Former Sears exec calls for retailer to liquidate

Fmr. Sears exec: Time to liquidate
Fmr. Sears exec: Time to liquidate

Former Sears executive Steven Dennis says now is the time for the struggling retailer to liquidate.

In a commentary on his blog last week, Dennis, a former vice president at Sears who exited the company in 2003 after about a decade, listed five reasons why the company should "stop the charade and embrace the inevitable." His points were:

  • It doesn't offer a value proposition.
  • It's lost its relevance in nearly every major category, while its competitors have gained ground.
  • After years of underinvesting in its stores, it has a lot of catching up to do, and it now would be unable to fund the necessary upgrades.
  • CEO Eddie Lampert "doesn't know what he is doing," and is investing in the wrong areas, such as the Shop Your Way loyalty program.
  • Its valuable assets, including proprietary brands Kenmore and Craftsman and its real estate portfolio, are becoming "less valuable every day."

Dennis joined The Neiman Marcus Group following his exit from Sears and now serves as an advisor at SageBerry Consulting. Dennis said none of his clients compete broadly with Sears. Sears, as a rule, does not comment on the circumstances behind the departure of former employees.

Customers leave a Sears store in Chicago.
Getty Images

Sears has closed hundreds of stores in the past decade, leaving more than 2,000 stores in its footprint, when accounting for both Sears and Kmart. More closings are expected.

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Lampert, who owns about a 50 percent stake in the company, emphasized on his blog following last week's shareholder meeting that turnarounds are different than transformations, and the company is taking measures to improve its profitability.

He wrote: "Turnarounds happen when a company succeeds again at doing what it had once done successfully before. Transformations are almost entirely different—they occur when companies adapt their business model to fundamental shifts in technology, competitive landscapes, government policies and regulations, or macro trends to serve their customers [or, in our case, members] in new ways. Over the last decade, incidentally, Sears and Kmart have faced all of the challenges I just listed."

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Lampert continued, "Turnarounds are challenging, but transformations are even harder because not everyone sees the direction you're heading in or your destination. After spending our annual meeting with shareholders, associates, and other partners, however, I am hopeful that looking carefully at other companies' transformations sheds more light on the actions we are taking and why."

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He also asked people to remember the transformations that took place at Apple, General Dynamics and Eastman Kodak.

"I want to be clear that I am in no way saying that Sears Holdings is just like any of these companies, but there are lessons to be learned from them," he said.

Delivery wars ahead
Delivery wars ahead

Last month, retail expert Robin Lewis, author of online newsletter The Robin Report, made the argument that Amazon should acquire Sears. He called the idea "win-win" for both companies, as an acquisition would supplythe online giant with thousands of distribution centers, while it would give Lampert a "profitable exit strategy."

Sears posted a loss of $930 million for the year ended Feb. 1. It is scheduled to announce first-quarter earnings on May 22.

Sears' shares are slightly higher since Tuesday, the day of the company's annual meeting, after falling 4.9 percent that day.

—By CNBC's Krystina Gustafson.