The 5 Ways Chairman Lampert Destroyed Sears’ Value

The 5 Ways Chairman Lampert Destroyed Sears’ Value

USAToday alerted investors that when Sears Holdings reports results 2/25/16 they will be horrible.  Revenues down another 8.7% vs. last year. Same store sales down 7.1%. To deal with ongoing losses the company plans to close another 50 stores, and sell another $300million of assets.  For most investors, employees and suppliers this report could easily be confused with many others the last few years, as the story is always the same.  Back in January, 2014 CNBC headlined “Tracking the Slow Death of an Icon” as it listed all the things that went wrong for Sears in 2013 – and they have not changed two years later.  The brand is now so tarnished that Sears Holdings is writing down the value of the Sears name by another $200million – reducing intangible value from the $4B at origination in 2004 to under $2B.

This  has been quite the fall for Sears.  When Chairman Ed Lampert fashioned the deal that had formerly bankrupt Kmart buying Sears in November, 2004 the company was valued at $11billion and 3,500 stores.  Today the company is valued at $1.6billion (a decline of over 85%) and according to Reuters has just under 1,700 stores (a decline of 51%.) According to Bloomberg almost no analysts cover SHLD these days, but one who does (Greg Melich at Evercore ISI) says the company is no longer a viable business, and expects bankruptcy.  Long-term Sears investors have suffered a horrible loss.

When I started business school in 1980 finance Professor Bill Fruhan introduced me to a concept that had never before occurred to me.  Value Destruction.  Through case analysis the good professor taught us that leadership could make decisions that increased company valuation.  Or, they could make decisions that destroyed shareholder value.  As obvious as this seems, at the time I could not imagine CEOs and their teams destroying shareholder value.  It seemed anathema to the entire concept of business education.  Yet, he quickly made it clear how easily misguided leaders could create really bad outcomes that seriously damaged investors.

sears closingAs a case study in bad leadership, Sears under Chairman Lampert offers great lessons in Value Destruction that would serve Professor Fruhan’s teachings well:

1 – Micro-management in lieu of strategy.  Mr. Lampert has been merciless in his tenacity to manage every detail at Sears.  Daily morning phone calls with staff, and ridiculously tight controls that eliminate decision making by anyone other than the top officers.  Additionally, every decision by the officers was questioned again and again.  Explanations took precedent over action as micro-management ate up management’s time, rather than trying to run a successful company.  While store employees and low- to mid-level managers could see competition – both traditional and on-line – eating away at Sears customers and core sales, they were helpless to do anything about it.  Instead they were forced to follow orders given by people completely out of touch with retail trends and customer needs.  Whatever chance Sears and Kmart had to grow the chain against intense competition it was lost by the Chairman’s need to micro-manage.

2 – Manage-by-the-numbers rather than trends.  Mr. Lampert was a finance expert and former analyst turned hedge fund manager and investor.  He truly believed that if he had enough numbers, and he studied them long enough, company success would ensue.  Unfortunately, trends often are not reflected in “the numbers” until it is far, far too late to react. The trend to stores that were cleaner, and more hip with classier goods goes back before Lampert’s era, but he completely missed the trend that drove up sales at Target, H&M and even Kohl’s because he could not see that trend reflected in category sales or cost ratios.  Merchandising – from buying to store layout and shelf positioning – are skills that go beyond numerical analysis but are critical to retail success.  Additionally, the trend to on-line shopping goes back 20 years, but the direct impact on store sales was not obvious until customers had long ago converted.  By focusing on numbers, rather than trends, Sears was constantly reacting rather than being proactive, and thus constantly retreating, cutting stores and cutting product lines.

