Sears Holdings (SHLD) has a new chief executive: billionaire hedge fund manager Eddie Lampert. He is chairman of Sears and head of ESL Investments, the hedge fund that controls the retailer.
Sears CEO Louis D'Ambrosio is stepping down due to "family health matters" after two years on the job. During his tenure the stock dropped nearly 40%.
Related: J.C. Penney Is the New Sears: Ron Johnson Has Done ?Incalculable Damage"
Lampert ? who has tried to rebuild the store over the last decade ? will take the helm officially in February at the end of the company's fiscal year. He will become Sears' fifth CEO in seven years.
How will Lampert run Sears?
"I think [Lampert] is marking time until he can chop this thing up and sell this thing for the brands," says Breakout's Jeff Macke, who joined The Daily Ticker's Henry Blodget in the accompanying interview. "You've got all these different brands within Sears that are terrific and still have the reputation. The stores themselves [are] dumps."
Lampert has been routinely criticized for his lack of retail expertise. In 2005, he merged Sears with Kmart. Same-store sales for the combined entity have declined for five straight years.
"This is a cautionary tale for merchants who are trying to turn stores around without actually spending any money on the stores themselves," Macke says. "These dilapidated retail fronts that you have out there don't do any business because, quite frankly, it is embarrassing to go into a Sears now."
In today's day and age, having a hedge fund manager take over a retailer is not unusual. Take Bill Ackman. He lost all the money he invested in Target (TGT) and is now losing massively on his investment in J.C. Penney (JCP).
Related: JCPenney: With Sales Sliding, Believers Getting Harder to Find
"What they fail to understand is the customer aspect," Macke notes. "You have to spend money to make a retailer work."
In the case of J.C. Penney, Makce says the retailer will run out of money before CEO Ron Johnson can turn the ship around.
Does Macke recommend investing in Sears?
"I wouldn't touch this thing long or short," Macke cautions. "In terms of going to the stores themselves, K-Mart and Sears, they are not going to exist as stand in 5-10 years."
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