Sinking sales at Sears spark top-level shake-up

CHICAGO — Hedge-fund wizard Edward Lampert is taking on a startling new role at Sears Holdings Corp.: chief marketer and merchandiser.

The billionaire chairman shook up top management at the No. 3 U.S. retailer Thursday after another poor quarter, naming Aylwin Lewis to replace Alan Lacy as CEO and taking on a more direct role at the struggling company.

The moves come with sales still sinking at the company's two laggard chains, nearly six months after Kmart Holding Corp.'s acquisition of Sears, Roebuck & Co. Reporting results from the first full quarter after the merger, Sears Holdings said it had a lower-than-expected profit of $161 million.

The news disappointed investors, who had driven up Sears' stock dramatically both before and after the March 24 merger engineered by Lampert. Shares in the company sank $7.04, or 5.2 percent, to close at $127.81 in heavy trading on the Nasdaq Stock Market, far off their peak of $163.50 in July.

Lampert, founder of hedge fund ESL Investments of Greenwich, Conn., which takes large stakes in distressed companies, will direct the marketing, merchandising, design and online businesses of Sears Holdings as well as its Lands' End casual-clothing unit.

He named Lewis, the former head of Kmart and of Sears' retail business, to take over as CEO and president of the company, based in Hoffman Estates, Ill., effective Sept. 30. Lewis will have responsibility for the company's 3,900 stores as well as home services, finance, legal, supply chain, information technology and human resources.

Lacy, who stays on for now as vice chairman and a director, headed Sears Roebuck from 2000 until its acquisition by Kmart and was CEO under Lampert for the past six months. His demotion was not completely unexpected, since he had failed to halt Sears' retail slide and had a diminished role under Lampert.

More surprising is the hands-on role being assumed by Lampert, who has made a giant mark in financial dealings but little in retail. Lampert made $1.02 billion last year at ESL Investments, according to the industry magazine Institutional Investor's Alpha.

Sears did not hold a conference call with analysts or respond to reporters' queries about the changes, in keeping with Lampert's tight-lipped policies. But in a letter to shareholders posted on the company's Web site, he said he will perform his expanded Sears duties without compensation.