Sears Holdings Corp. CEO Eddie Lampert on Monday took to the company’s blog to complain that tool maker One World, which manufacturers some of the company’s Craftsman tools, is attempting to renege on its contract and threatening to sue Sears in court. "We will not simply roll over and be taken advantage of — we will do what’s right to protect the interests of our company and the millions of stakeholders we serve," Lampert said.
Lampert defended Sears’ track record paying all its vendor bills, and said, as he has in the past, that rumors to the contrary only give vendors leverage to negotiate more favorable terms. The real reason One World is trying to get out of its Craftsman contract, he said, is to free up capacity to make more tools for other brands. He noted that Sears will “take the appropriate legal action to protect our rights and ensure that One World honors their contract.”
Meanwhile, Sears appears to be shuttering more Sears and Kmart stores than had been previously disclosed, according to Business Insider, which has been tracking the company's announcements of individual store closings to local media in various areas of the country. One World and its parent company, Techtronic Industries, didn't immediately return Retail Dive’s requests for comment.
Sears Holdings executives, including Lampert, have often taken to the company's blog to refute rumors about store closings, vendor tussles and even the utter collapse of its Kmart division. Lampert in particular has blasted the media and what he calls "deliberately unfair” reports that the company is having trouble meeting its obligations.
But by and large, the media is reporting facts and figures from analysts and the company's own financial disclosures and press releases. In December, Sears reported its 20th consecutive quarterly sales and revenue miss, and announced then it would accelerate the closing of unprofitable stores to combat declines. The company this year also sold its popular Craftsman tools line to Black and Decker for $900 million and has begun outsourcing its Kenmore home appliance brand.
In March, Sears expressed diminished hopes in its ability to continue operating, according to its annual report filing with the Securities and Exchange Commission. That alone might make vendors nervous, but many analysts have also signaled that the company is spiraling out of control.
While Lampert and Sears defend layoffs and other restructuring efforts as a sober path back to viability, in practice the moves have served to pay debt and stave off death. Rather than devising a plan to rebuild store traffic and drive growth (its much touted and somewhat successful Shop Your Way omnichannel effort notwithstanding), Sears continues to rely on financial moves that merely prop it up (most notably a series of loans from Lampert’s hedge fund), Greg Portell, lead partner in Retail Practice at consulting firm A.T. Kearney, told Retail Dive earlier this year.
In fact, Sears’ financial performance "remains extremely weak which is prompting the acceleration of cost reductions by an additional $250 million," Moody's Vice President and Senior Analyst Christina Boni said in an email to Retail Dive last month. "Its effort to sell real estate which has produced over $700 million of bids currently will enhance liquidity, but accelerates the timeline required to stem operating losses as it asset base diminishes."
It wasn't a huge surprise when rumors (eventually confirmed) of massive layoffs at Sears’ corporate headquarters began circulating in February. Lampert eventually released a letter to employees, published by Business Insider, stating that 130 positions were eliminated and iterating much of what a spokesperson also later told Retail Dive.
Lampert's defense of the company at times appears to come from left field. Last week at the company’s annual shareholders meeting, part of Lampert's speech stipulated that Sears has plenty of support from shoppers. "We don't need more customers," he said, according to reports of the meeting, uttering a sentence rarely, if ever, heard in retail. "We have all the customers we could possibly want."