New drama for your momma
Not all retail endings are because of online competition. This season in Retail Drama, Sears is looking to up its ratings with an exciting new conflict.
On Monday, CEO Eddie Lampert took to the Sears corporate blog to announce the company is “taking a stand against one vendor that is trying to take unfair advantage of us: One World.”
Lampert said the tool vendor is seeking to embarrass Sears with a lawsuit in order to be let out of their contract.
One World Technologies, a subsidiary of China-based Techtronic Industries, manufactures products like power tools under the Craftsman brand. One World said their decision to seek a lawsuit is based on rumors about Sears’ current financial standings.
One World fears that Sears will not be able to honor its financial obligations to the tool vendor. They threatened to cancel their contract unless Sears cuts back on orders.
Since 2007, Sears’ sales have decreased by half, and hundreds of stores around the country have closed.
To keep funding operations, the company has sold real estate assets and brands, including Craftsman. Lampert’s hedge fund, ESL Investments, is also helping keep the chain afloat. In March, Lampert wrote off an SEC filing as a technicality, but understandably, many investors are concerned about the store’s ability to stay in business.
However, Sears says they have always fulfilled the contractual Supply Agreement and paid vendors—including One World—on time and in full.
In his borderline rant, Lampert noted, “We are generally not a litigious company, but we will fight back to protect our legal rights, hold One World to its contractual agreements, and ensure that our customers are not affected by this business dispute.”
After the blog post was published, Sears’ stock fell 12 percent.
Lawyers n such
Despite the negative reception, Lampert is following through with his threats to sue One World. The lawsuit, also filed on Monday, alleges One World Technologies is taking advantage of rumors to change the terms of their contract.
“If you’re a vendor and want to do business with us, then you have to treat us like a customer,” Lampert said. “You don’t treat us like a pariah.”
Unfortunately, widespread speculation based on Sears’ self-proclaimed “substantial doubt” about its ability to stay in business is not helping the company’s standing. The word on Wall Street is that Sears may be nearing bankruptcy. That’s enough to make any vendor vary of continuing business.
Beginning of the end?
With One World and other vendors threatening to pull their products, Sears becomes even less appealing to consumers, who will no longer be able to shop for their favorite brands. And if Lampert continues his streak of calling out vendors and filing lawsuits, that’s another nail in the coffin.
At the very least, all the drama is keeping Sears in the news. Maybe that will be enough to keep the business hanging on by a thread for a little longer.