3 – Seeking confirmation rather than disagreement. Mr. Lampert had no time for staff who did not see things his way.  Mr. Lampert wanted his management team to agree with him – to confirm his Beliefs, Interpretations, Assumptions and Strategies — to believe his BIAS.  By seeking managers who would confirm his views, and execute, rather than disagree Mr. Lampert had no one offering alternative data, interpretations, strategies or tactics.  And, as Mr. Lampert’s plans kept faltering it led to a revolving door of managers.  Leaders came and went in a year or two, blamed for failures that originated at the Chairman’s doorstep.  By forcing agreement, rather than disagreement and dialogue, Sears lacked options or alternatives, and the company had no chance of turning around.

4 – Holding assets too long. In 2004 Sears had a LOT of assets.  Many that could likely be redeployed at a gain for shareholders.  Sears had many owned and leased store locations that were highly valuable with real estate prices climbing from then through 2008.  But Mr. Lampert did not spin out that real estate in a REIT, capturing the value for SHLD shareholders while the timing was good.  Instead he held those assets as real estate in general plummeted, and as retail real estate fell even further as more revenue shifted to e-commerce.  By the time he was ready to sell his REIT much of the value was depleted.

Additionally, Sears had great brands in 2004.  DieHard batteries, Craftsman tools, Kenmore appliances and Lands End apparel were just 4 household brands that still had high customer appeal and tremendous value.  Mr. Lampert could have sold those brands to another retailer (such as selling DieHard to WalMart, for example) as their house brands, capturing that value.  Or he could have mass marketd the brand beyond the Sears store to increase sales and value.  Or he could have taken one or more brands on-line as a product leader and “category killer” for ecommerce customers.  But he did not act on those options, and as Sears and Kmart stores faded, so did these brands – which largely no longer have any value.  Had he sold when value was high there were profits to be made for investors.

5 – Hubris – unfailingly believing in oneself regardless the outcomes.  In May, 2012 I wrote that Mr. Lampert was the 2nd worst CEO in America and should fire himself. This was not a comment made in jest.  His initial plans had all panned out very badly, and he had no strategy for a turnaround.  All results, from all programs implemented during his reign as Chairman had ended badly.  Yet, despite these terrible numbers Mr. Lampert refused to recognize he was the wrong person in the wrong job.  While it wasn’t clear if anyone could turn around the problems at Sears at such a late date, it was clear Mr. Lampert was not the person to do it.  If Mr. Lampert had been as self-analytical as he was critical of others he would have long before replaced himself as the leader at Sears.  But hubris would not allow him to do this, he remained blind to his own failings and the terrible outcome of a failed company was pretty much sealed.

From $11B valuation and a $92/share stock price at time of merging KMart and Sears, to a $1.6B valuation and a $15/share stock price.  A loss of $9.4B (that’s BILLION DOLLARS).  That is amazing value destruction. In a world where employees are fired every day for making mistakes that cost $1,000, $100 or even $10 it is a staggering loss created by Mr. Lampert.  At the very least we should learn from his mistakes in order to educate better, value creating leaders.

Bigger Is Not Always Better – Why Amazon Is Worth More than Walmart

Bigger Is Not Always Better – Why Amazon Is Worth More than Walmart

This week an important event happened on Wall Street.  The value of Amazon (~$248B) exceeded the value of Walmart (~$233B.)  Given that Walmart is world’s largest retailer, it is pretty amazing that a company launched as an on-line book seller by a former banker only 21 years ago could now exceed what has long been retailing’s juggernaut.

WalMart redefined retail.  Prior to Sam Walton’s dynasty retailing was an industry of department stores and independent retailers.  Retailing was a lot of small operators, primarily highly regional.  Most retailers specialized, and shoppers would visit several stores to obtain things they needed.

But WalMart changed that.  Sam Walton had a vision of consolidating products into larger stores, and opening these larger stores in every town across America.  He set out to create scale advantages in purchasing everything from goods for resale to materials for store construction.  And with those advantages he offered customers lower prices, to lure them away from the small retailers they formerly visited.

