Letter to Eddie Lampert (SHLD)

Edward S. Lampert

CEO and Chairman

Sears Holding Co.

What is the plan?

We, as shareholders of SHLD, are closing in on a decade since the merger of Sears and K-Mart in 2005. Over the last decade, we have watched both Sears and Kmart continue to fall from market leading positions and lose ground to traditional and online retailers alike. So I ask the question, what is the plan?

Myself, like I’m sure many other shareholders, bought into SHLD because of a belief that you, very personally, would right this ship. It was very clear for any shareholder to see that there was value to be unlocked through real estate or the brands. That is why we joined the cause. We, as shareholders, believed that you would do what was in the shareholders’ best interest.  We had faith in you. We have faith in the entity that you and Bruce control a majority stake in. What do we have to show for it?

The business is in a state of chaos. I have a Kmart and Sears within 5 minutes of my house. I have never been to either of them (in 8 years). The most recent shareholder’s letter verges on insulting due to your lack of understanding of branding and consumer behavior. The failure to invest in capital expenditures for the brick and mortar stores has forced customers to the likes of Wal-Mart and Target. If your customers don’t want to go anywhere near your physical locations, why on earth would they shop with you online given the proliferation of superior online retailers? Certainly Kmart and Sears brick and mortar stores still have markets that are captive and verge on monopolistic and therefore are able to convert customers to Shop Your Way customers but this can’t possibly be the strategic plan for the whole company, can it?

You posted on your blog at the beginning of the year about transformative companies. For ten years, SHLD has been lost in the shuffle as all of its competitors transform around it. Building an integrated online and physical platform is not transformative; it’s the norm. If you want this company to be transformative, make it disruptive. Change. Do something.

Everyday the value of the real estate portfolio becomes less valuable. The proliferation of empty commercial real estate (mall real estate especially) in America signals the exact transformative change you outline in your letter. There are hundreds of stores not making money, why are we behind the curve in making a real transformation and closing all of them immediately?

Mr. Chairman and CEO, what is the plan? The last ten years have seen remarkable opportunity costs go down the drain. How do we add value to shareholders over the next ten?

Thank You,

Jason M. Nista