Critics of the Sears and Kmart turnarounds have long argued that if Sears Holdings (SHLD) Chairman Eddie Lampert ignored the retail business by cutting capital expenditures and marketing expenses, the company would begin to die a slow death. Well, the skeptics have proven to be very wrong, as shown by the stock’s move from $15 several years ago to nearly $180 today.
After the bell on Wednesday we learned that Sears has hired John Walden, an eight-year veteran manager from Best Buy (BBY), to become Chief Customer Officer, with core responsibilities including customer-focused strategies and new business development. Such a move certainly doesn’t seem to imply that Lampert and Co. are not focused on the retail operations.
This is not to say that Sears will become Target (TGT) or Wal-Mart (WMT), because the window for that opportunity has long been closed. However, if they can earn similar profit margins to other large retailers over the next several years, the earnings power of the company will be much higher than it is today.
Full Disclosure: Long SHLD at time of writing