And customers were lured.  Today there are very few independent retailers.  WalMart has ~$488B in annual revenues.  That is more than 4 times the size of #2 in USA CostCo, or #1 in France (#3 in world) Carrefour, or #1 in Germany (#4 in world) Schwarz, or #1 in U.K. (#5 in world) Tesco.  Walmart directly employes ~.5% of the entire USA population (about 1 in every 200 people work for Walmart.)  And it is a given that nobody living in America is unaware of Walmart, and very, very few have never shopped there.

But, Walmart has stopped growing.  Since 2011, its revenues have grown unevenly, and on average less than 4%/year.  Worse, it’s profits have grown only 1%/year.  Walmart generates ~$220,000 revenue/employee, while Costco achieves ~$595,000.  Thus its need to keep wages and benefits low, and chronically hammer on suppliers for lower prices as it strives to improve margins.

140805_HO_OutAmazonAnd worse, the market is shifting away from WalMart’s huge, plentiful stores toward on-line shopping.  And this could have devastating consequences for WalMart, due to what economists call “marginal economics.”

As a retailer, Walmart spends 75 cents out of every $1 revenue on the stuff it sells (cost of goods sold.)  That leaves it a gross margin of 25 cents – or 25%.  But, all those stores, distribution centers and trucks create a huge fixed cost, representing 20% of revenue.  Thus, the net profit margin before taxes is a mere 5% (Walmart today makes about 5 cents on every $1 revenue.)

But, as sales go from brick-and-mortar to on-line, this threatens that revenue base.  At Sears, for example, revenues per store have been declining for over 4 years.  Suppose that starts to happen at Walmart; a slow decline in revenues.  If revenues drop by 10% then every $100 of revenue shrinks to $90.  And the gross margin (25%) declines to $22.50.  But those pesky store costs remain stubbornly fixed at $20.  Now profits to $2.50 – a 50% decline from what they were before.

A relatively small decline in revenue (10%) has a 5x impact on the bottom line (50% decline.) The “marginal revenue”, is that last 10%.  What the company achieves “on the margin.”  It has enormous impact on profits.  And now you know why retailers are open 7 days a week, and 18 to 24 hours per day.  They all desperately want those last few “marginal revenues” because they are what makes – or breaks – their profitability.

All those scale advantages Sam Walton created go into reverse if revenues decline.  Now the big centralized purchasing, the huge distribution centers, and all those big stores suddenly become a cost Walmart cannot avoid.  Without growing revenues, Walmart, like has happened at Sears, could go into a terrible profit tailspin.

And that is what Amazon is trying to do.  Amazon is changing the way Americans shop.  From stores to on-line.  And the key to understanding why this is deadly to Walmart and other big traditional retailers is understanding that all Amazon (and its brethren on line) need to do is chip away at a few percentage points of the market.  They don’t have to obtain half of retail.  By stealing just 5-10% they put many retailers, they ones who are weak, right out of business.  Like Radio Shack and Circuit City.  And they suck the profits out of others like Sears and Best Buy.  And they pose a serious threat to WalMart.

And Amazon is succeeding.  It has grown at almost 30%/year since 2010.  That growth has not been due to market growth, it has been created by stealing sales from traditional retailers.  And Amazon achieves $621,000 revenue per employee, while having a far less fixed cost footprint.

What the marketplace looks for is that point at which the shift to on-line is dramatic enough, when on-line retailers have enough share, that suddenly the fixed cost heavy traditional retail business model is no longer supportable.  When brick-and-mortar retailers lose just enough share that their profits start the big slide backward toward losses.  Simultaneously, the profits of on-line retailers will start to gain significant upward momentum.

And this week, the marketplace started saying that time could be quite near.  Amazon had a small profit, surprising many analysts.  It’s revenues are now almost as big as Costco, Tesco – and bigger than Target and Home Depot.  If it’s pace of growth continues, then the value which was once captured in Walmart stock will shift, along with the marketplace, to Amazon.

