Some Very Creative Excuses For Lousy Management

Implications: Eddie Lampert came up with about a half dozen excuses for lousy performance that in 40 years of listening to retailers use excuses about the weather, fashions, the weather, early or late holidays, the weather, and many other tired cliches, I had not heard before. While in this annual meeting he almost sounded as if he knew something about retailing, he spent most of his time backpeddling on comments he had made in previous meetings.   I found it facinating that he seemed to take some comfort in the fact that many of his competitors had added debt to their balance sheets in order to modernize their stores and add new units. Eddie on the other hand was pleased that they would not modernize their stores or take on more debt so that they could "weather any financial storm that comes our way". 

Analysis: By continuing to refuse to upgrade his stores and continuing to look for the "big ideas to put our capital behind" Eddie is at least being consistent.  However with same store sales falling for the past eight quarters and likely to soon fall for the ninth, his reluctance to do more than "look for big ideas" is a bit puzzling.

What is less puzzling but even more bizarre is one of his largest shareholders and former critic, Mr. Ackman, offering only mild criticism of SHLD's lack of transparency and then claiming the stock is "undervalued"! After all this is the same guy who said SHLD's real estate alone is worth $20 billion in collateral value, so he must know what he is talking about.

Between Messrs. Ackman and Lampert, (not exactly the J.C. Penney and Stanley Marcus of retailing) using their best retailing knowledge to try to turn around what some of the best retail minds in America have failed to do in the last ten years, it now appears that we need only wait until after the current recession to see some positive results from all the brilliant work these two great minds have been putting into the turnaround effort.

I do not plan to hold my breath while waiting for the "big ideas" to work their magic.