Sears Holdings Corp. said Monday night that Chief Executive Officer Louis J. D’Ambrosio will step down at the end of its fiscal year on Feb. 2, due to family health matters. Chairman Edward S. Lampert will step into the role of CEO.
The surprise move adds new uncertainty for the Hoffman Estates-based company, which has struggled for years to re-establish itself as a department store in an ultra-competitive retailing industry dominated by the low-price giant Walmart and big box and specialty stores.
The decision by Lampert, a hedge fund operator who is the company’s biggest shareholder and driving force, to reassert day-to-day control represents a reversal from his the naming of D’Ambrosio, an outsider, as chief executive nearly two years ago after operating with an interim CEO previously.
“In light of Lou's decision to step down, the Board feels it is important that there is continuity of leadership during this important period of transformation and improvement at Sears Holdings,” Lampert said in a statement. “I have agreed to assume these additional responsibilities in order to continue the company's recovery and sustain the momentum we are experiencing, as well as further the development of the management team under the distributed leadership model, which provides our business unit leaders with greater control, authority and autonomy.”
Sears Holdings, which operates Sears and Kmart, also updated fourth quarter earnings outlook Monday night. The company said it expects to report a net loss of between $280 million and $360 million, or $2.64 and $3.40 per diluted share, for the quarter ending Feb. 2. The loss includes a non-cash charge of roughly $450 million due to pension settlements and an additional $42 million in pension expenses.
Excluding pension expenses Sears said it expects to earn between $132 million and $212 million, or between $1.25 and $2.00 per share. Analysts polled by Bloomberg had been expecting adjusted net income of $137 million.
Excluding interest, taxes and other items, Sears said it expects its adjusted earnings to be between $365 million and $465 million, compared to $351 million at the same time last year. For the year, it expects to adjusted earnings to be between $560 million and $660 million compared to $277 million last year.
For the year, Sears said it expects to lose between $721 million and $801 million, or between $6.80 and $7.56 per diluted share, which also includes pension-related costs and other adjustments reported in regulatory filings late last year. Excluding those items, the company said it expects to lose between $123 million and $203 million or between $1.16 and $1.92 per share.
D’Ambrosio became CEO after working for the company as a consultant. The 16-year veteran of IBM Corp. had been CEO of a telecommunications company before joining Sears.
“I have worked very closely with Eddie over the past two years. I can say this: there is simply no one in the world that cares more about Sears Holdings and has thought more deeply about our company than Eddie,” D’Ambrosio wrote in a memo to employees.
Lampert gained control of Sears in 2005 after engineering the merger Kmart and Sears Roebuck & Co. For years speculation about Lampert’s intentions for the company focused on the value of its real estate, but under D’Ambrosio Sears appeared to pay more attention to its aspirations as a retailer.
The company reported improved performance in the last quarter that beat Wall Street expectations, but Sears stock still has lost more than 35 percent of its value since November, closing Monday at $42.92.
Crshropshire@tribune.com
Twitter: @corilyns
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