.

In the war for retail supremacy top Sears Holding brass continue to desert faster than members of the Iraqi military.  After parting ways with  Yum alum Alwyn Lewis, they have now seen the defection of the SVP of Home Services Mark Good and marketing chief Maureen Maguire.  They also lost Lands’ End chief David McCreight, who took the No. 2 post at Under Armour Inc. and Bill Stewart, Kmart’s chief marketing officer, who left in June to work on a campaign to protect gay marriage in California.  I met  both Maguire and Stewart last year.  My impression was that regardless of talent, it was difficult for them to function in an environment whose structure was defined by chaos.  Sears still has some some talent hanging on in the likes of head of Kmart retail chief Don Germano  and SVP of Supply Chain Robert Phelan.   How much longer they will tolerate Eddie Lampert’s “top to nowhere” management style or end up being the newest scapegoats is anyone’s guess.

Alywn Lewis left almost a year ago and has not been replaced.  His position has been filled in the interim by W. Bruce Johnson whose primary experience was in supply chain.  Word on the street is that Johnston is not a fan favorite of employees and is considered almost as aloof and out of touch as Lampert.   This can not be a good sign for quarterly numbers expected to be released shortly.  We should see another terrible quarter on the heels of the biggest quarterly loss since hedge fund guru Eddie Lampert took over the helm 3 years ago.

Sears top revenue generators are a telling sign of the bleak future.  While still the largest supplier of home appliances their market share is on steady decline to the benefit of of competitors such as Lowes and Home Depot offering better service and more aggressive pricing.  The loss of Home Services SVP Mark Good may be just as telling. His Home Services division was responsible in part for installing and repairing Sears appliances.  Good was widely considered one of Sears top talent acquisitions.  He was unable to turn around  a division already under constant attack for terrible customer interaction, shoddy response and scant part availability.  We could gasp and say that this is shocking and reflect on the once mighty Sears that supplied our parents and our grandparents homes but this spiral into complete retail irrelevancy was pre-destined from the moment Wall Street Hedge fund guru Eddie Lampert took over as majority shareholder and CEO.

In the retail industry same store sales is what Wall Street looks at to gauge how well as retailer is doing. It is not the final word in how well a store is really doing but for better or worse it is the bench mark. Edward Lampert prefers to use EBITDA (Earnings before interest, taxes, depreciation and amortization) as his benchmark. That is well and good for the egg heads. You can have all the MBA ‘s in the world working for you but in the end someone still has to want to walk into your store and buy something. That someone then has to want to come back. That someone then has to want to tell others to come and check it out.  Its called customer evangelism.   That is the cycle every retailer strives for.  You want someone to buy your product and tell others to buy it.  You want someone to like your “brand” and tell others to check it out.  When consumers stop participating in that cycle irrelevancy follows.

In what could be the most telling sign of the last gasp of a once proud retail giant, Lampert did something he swore up and down he would never do to generate revenue.  Sears in true pre-bankruptcy Kmart form has engaged in across the boards Midnight Madness sales and other sales gimmicks designed to rid Sears of an enormous amount of excess inventory. Sears has been in continuous mark-down mode ever since.  We can expect this to be reflected in their 2008 2nd quarter numbers.  Never-ending sales, markdowns and gimmicks are signs of flailing companies not healthy ones.

Ironically there is a book out entitled “Kmart’s Ten Deadly Sins: How Incompetence Tainted An American Icon. (Kmart is now owed by Sears Holding Corp) In this book one of the specific areas of incompetent actions discussed repeatedly in leading to the downfall of Kmart was the use of excessive sales and clearance gimmicks to generate revenue and get rid of excess inventory and how this is a major sign of financial distress. Even more ironic is the book was given to me by a high level Sears employee when I was at their headquarters last year. I would have thought they were all reading the book to learn from prior mistakes. Eddie’s reign over Sears to  date has been an example of mistake after mistake.  Mistakes of arrogance, ignorance and simple stupidity.  Case in point-Eddie does the smart thing.  He brings in Alwyn Lewis from Yum who had a proven track record in both generating revenue and employee relationships.  He then in true monarch form, gives Alwyn zero responsibility, zero direction and zero autonomy.  This formula  will always translate into zero productivity.  He basically says:

“This is what I want to see happen but you cant make it happen without talking to me first and I don’t talk to anyone.”

