NEW YORK — Sears, Roebuck & Co. chairman, chief executive and president Alan Lacy warned employees this week that there will be some definite changes when the retailer ties the knot with Kmart.
The management structure will be different, for one, and the benefits program will likely change. Lacy also said to expect some layoffs, probably at the merged company’s headquarters.
Nonetheless, in a 15-minute videotape sent to managers this week, Lacy urged its shareholder-employees to vote “yes” on the deal, saying the new company would result in a stronger, more viable retailer in the market.
The tone of Lacy’s speech was upbeat as he trumpeted the genius of Edward Lampert, hedge-fund wizard and chairman of Kmart Holdings Inc. Lacy said he hoped employee-shareholders of Sears will take options on the merged company “because I think we’ve got some great things that are going to benefit all parties.”
According to the transcript of the video, filed with the Securities and Exchange Commission Monday night, Lacy reminded employees that the board supports the merger. He also shared some frank views on the 119-year-old company, but he was optimistic about its future.
“As we’re approaching 2005, we’re going to go from no store growth to 60 new stores this year, absolutely the biggest store expansion plan this company has ever had and yet, still too little, too late,” Lacy said before touting the benefits of the merger with a retailer in a similar boat: Kmart.
Two is better than one, Lacy said. He urged employees to ponder the future of the merged company, Sears Holdings, instead of focusing on the rocky past of Sears or Kmart.
“Eddie Lampert, as you all may have heard, has talked a little bit about Kmart,” Lacy said, “and from his perspective, Kmart was going to be a great company. But it was highly unlikely to be a great retailer. In the case of Sears Holdings, [management is] absolutely committed and believes that Sears Holdings can be both a great company and a great retailer.”
Lacy went on to say that Sears Holdings will be a “different type of company than Sears, Roebuck had been.
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“We have a 40 percent shareholder in Eddie Lampert,” Lacy said. “The subjectivity of what creates shareholder value won’t be very subjective because Eddie is a brilliant investor. His track record is better than [Warren] Buffett’s. If you had invested with [Lampert] 15 years ago, you would have been very happy.”
Lacy said Lampert has a clear idea on what needs to be done to create shareholder value. He knows how to invest capital. Lacy said Lampert will take an active role in the company. “He’s got a lot invested in this, and while he’s obviously not running the business in a day-to-day sense, he’s going to want to be involved in key decision activities,” Lacy added.
Above all, Lacy stressed to employees that Sears Holdings will emerge from the deal with a fresh start and a fresh corporate culture. “It is a new company, and therefore, we need to approach it as if it’s a blank sheet of paper,” Lacy said.
“We can’t say, ‘Well, this is the way that Sears has always done it,’ and likewise, the Kmart folks can’t say, ‘This is the way Kmart’s always done it,’” Lacy added.
Lacy said all employees need to think about what’s right for Sears Holdings, “and what’s the right way to do this going forward regardless of where one came from, from a heritage standpoint.
“So, being open-minded and not wedded to the past is going to be very important,” Lacy said.
The shareholder meeting on the deal is set for March 24.