Sears' Eddie Lampert Is "Worst CEO of the Year"

The fact that Eddie Lampert isn’t even a CEO didn’t stop Herb Greenberg at Marketwatch from slapping the coveted “Worst CEO of the Year” award on him. Eddie beat out such unemployed luminaries as Chuck “Whoops” Prince, formerly of Citigroup, and Ed “I Hate My Customers” Zander, formerly of Motorola.

There was no mention of Mark “Anybody Wanna Buy A Subprime Lender?” Ernst, of H&R Block. Or JetBlue’s David “Mortified” Neeleman, a nice guy who apologized himself right out of a job.

Angelo “You Can Afford It” Mozilo
of Countrywide was scoffed at a bit, as was Kerry “KerKil” Killinger of WaMu. Mesa Airlines “Jonathan Ornstein received the most write-in votes by employees, investors and employees of competitors.” Impressive.

And no, Phil “Pink Slip” Schoonover of Circuit City didn’t win either, even after firing the last 6 people at Circuit City who knew anything about televisions.

It was Chairman Eddie Lampert of Sears Holdings, because he apparently has absolutely no idea how to run a bunch of stores:

Lampert’s mantra has been profits over sales, which makes sense if it works. As recently as March, in his shareholder letter, he suggested better times were imminent when he said, “We believe we have stabilized Kmart’s Ebitda and are now in a position to grow from that base.” But retailers, especially those trying to improve themselves, require considerable capital infusions to drive sales.

So far, for all of Sears, including Kmart, the strategy has failed miserably. Not only have same-store sales (which Lampert says are “overrated” as a metric) gone deeper into the red, but gross margins, Ebitda and operating income for Kmart are also going in the wrong direction.

Yes. “How much stuff a store is selling” is overrated as an indicator of the health of a store. Excellent.

Worst CEO award goes to Sears’ Lampert [Marketwatch]

Comments

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  1. JustAGuy2 says:

    It is overrated. Think of it this way: if widgets cost $9 to make, would you rather sell 1000 widgets at $10 or 500 widgets at $12?

    1000*(10-9)=$1000 profit

    vs.

    500*(12-9)= $1500 profit.

    I’ll take column two, thanks.

  2. IndyJaws says:

    The company I used to work for has a CEO who had one of the best lines ever on the topic:

    “There is no nutrition in a bowlful of volume.”

  3. hollerhither says:

    @JustAGuy2:
    True, but you also have to have attractive stores that have products (high and low margin) that people want to buy, and give them a great experience that keeps them coming back. That includes a great *online* experience too, these days. Gutting customer service and back-end operations might look great on paper; it’s done incredible damage to the brand.

    This happens time and time again. New guy licks the boots of the shareholders and BOD. If he’s lucky, he produces a short-term profit jump through catastrophic cuts. Where does the company end up in the long run? Toxic brands with demoralized employees and pissed-off customers don’t have bright futures.

    Then again, these guys are usually riding off into the sunset with their big fat bonus/severance payouts, why should they care.

  4. cerbie says:

    @JustAGuy2: that assumes you are the only store selling widgets. Everyone sells widgets. Why get it for $12 at Sears when you can get it at $10 at Wal-mart, and otherwise have the same experience? Publix, Ace, etc., don’t get bottom dollar most of the time, but offer a superior experience to say, trying to find it all at Walmart.

    If you want to sell them over $10, when somewhere else sells them for $10, you need something more to make people come to your store. I’m not paying 20% more just because your store is named differently.

  5. cerbie says:

    @hollerhither: just once I’d like to see a big CEO drive a corporation into the ground and be forced to leave with nothing. While not a shareholder, as a user of HP products past and present, it irked to me to no end to see Fiorina given a treasure chest as a firing gift.
     
    Jet Blue was dissappointing, as well, where the guy could have turned it around from, “Oh, so sorry, we’re really sorry about that, bye,” to, “I want to talk to everyone involved in making that flight not happen how it did, and prevent it from ever happening like that again. Give the passengers a gift card to Red Lobster or something while we’re at it.” Knowing you can’t do aspect X of that job means you find someone who can, right? As a CEO, is he not in the position of delegating things? Aacknowledging that already puts you a step ahead of someone who may be better at it but not know a major leadership weakness of his own. Arrgh! The cycle repeats.
     

    Instead, the confident CEOs just like to ruin things.

  6. JustAGuy2 says:

    @cerbie:

    Very true. All I’m saying is that just having higher sales doesn’t necessarily mean higher profits, which are all that really matter. You don’t want to get 100% market share, just like you don’t want everyone to be your customer.

