As Sears Holdings reported yet another quarter of disappointing results last week, CNN reports, company CEO Edward Lampert decided to use the moment to blame company retirees and the pension plans the company funds. Lampert said that if the company had been able to put that money into operations, “we would have been in a better position to compete with other large retail companies, many of which don't have large pension plans.”
Lampert said, according to the story, that “Sears has paid almost $2 billion into pension plans in the past five years, and $4.5 billion since Sears and Kmart merged in 2005 to form Sears Holdings (SHLD). The company pays retirees about $300 million a year, filings show.”
CNN makes the point that “Lampert is right that the company is at a disadvantage because it once had traditional pension plans, which pay a fixed monthly benefit to retirees as long as they live … Sears ended its pension plans in 2006, but longtime employees and retirees are still entitled to benefits they accrued while the plans were in effect.” In fact, the story points out that Sears has about 100,000 retirees still collecting pensions … and had only 89,000 store employees as of last February. (It has fewer now because of hundreds of store closings.)
However, the story also notes that Sears hasn’t made a profit since 2012, and that many analysts blame Lampert for bad decision-making and missing the online opportunity.
Lampert said, according to the story, that “Sears has paid almost $2 billion into pension plans in the past five years, and $4.5 billion since Sears and Kmart merged in 2005 to form Sears Holdings (SHLD). The company pays retirees about $300 million a year, filings show.”
CNN makes the point that “Lampert is right that the company is at a disadvantage because it once had traditional pension plans, which pay a fixed monthly benefit to retirees as long as they live … Sears ended its pension plans in 2006, but longtime employees and retirees are still entitled to benefits they accrued while the plans were in effect.” In fact, the story points out that Sears has about 100,000 retirees still collecting pensions … and had only 89,000 store employees as of last February. (It has fewer now because of hundreds of store closings.)
However, the story also notes that Sears hasn’t made a profit since 2012, and that many analysts blame Lampert for bad decision-making and missing the online opportunity.
- KC's View:
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I’ll say something here that I’ve rarely said … yes, Lampert does have a point. But…
He knew about these pension obligations before he bought the company. If he’d run the company in a halfway competent fashion, he might have a little maneuvering room, but he didn’t, so he doesn’t.
I feel worse for the retirees than for Lampert. Whatever happens to Sears, Lampert will be fine. He’ll find ways to come out of the thing whole. People like him always do. But the retirees are facing a world in which when Sears dies, I’m sure their pensions go away as well.
Who dies first? Sears or the retirees?