Not long ago  I had dinner with an employee at SHLD who reported directly to Eddie Lampert. The employee confided to me that while everyone knew what Alwyn was brought in for, the general consensus was that no one knew what he was in fact doing or what his responsibilities were. He seemed to be a guy just “floating” out there with no real focus or impact.  Was that Alwyn’s fault? Absolutely not. I believe he was extremely qualified to help turn Sears around. I also believe that they will not find anyone out there more qualified to replace him which is why his position is still vacant.  When they do find someone it won’t matter.  The problem was not Alwyn.  The problem was Eddie Lampert’s total lack of understanding of retail and how to delegate.  He did not have that understanding then and unless he has undergone an epiphany in the last year, there is no reason to believe anything will change no matter who he sticks in there.

Eddie is about control. Eddie is about spreadsheets, data, algorithms, stock buybacks, numbers hocus-pocus, Ivy League MBAs, the latest Wall Street Journal book of the month, advance teams, posses, and entourages. In other words, he is completely out of touch.  In all fairness to him, he didn’t suddenly one day lose touch.  All those things he is about have made him a huge success in the hedge fund numbers crunching world where you don’t have to leave your office and don’t have to talk to anyone but the crunchers.  Until Eddie is ready to be a “regular guy” talking to “regular customers”  in the trenches the only big change at Sears Holdings will be when he unloads bits and pieces and finally dumps at “Midnight Madness” prices.

At this point, does anyone really even care?

 I’ve said it before. I believe Sears Holdings is toast as we know it.  The writing has been on the wall and is still being written. Eddie Lampert’s change to self contained profit centers is sleight of hand simply to categorize value and manage assets in preparation for a gradual sell off. 

What value does Sears really have now other than intellectual property/brand name?  We will not even talk about Kmart.  It has sunk below completely irrelevant.  It is not that it is not savable.  It is more simplistic than that.  Eddie Lampert will never ever ever invest the capital in Kmart that is needed to save it and he should not. 

It’s like that 100 year old deteriorating home in an up and coming neighborhood.  If it has not been kept up over the years, it eventually becomes so broken down than it would cost more to renovate than you could ever re-coup in your investment.  It is a “tear-down”.  That is what Kmart is… a tear-down.  The big difference is that a tear downs generally maintain its good real-estate value.   That’s why you tear it down.  Whatever you re-build re-coups the investment. The value of Kmart real-estate has been decimated.  The precise thing that made Eddie Lampert look like a genius in is now an albatross around his neck.  A bunch of junk real estate that nobody wants.  Unfortunately, the biggest Albatross around the neck of Sears is Eddie himself.

 Kmart does have some very good talent at the top. I have met some of them. Very smart guys. Unfortunately things have gotten to the point where nothing but an “immaculate resurrection” will do the trick and as good as these guys may be on paper, none of them walk on water.

So why should Wal-Mart purchase Sears.   Sears has some kick ass brand names that pretty much defines its value, particularly in the hardware/tool department.  Wal-Mart could do wonders with these brands.   Of course there is also the issue of whether these brands would want Wal-Mart who takes a draconian approach to their suppliers.

Eddie should do it now while   there is still intrinsic value to the operation.

 So Alwyn Lewis is out at Sears.  Not really suprising.  About 8 months ago I had dinner with an employee at SHLD who reported directly to Eddie Lampert.  The employee confided to me that while everyone knew what Alwyn was brought in for, the general consensus was that no one knew what he was doing or what his responsibilities were. He seemed to be a guy just “floating” out there with no real focus or impact.  

Was that Alwyn’s fault? Absolutely not.  I believe he was extremely qualified to help turn Sears around.  I also believe that they will not find anyone out there more qualified to replace him.  I also believe that even if they do it won’t matter…. Why? The problem was not Alwyn.  The problem was Eddie Lampert’s total lack of understanding of retail and how to delegate.  He did not have that understanding then and unless he has undergone an epiphany in the last few months, there is no reason to believe anything will change no matter who he sticks in there.  

Eddie is about control.  Eddie is about spreadsheets, data, algorithms, stock buybacks, numbers hocus-pocus, Ivy League MBAs, advance teams before he goes anywhere, posses, and entourages. In other words, he is completely out of touch.  In all fairness to him, he didn’t suddenly one day lose touch.  All those things he is about have made him a huge success in the hedge fund numbers crunching world where you don’t have to leave your office and don’t have to talk to anyone but the crunchers…….

Until Eddie is ready to be a “regular guy” talking to “regular customers” the only big change at SHLD will be when he unloads bits and pieces and finally dumps…..