Case Study Of Eddie Lampert, Chairman And CEO Of Sears And Kmart
Eddie Lampert is one of those CEO about whom none of us even bother to talk about anymore. For three consecutive years he has been on the worst CEO list. He is the man who engineered the disastrous merger between Sears and Kmart that continues to unravel two formerly great American brands. The company is still shrinking, accumalating record losses and disappointing investors. There stock was down 35% in 2015 and continues to trade low.
Who is Eddie Lampert?
Eddie started his career with Goldman Sachs in their risk arbiterage department. After 4 years with the bank, he started a hedge fund company (ESL Investments) and ran it sucessfully for 20 years. During these 20 years his company generated annualized reture of more than 20%. He was a noted businessman and was compared to Warren Buffett in his investment ability. In 2003 Eddie gained control of Kmart through his hedge fund …show more content…
Lampert’s holding company holds about 50% of the Sears Holding Company, making him the largest share holder of Sears.
What went wrong:
Once Lampert became the Chairman he began share buy backs and defended that it will help with the liquidity for sharholders and increase the ownership of Sears investors. However these buy-backs resulted in reduction in spending. This spending cut resulted in reduction in promotions and advertisement of the company. Even though Lampert promised to revive the company, he was unable to keep his promise. This is partly due to the lack of his understanding the retail industry that is highly dependent on valuing, listening and serving its clients. The employees are an integral part of delivering this good customer experience. Eddie Lampart failed to understand this basic framework of retall industry and let his company slowly bleed to death for the benefit of its major