One Problem With the Recurrent Eddie Lambert-Liquidates-Sears Fantasy: 293,000 Employees

The Wall Street Journal this morning, quoting Credit Suisse analysis, revives the long-held notion that Eddie Lampert, the hedge fund manager who controls Sears (SHLD), could break up the miserable retailing mess he has presided over, at great profit to shareholders.

Sell the stores, sell off Land’s End, the Kenmore brand, you name it, the article suggests, and the value would exceed Sears’ current market cap.

SHLD Market Cap Chart

SHLD Market Cap data by YCharts

Maybe so. But the article and the thinking Lampert has encouraged about break-up values and liquidation since he slammed wobbly Kmart together with Sears nearly a decade ago has a major flaw: Sears employs 293,000 workers as of the end of the most recent fiscal year, and sending huge numbers of them home to facilitate a sell-off of assets would constitute a local and national economic blow. And invite a shit storm of protest and criticism.

It’s one thing to shut down a little steel plant that’s unproductive and move the work elsewhere, idling a few hundred works. But cashiering tens of thousands of employees who work at a going concern because you can’t quite bring yourself to invest a little in its stores and perhaps hire a plausible CEO to run the thing, is quite another move.

Lampert, once the subject of a fawning BusinessWeek cover story – “The Next Warren Buffett” – seems stuck with Sears. He’s a poor overseer at best. But the idea he can sell it all off like a junkman would, while sounding great to investment pros dealing in the abstract, ignores societal pressures all major employers deal with.

Jeff Bailey is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.

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