At Sears, Eddie Lampert's Warring Divisions Model Adds to the Troubles

In January, eight years after Eddie Lampert masterminded Kmart's $12 billion buyout of Sears in 2005, the board appointed him CEO of the 120-year-old retailer. Since the takeover, Sears Holdings' sales have dropped from $49.1 billion to $39.9 billion, and its stock has sunk 64%. Its cash recently fell to a 10-year low. Although it has plenty of assets to unload before bankruptcy looms, the odds of a turnaround grow longer every quarter. Plagued by the realities threatening many retail stores, Sears also faces a unique problem: Lampert. Many of its troubles can be traced to an organizational model the chairman implemented five years ago, an idea he has said will save the company. Lampert runs Sears like a hedge fund portfolio, with dozens of autonomous businesses competing for his attention and money. He created the market to drive better results. Instead, the divisions turned against each other -- and Sears and Kmart, the overarching brands, suffered.