Bloomberg News

Sears Turnaround Means Using Tech With Store Upgrades

January 04, 2012

(Updates with hiring of Ron Boire in seventh paragraph.)

Jan. 3 (Bloomberg) -- Lou D’Ambrosio, chief executive officer of Sears Holdings Corp., said creatively combining technology with spending on stores is the best way to turn around the largest U.S. department store chain.

On Dec. 27, Sears announced it was closing as many as 120 locations after same-store sales slipped 5.2 percent in the eight weeks ended Dec. 25. The shares plunged 27 percent on the news, the biggest drop since April 29, 2003. Sears fell 3.4 percent in New York on Dec. 30 to $31.78.

A former Avaya Inc. and International Business Machines Corp. executive who joined the Hoffman Estates, Illinois-based company in February, D’Ambrosio is drawing on his tech background and telling managers to gather more information about customers’ buying patterns and product preferences and to ramp up Web operations.

“Everything starts with knowing what our customers want to buy and how and then delivering that across platforms,” he said in a telephone interview.

Sears technicians each year make 17 million visits to customers’ homes and communicate even more frequently with shoppers online and on the phone, according to D’Ambrosio.

As part of that effort, Sears has given store salespeople more than 5,000 Apple Inc. iPads and 11,000 iPod touches to track inventory and customer orders, he said.

Capital Starved

Sears named Ron Boire chief merchandising officer and executive vice president today. Formerly president and CEO of Brookstone Inc., he will lead store formats for Sears and Kmart, and will focus on integrating Web and mobile services, the company said in a statement.

Chairman Edward Lampert, who along with his hedge funds owns 60 percent of Sears, has attempted multiple turnaround strategies that have failed to reverse a slide in sales. D’Ambrosio is the fourth CEO since Lampert merged Sears with Kmart in 2005.

The company’s larger stores have been starved of capital investment and customers have defected, according to Gary Balter, an analyst with Credit Suisse Group AG in New York.

Sears is spending less than a quarter of the $8 a square foot that retailers typically invest to maintain stores, according to International Strategy & Investment Group. In an August report, the New York-based company put Sears and Kmart at the bottom of the list of a dozen retailers ranked by sales per square foot and operating profitability.

‘Iconic Brand’

“Sure we want to have stores that look nice so we’re investing in fixtures, paint and new designs but store appearance in itself isn’t enough,” D’Ambrosio said. “Borders had great bathrooms but that didn’t help them because they missed the e-book revolution in their industry.”

While Lampert sticks mostly to his base in Greenwich, Connecticut, D’Ambrosio is in close touch with managers down the ranks and visited several Sears stores last month, he said.

“Eddie and I have aligned views about what it takes to make this company great,” D’Ambrosio said. “We’re in touch regularly.”

The retailer’s “assets are undervalued, which creates an opportunity,” said D’Ambrosio, who recalls visiting Sears auto centers with his father as a child. “Sears is an iconic brand. It’s important to revitalize this company.”

--With assistance from Lauren Coleman-Lochner in New York and Cotten Timberlake in Washington. Editors: Robin Ajello, Jeffrey Tannenbaum, Kevin Orland.

To contact the reporter on this story: Carol Hymowitz in New York at chymowitz1@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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