  7. Munsoned says:

    Ooo! Ooo! *Vigorously holding up hand*

    I think I know what’s wrong with Sears!!!

    [consumerist.com]

  8. liquisoft says:

    I guess I was always under the impression that making money was easy: have products people want to buy, sell them for a bit more than they cost to you, profit. What’s wrong with Sears/Kmart that they don’t get this?

  9. headon says:

    Why shouldn’t the worst CEO of the year run the worst company. Seems to me like a perfect fit.

    @indyjaws: Your CEO where you used to work is probably no longer employed. Volume works because you sell the product faster. The store is paid immediatly in cash or by the credit card companies and they don’t pay the manufacturer for 120 days. Thats the real secret of big retail. Milions of dollars of cash to invest. Similar to a bank float scenario. Man all CEO’s should know basic college business math and investment strategies.

  10. Gari N. Corp says:

    He’s an awesome CEO of a real estate company, just sucks at retail. He bought KMart and Sears based on the value of their real estate, which was very undervalued in their share price. He neither knew nor cared how they made the rest of their money, his protestations to the contrary notwithstanding.

  11. Sonnymooks says:

    I’m laughing so hard right now I am almost crying.

    For years Eddie Lamperts rep was that he was the next Warren Buffett.

    I’ve lost count of the business mags and newspapers that have said that.

    Its actually become his nickname (and he has the arrogance to match).

    The “next Warren Buffett” has been named worst CEO of the year.

    This is actually making me hysterical.

  12. Sonnymooks says:

    @IndyJaws:

    Its safe to say you did not work for wal-mart where the religion is the opposite.

  13. timmus says:

    @cerbie said: just once I’d like to see a big CEO drive a corporation into the ground and be forced to leave with nothing.

    Agreed!! Unfortunately I think here the fault is with shareholders for promoting a culture of tolerating this kind of BS. I’m mystified why shareholders aren’t satisfied with capping CEO pay at $10 million or so and putting the rest into capital investments, and throwing the CEO & board of directors out on their asses for going into the red.

  14. Sonnymooks says:

    @timmus: I’m mystified why shareholders aren’t satisfied with capping CEO pay at $10 million or so and putting the rest into capital investments, and throwing the CEO & board of directors out on their asses for going into the red.

    Its kind of like baseball free agency, you can cap it internally, but the CEO’s are free to go to whatever company can pay them the most (not much different then most jobs actually, just involves more money).

    And, alot of companies do cap the CEO pay, but because they want to keep their best executives, or hire the best guys to keep the company in the black, they use stock options as the incentive program.

    Larger companies are well known for poaching the best talent from smaller companies (this is really like baseball), by simply being able to pay more money, and if a smaller company has a cap, and a larger company does not, guess who gets whoever they want?

    FWIW, I am NOT saying they actually do get the best talent, they are paying alot because they think they are getting guys who are the best talent, and the competition for them, drives up their demands (and compensation). It does NOT mean they actually are worth the money they get paid.

  15. hollerhither says:

    @Gari N. Corp:
    Then I would say he also sucks at managing in general, because “awesome” people who find themselves in charge of an unfamiliar business know to hire in more knowledgeable talent and delegate to those people accordingly. You’re only as good as your staff.

    When are we going to see business leaders roll up their shirtsleeves, immerse themselves in the operation, and take some f-ing pride in their work instead of pillaging corporate expense accounts, dismantling pensions, and racking up stock options?

    @Timmus: Agree the fault is with greedy shareholders who encourage and reward this garbage. And it’s with corrupt, greedy opportunists who jump at the chance to “run” these businesses, knowing they won’t personally bear the consequences of their decisions.

  16. hollerhither says:

    @cerbie:
    Yup. Personal responsibility, what a concept. I guess the culture doesn’t encourage this, perhaps people think it makes them look “weak,” I don’t know.

    I cringe about the whole Fiorina thing because there are so many men who have pulled similar bs, but she’s easier to remember… I keep hoping to see more strong, ethical female CEOs who won’t sell themselves out, people who will be recognized as positive examples in the very way that she’s remembered as a negative. So far, not so much.

  17. marsneedsrabbits says:

    @JustAGuy2:
    But it isn’t that simple, since if you sell widgets at 10 dollars and make a buck, but sell them 2 dollars cheaper than anyone else, when I come buy to widgets, I’ll go to your store, and I’ll also buy a pair of shoes and some pajamas for my cat.
    If you sell your widget for 12 dollars, I may never make it into your store to see anything else and you get nothing.

  18. HOP says:

    sears is now a joke…..no mo sears for us…..

  19. z1rdarryl says:

    Sears Allways puts stuff on sale.
    So I only stuff from Sears if its on sale