By Tom Hals
HOFFMAN ESTATES, Ill., May 4 (Reuters) - Sears will have 'more than enough' access to credit markets and can take steps to generate cash if needed should the economy worsen, controlling shareholder and Chairman Edward Lampert said on Monday.
Addressing shareholders at the company's annual meeting, Lampert acknowledged press reports that the company was in discussions with banks about its $4 billion revolving credit agreement that expires in March. The borrowing facility has become a concern to analysts as the company's margins have been squeezed during the recession.
'We're pretty confident we'll have more than enough access to operate businesses and give us flexibility should conditions worsen,' said Lampert, a hedge fund manager. 'There are things we can do should conditions worsen.'
Sears has closed some of its thousands of Sears and Kmart stores over the past year and has taken other steps to reduce costs, such as tightening inventory control. 'We're taking a position to give us a cushion six months out,' Lampert.
Sears has been hard hit by the housing downturn, which has cut into sales of its Kenmore appliances and Craftsman tools as well as lawn and garden supplies.
Lampert wouldn't predict when the economy might bottom and begin to recover, but he said the key for Sears would be a pick up in activity in the housing market.
Lampert said the search for a permanent CEO had been slowed by the company's new management structure and recession.
'If the economy was different and the business environment was different we could allow someone to take whatever amount of time it took to learn the system and implement their ideas,' said Lampert.
The company's acting chief executive, Bruce Johnson, joked at the meeting outset that his wife and kids address him as 'interim.'
Lampert faced a friendly group of shareholders and analysts, and peppered his answers with references to Mikhail Gorbachev, Margaret Thatcher and recommended books by the Austrian economist Friedrich Hayek. A representative from a retirees group, which clashed with management in the past, read a complimentary letter.
Management emphasized to the roughly 250 attendees the various programs it is developing to give it greater access to customers, such as Kmart's layaway program. Johnson said more than 1 million new customers used the layaway program in 2008, giving the company customer email addresses and a way to communicate with them as traditional ways of reaching shoppers, such as newspaper circulars, decline.
The company also highlighted its efforts in developing online formats and expanding its Internet offerings. The company recently opened a My Gofer store near Chicago, which allows shoppers to place Internet orders for essentials such as toilet paper and groceries and then pick them up, and began in-store pickup at Kmart for online orders.
'There will be more hybrid forms of shopping going forward,' said Lampert. 'You won't have to go to six stores, you can go to My Gofer. That's an idea were trying and that should resonate.'
Lampert and Johnson also focused on ServiceLive, an online forum recently launched by Sears which brings together providers of services such as home repairs with customers.
Last year Sears divided the company's operations into five areas in an attempt to improve efficiency. Lampert said the system led to some 'stepping on toes' but uncovered areas of the company that were very unproductive and allowed more talented managers the freedom to run ahead of the pack.
An individual shareholder asked if the division of the company into five reporting segments would eventually allow its Craftsmen and Kenmore brands to be sold.
Lampert said the company is looking for more ways to leverage brands, but emphasized that no brands were up for sale.
Sears shares ended up 4.3 percent at $62.85. The shares have risen about 75 percent since it reported in late February better than expected results for 2008.
(Reporting by Thomas Hals; Editing Bernard Orr) Keywords: SEARS/SHAREHOLDERMEETING (thomas.hals@reuters.com; 1-646-223-6356; Reuters Messaging: thomas.hals.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
HOFFMAN ESTATES, Ill., May 4 (Reuters) - Sears will have 'more than enough' access to credit markets and can take steps to generate cash if needed should the economy worsen, controlling shareholder and Chairman Edward Lampert said on Monday.
Addressing shareholders at the company's annual meeting, Lampert acknowledged press reports that the company was in discussions with banks about its $4 billion revolving credit agreement that expires in March. The borrowing facility has become a concern to analysts as the company's margins have been squeezed during the recession.
'We're pretty confident we'll have more than enough access to operate businesses and give us flexibility should conditions worsen,' said Lampert, a hedge fund manager. 'There are things we can do should conditions worsen.'
Sears has closed some of its thousands of Sears and Kmart stores over the past year and has taken other steps to reduce costs, such as tightening inventory control. 'We're taking a position to give us a cushion six months out,' Lampert.
Sears has been hard hit by the housing downturn, which has cut into sales of its Kenmore appliances and Craftsman tools as well as lawn and garden supplies.
Lampert wouldn't predict when the economy might bottom and begin to recover, but he said the key for Sears would be a pick up in activity in the housing market.
Lampert said the search for a permanent CEO had been slowed by the company's new management structure and recession.
'If the economy was different and the business environment was different we could allow someone to take whatever amount of time it took to learn the system and implement their ideas,' said Lampert.
The company's acting chief executive, Bruce Johnson, joked at the meeting outset that his wife and kids address him as 'interim.'
Lampert faced a friendly group of shareholders and analysts, and peppered his answers with references to Mikhail Gorbachev, Margaret Thatcher and recommended books by the Austrian economist Friedrich Hayek. A representative from a retirees group, which clashed with management in the past, read a complimentary letter.
Management emphasized to the roughly 250 attendees the various programs it is developing to give it greater access to customers, such as Kmart's layaway program. Johnson said more than 1 million new customers used the layaway program in 2008, giving the company customer email addresses and a way to communicate with them as traditional ways of reaching shoppers, such as newspaper circulars, decline.
The company also highlighted its efforts in developing online formats and expanding its Internet offerings. The company recently opened a My Gofer store near Chicago, which allows shoppers to place Internet orders for essentials such as toilet paper and groceries and then pick them up, and began in-store pickup at Kmart for online orders.
'There will be more hybrid forms of shopping going forward,' said Lampert. 'You won't have to go to six stores, you can go to My Gofer. That's an idea were trying and that should resonate.'
Lampert and Johnson also focused on ServiceLive, an online forum recently launched by Sears which brings together providers of services such as home repairs with customers.
Last year Sears divided the company's operations into five areas in an attempt to improve efficiency. Lampert said the system led to some 'stepping on toes' but uncovered areas of the company that were very unproductive and allowed more talented managers the freedom to run ahead of the pack.
An individual shareholder asked if the division of the company into five reporting segments would eventually allow its Craftsmen and Kenmore brands to be sold.
Lampert said the company is looking for more ways to leverage brands, but emphasized that no brands were up for sale.
Sears shares ended up 4.3 percent at $62.85. The shares have risen about 75 percent since it reported in late February better than expected results for 2008.
(Reporting by Thomas Hals; Editing Bernard Orr) Keywords: SEARS/SHAREHOLDERMEETING (thomas.hals@reuters.com; 1-646-223-6356; Reuters Messaging: thomas.hals.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.