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…..