Sears is a mess, but in his annual letter to shareholders today, Chairman Eddie Lampert compared the company with Apple. (Read the entire letter here)
Toward the bottom of the rambling, 21-page letter, which includes concessions of “missteps,” Lampert launches into a discussion of Apple and Microsoft: how one (Microsoft) buys back stock and the other (Apple) doesn’t. (Sears is the poster child for share repurchases.)
As a result of share buybacks, he says, Microsoft’s market cap lags Apple's.
“The point is that the attention some have placed on overall market value rather than per share value is misplaced from the vantage point of an investor in a company, “he says. “Sheer size may make for interesting headlines, but it may distract from doing the optimal things for shareholders of a business.”
Continuing one, he says: “At Sears Holdings, we seek to create long-term value for shareholders. Like Apple, we seek to do so by improving our operating performance, innovating and delighting customers.”
Then he quickly adds, “In this area, we have fallen far short of our goals and what we aspire to do in the future.”
My take: The letter is actually quite good. It's as if Lampert is unleashing a year’s worth of pent-up thoughts—good, bad and ugly. Hard to argue with the candor over the company’s missteps, especially the appliance business. It’s almost as if he’s beating himself up. “While this business is clearly highly dependent upon the macroeconmic environment, our own missteps exacerbated the situation…”
Noting that Sears holds the leading share in appliances, he goes on to say: “Greater share is not sufficient to win; to be a leader requires constant innovation and reinvention, something a leader is best positioned to do, but can often fail to leverage.”
With the likes of Home Depot diving head first into that business (appliances, in fact, were a bright spot in Home Depot’s results), you can only wonder for Sears—no matter what it does: Too little, too late.
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