Sears Holdings Rebukes "Wall Street Journal"

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Sears Holdings (NASDAQ: SHLD) is complaining about its media coverage again. The Wall Street Journal recently ran a story detailing the decline [subscription required] of Sears, "the Amazon of the 20th century." And Sears used its company blog to rebut some of the claims in the article and complain about the "rehash of inaccurate assertions and negative speculation."

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A likely story

It's not the first time Sears has said it's been targeted by the media. Earlier this year, at the retailer's annual meeting, Chairman and CEO Eddie Lampert showcased a decade's worth of headlines about the company that predicted its imminent demise yet noted that Sears is still standing. He likened the retailer's six years of consecutive losses to Amazon.com (NASDAQ: AMZN) and said people will wonder how they missed the turnaround.

Last year he used his chairman's letter to shareholders to hit back at critics, saying new-economy companies are held to different standards than legacy retailers like Sears. Uber at the time was praised for raising $10 billion in capital, even though it lost $1 billion in China, while Tesla was held up as a marvel despite being propped up by taxpayer subsidies.

In part, he acknowledged it's the older business model that's really under attack and needs to change, which he said is something he's trying to do but gets little to no credit for. In May 2017, he maintained that the negative coverage has been "deliberately unfair" and "meant to scare our vendors."

Tough to spin it any other way

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Certainly, it is incumbent on the media to note that Sears had inserted language into its SEC filings that indicated it had substantial doubt about its ability to continue as a going concern. That vendors may have subsequently used that coverage to try to get out of supplying Sears or Kmart with product, or, in the case of Whirlpool, to finally cut it off altogether, is not the fault of the news. The media would be remiss if it did not mention it.

There's no question the media is at times guilty of sensationalism and exaggeration, but not every criticism is a case of embellishment and over-editorializing. In fact, since joining Sears, Roebuck and Kmart together, there have been very few feel-good stories to tell about the retailer, as massive, mounting losses and declining sales leave little silver lining to report on.

It may be that rivals such as J.C. Penney and Macy's are also experiencing many of the same problems as Sears, and an argument can be made that J.C. Penney coverage in particular has been at least as harsh as that directed at Sears. But one can also argue that a large part of Sears' problems have been brought on by Lampert himself.

The buck stops here

It was Lampert's decision to forgo investing in remodeling his stores because he didn't think customers cared about decor. Lampert chose to use financial gymnastics like interest-rate swaps instead of modernizing to make quarterly sales numbers. And while his ShopYourWay loyalty program has a few innovative features to it, it's not a novel idea, as membership programs are now commonplace.

The poet Carl Sandberg once wrote: "If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell." Not all the reporting on Sears Holdings has been fair or accurate, but the retailer just announced it is closing another 63 stores, and Standard & Poor's downgraded its debt deeper into distressed territory. How can the media not report on such developments? And Lampert's complaining about that coverage is akin to him pounding on the table in an attempt to distract from where the real problem lies.

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