Shares of Sears Holdings Corp. fell more than 7 per cent in early trading on Tuesday after the company said Chairman Edward Lampert would take over as CEO from Louis D’Ambrosio, who is stepping down due to a family member’s health issue.
The stock’s decline came even as Sears sales for the holiday shopping season were not as bad as some analysts had feared. Sears’ domestic comparable-store sales for the nine weeks ended Dec. 29 fell 1.8 per cent, the company said on Monday.
By contrast, Sears’ U.S. same-store sales fell 3.1 per cent in the third quarter.
“Preliminary results for its fourth quarter, which showed improvement over third-quarter trends ... were in line to slightly better than our model,” said analyst Gary Balter of Credit Suisse.
Mr. Lampert and his ESL Investments hedge fund held a combined 55.5 per cent of the stock of Hoffman Estates, Illinois-based Sears as of Nov. 30, according to Thomson Reuters data. That leads some to question how much the departure of Mr. D’Ambrosio will affect the leadership of the company. Before Mr. D’Ambrosio was hired in 2011, Sears had operated under an interim CEO for more than two years.
“At the end of the day, there is only one person who makes the big decisions ... and that person is Mr. Lampert,” Balter said. “Giving him an additional title does not change that reality and, in our opinion, does not change the direction of the company.”
Sears faces stiff competition from Wal-Mart Stores Inc and Target Corp, especially in areas such as electronics. While Sears’ Kmart discount chain has managed to keep some budget-conscious U.S. shoppers, the Sears chain has been losing market share in appliances and apparel.
Sears has been closing stores, tightly managing inventory, selling some real estate and shedding assets to turn its business around. It spun off its Orchard Supply Hardware Stores unit in December 2011. Last year, it announced plans to sell some prime real estate and spin off its Sears Hometown and Outlet businesses and certain hardware stores.
Sears shares were down $3.25 at $39.67 in morning Nasdaq trade.
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