Now raising intellectual capital

Eddie and the losers


Why are there financiers who think that they — and they alone — can run businesses where nearly everyone else who has tried has failed? There is Guy Hands with EMI and Cerberus Capital Mangement with Chrysler, but Exhibit A has to be hedge fund manager Eddie Lampert’s nearly four-year adventure with Sears.

One can admire the financiers’ ambition, the sheer audacity in going against conventional wisdom. Yet something obvious has been lacking in all their bold calculations: How to persuade consumers to buy their offerings. These have been companies that need leaders who are more like the late Billy Mays than financial wizards.

That was underscored today by Sears Holdings Corp.’s embarrassing second-quarter loss. Sales at both Sears and Kmart stores open at least a year fell 8.6 percent from the quarter a year ago. Revenue declined 10.3 percent. It’s a tough market, to be sure, and the weak housing market has dampened demand for core items like appliances. But recent results from retailers like Home Depot show that Sears’ shoppers are simply going elsewhere.

“Ouch,” begins Morgan Stanley’s note to investors on the results. The Credit Suisse report is titled “Put a Fork in It.”