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Last updated: February 28, 2013 9:40 pm
Eddie Lampert, the hedge fund manager who controls Sears Holdings, predicts upheaval in US retail as chief executives are ousted in a sector where companies – including his own – are searching for new ideas in the face of weak sales.
Mr Lampert, who became Sears chief executive last month, forecast “significant levels of management turnover” on Thursday as his department store and Barnes & Noble, the bookseller, both reported falling sales in the crucial Christmas quarter.
“The talent needed to transform companies in the retail industry today and the persistence required to see transformations through are not easy to come by,” he said in a letter to shareholders.
Gap bucked the negative trend by reporting a 4 per cent rise in North America sales for the quarter to February 2 as well as a 61 per cent jump in net profit to $351m, which exceeded expectations and was helped by lower cotton prices.
Mr Lampert noted that in the past year several other retailers in difficulty had announced changes to their chief executives or presidents, including Best Buy, JC Penney, Toys R Us, Staples and Safeway.
His comments came as Best Buy and its shareholders waited to hear if Richard Schulze, the struggling electronics chain’s estranged founder, had assembled private equity partners to buy the company ahead of a deadline set for Thursday.
Since Mr Lampert created Sears Holdings through a merger in 2004, it has become the most long-awaited turnround story in a retail sector marked by financially stressed consumers, a surplus of bricks-and-mortar stores, and growing ecommerce.
In the quarter to February 2, Sears posted a 1.6 per cent decline in like-for-like sales compared with a year earlier and total sales of $12.3bn. It reported a $489m net loss, against a $2.4bn loss a year earlier.
Mr Lampert, whose ESL Investments owns 56 per cent of Sears, said its performance was worse than it should be but no longer deteriorating, and stressed that Sears was closing its worst stores. Its shares fell 5.8 per cent to $44.72.
In his letter he wrote: “Increased price transparency, better customer-level information and analytics, faster supply chains and the advent of . . . social media are all contributing to making running a large retail organisation more complex.”
Barnes & Noble, the book retailer, on Thursday reported an unexpected net loss of $6m in the 13 weeks to January 26 compared with a profit of $52m the same period a year ago, while its total sales fell 8.8 per cent year on year to $2.2bn.
Its Nook Media business, which comprises its ereader and ebook operations, posted falling sales and a loss before interest and tax of $190m. The company said it was looking for ways to “significantly reduce” Nook Media’s expenses.
Late last year Pearson, owner of the Financial Times, spent $89.5m to buy a 5 per cent stake in Nook Media.
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