CEO is ousted at slumping Sears

Retailer seeks 'new leadership'

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Bloomberg News / January 29, 2008

NEW YORK - Sears Holdings Corp., the retailer controlled by investor Edward Lampert, ousted chief executive Aylwin Lewis after almost three years of sales declines prompted the department store chain to reorganize.

Lampert said in a statement yesterday the board was looking for "new leadership" at the company, which was created when his Kmart Holding Corp. took over Sears, Roebuck & Co. in March 2005. Lewis, 53, will step down Feb. 2. W. Bruce Johnson was appointed interim chief executive while Sears looks for a permanent successor.

Sears said this month that fourth-quarter profit may fall more than 50 percent after US holiday sales shrank at its namesake and Kmart retail chains. Sales at stores open at least a year have declined every quarter since the merger as the biggest US department store chain loses customers to Wal-Mart Stores Inc., Target Corp., J.C. Penney Co., and Home Depot Inc.

Sears, which operates 3,800 stores in the United States and Canada, rose $1.28 to $100.28 in New York Stock Exchange composite trading.

Separately, Sears said yesterday it is still interested in discussing a possible acquisition of Restoration Hardware Inc., the home furnishings retailer that agreed to be bought by Catterton Partners for $179 million.

Sears had previously bid $6.75 a share, or $269 million.

The retailer said yesterday in a regulatory filing that it was reviewing the terms of the Catterton transaction and still may hold talks with Restoration Hardware.

Hoffman Estates, Ill.-based Sears said Jan. 22 it would reorganize into five types of business units. The new structure will help to improve earnings and attract customers, Lampert said last week.

Johnson, 56, is executive vice president of the company's supply chain and operations, according to the statement. He joined Kmart in 2003 after being a director of organization and systems at Carrefour SA, Europe's biggest retailer, and working at Colgate-Palmolive Co. for 16 years.

Lampert approached retail executives, including J.Crew Group Inc. chief executive and former Gap Inc. head Millard Drexler and former J.C. Penney Co. chief Allen Questrom to work at Sears and neither agreed, The New York Times reported yesterday. Sears spokesman Chris Brathwaite declined to comment on the report or say if Sears had hired an executive search firm.

Messages to Drexler's office were referred to J.Crew spokeswoman Margot Fooshee, who said the company didn't know where the newspaper got the information and doesn't comment on rumors.

Questrom didn't immediately return a phone message left at Lee Equity Partners LLC, where he is a senior adviser.

Lewis became Kmart's chief executive in October 2004, a month before the $12.3 billion acquisition of Sears was disclosed. Almost a year later, Lampert ousted chief executive Alan Lacy and named Lewis as his successor. Lewis was paid $4.81 million in his first full year in the position, the company said in April.

He was also chief operating officer of Yum Brands Inc., the owner of the Taco Bell, KFC, and Pizza Hut chains.

The retailer's revenue has declined for three straight quarters. On Jan. 14 the retailer said fourth-quarter profit would be $350 million to $470 million, or $2.59 to $3.48 a share.

Aylwin Lewis (left) has been Sears' CEO since 2005. W. Bruce Johnson will lead the troubled chain in the interim.

Lewis out, Johnson in

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