Sears CEO Lashes Out at Suppliers Trying to ‘Take Advantage’
(Bloomberg) -- Sears Holdings Corp. Chief Executive Officer Eddie Lampert vowed to fight back against suppliers trying to take advantage of his company, saying that “dire predictions” about the retailer’s future have hurt its position with vendors.
The department-store chain has been working with suppliers to ensure that their level of credit risk is “both affordable and appropriate,” but some vendors have tried to capitalize on its situation, Lampert said in a blog post.
“There have been examples of parties we do business with trying to take advantage of negative rumors about Sears to make themselves a better deal,” he said. “In such a case, we will not simply roll over and be taken advantage of -- we will do what’s right to protect the interests of our company and the millions of stakeholders we serve.”
Lampert pointed to one supplier in particular, One World, which makes power tools under the Craftsman brand. The business, part of Hong Kong-based Techtronic Industries, has threatened to file a lawsuit against Sears as it attempts to get out of a contract, Lampert said.
“We will take the appropriate legal action to protect our rights and ensure that One World honors their contract,” he said.
On Monday, Sears sued One World in state court in Chicago, claiming the supplier is refusing to provide power tools so that One World can sell them to other retailers at a higher price. According to the complaint, One World wants to end a supply agreement by claiming that Sears may soon stop purchasing power tools. Sears is seeking a judge’s order that it hasn’t breached the supply agreement.
A representative for Techtronic in Hong Kong didn’t immediately respond to requests for comment after business hours.
Sears’s shares fell as much as 12 percent to $8.36 in the wake of the comments, marking the worst intraday decline since March 22. The stock had been up 2.2 percent this year through the end of last week.
Once the world’s largest retailer, Sears has racked up more than $10 billion in losses since 2012. Lampert, also the chain’s biggest investor, has helped keep it afloat by injecting more than $1 billion in financing into the operations. The company also has sold or spun off assets to raise cash, including its Craftsman tool brand, Lands’ End clothing business and hundreds of stores.
Sears added so-called going-concern language to its annual report filing in March, acknowledging there was “substantial doubt” about its future. The move sent the stock on its biggest decline in more than two years.
But Lampert indicated on Monday that the pessimism has been overblown -- hurting the company in the process.
“While we are not asking to be spared from informed opinions about our business performance, the recent wave of dire predictions about our company’s future have done harm to our business,” he said.