Sears turnaround will depend on tech, store upgrades, says CEO

A Sears store in Longmont, Colo., displays sale signs on Thursday, Dec. 29, 2011. The Hoffman Estates-based retailer Sears announced specific stores it would close on Thursday, Dec. 29.
AP Photo/The Daily Times Call, Joshua Buck
A Sears store in Longmont, Colo., displays sale signs on Thursday, Dec. 29, 2011. The Hoffman Estates-based retailer Sears announced specific stores it would close on Thursday, Dec. 29.
Posted Jan. 03, 2012, at 9:08 a.m.

NEW YORK — Lou D’Ambrosio, chief executive officer of Sears Holdings Corp., said creatively combining more technology with increased spending on stores is the strategy 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.

The company released a list of 80 stores pegged for closure; there were no Maine locations on the list, though New Hampshire was losing two stores in Nashua and Keene.

A former Avaya Inc. and International Business Machines Corp. executive who joined the 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.

Sears 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.

“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, Conn., 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.”

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