In May, 2010 Apple’s value eclipsed Microsoft.  Five years later, Apple is now worth double Microsoft – even though its earnings multiple (stock Price/Earnings) is only half (AAPL P/E = 14.4, MSFT = 31.)  And Apple’s revenues are double Microsoft’s.  And Apple’s revenues/employee are $2.4million, 3 times Microsoft’s $731k.

While Microsoft has about doubled in value since the valuation pinnacle transferred to Apple, investors would have done better holding Apple stock as it has more than tripled.  And, again, if the multiple equalizes between the companies (Apple’s goes up, or Microsoft’s goes down,) Apple investors will be 6 times better off than Microsoft’s.

Market shifts are a bit like earthquakes.  Lots of pressure builds up over a long time.  There are small tremors, but for the most part nobody notices much change.  The land may actually have risen or fallen a few feet, but it is not noticeable due to small changes over a long time.  But then, things pop.  And the world quickly changes.

This week investors started telling us that the time for big change could be happening very soon in retail.  And if it does, Walmart’s size will be more of a disadvantage than benefit.

Hobby Lobby – Win the Battle, Risk Losing the War

Hobby Lobby – Win the Battle, Risk Losing the War

Yesterday the U.S. Supreme Court ruled in favor of Hobby Lobby and against the U.S. government in a case revolving around health care for employees.  I’m a business person, not a lawyer, so to me it was key to understand from a business viewpoint exactly what Hobby Lobby “won.”

It appears Hobby Lobby’s leaders “won” the right to refuse to provide certain kinds of health care to their employees as had been mandated by the Affordable Care Act.  The justification primarily being that such health care (all associated with female birth control) violated religious beliefs of the company owners.

As a business person I wondered what the outcome would be if the next case is brought to the court by a business owner who happens to be a Christian Scientist.  Would this next company be allowed to eliminate offering vaccines – or maybe health care altogether – because the owners don’t believe in modern medical treatments?

This may sound extreme, and missing the point revolving around the controversy over birth control.  But not really.  Because the point of business is to legally create solutions for customer needs at a profit.  Doing this requires doing a lot of things right in order to attract and retain the right employees, the right suppliers and  customers by making all of them extremely happy.  I don’t recall Adam Smith, Milton Friedman, Peter Drucker, Edward Demming, John Galbraith or any other historically noted business writer saying the point of business to set the moral compass of its customers, suppliers or employees.

I’m not sure where enforcing the historical religious beliefs of founders or owners plays a role in business.  At all.  Even if they have the legal right to do so, is it smart business leadership?

Hobby Lobby Store

Hobby Lobby Store

Hobby Lobby competes in the extraordinarily tough retail market.  The ground is littered with failures, and formerly great companies which are struggling such as Sears, KMart, JCPenney, Best Buy, etc.  And recently the industry has been rocked with security breaches, reducing customer faith in stalwarts like Target.  And profits are being challenged across all brick-and-mortar traditional retailers by on-line companies led by Amazon, who have much lower cost structures.

All the trends in retail bode poorly for Hobby Lobby.  Hobby Lobby does almost no business on-line, and even closes its stores on Sunday. Given consumer desires to have what they want, when they want it, unfettered by time or location, a traditional retailer like Hobby Lobby already has its hands full just figuring out how to keep competitors at bay.  Customers don’t need much encouragement to skip any particular store in search of easily available products and instant price information across retailers.

Social trends are also very clear in the USA.  The great majority of Americans support health care for everyone.  Including offering birth control, and all other forms of women’s health needs. This has nothing to do with the Affordable Care Act.  Health care, and women’s rights to manage their individual reproductiveness, is something that is clearly a majority viewpoint – and most people think it should be covered by health insurance.

So, given the customer options available, is it smart for any retailer to brag that they are unwilling to offer employees health care?  Although not tied to any specific social issues, Wal-Mart has long dealt with customer and employee defections due to policies which reduce employee benefits, such as health care.  Is this an issue which is likely to help Hobby Lobby grow?

Is it smart, as Hobby Lobby competes for merchandise from suppliers, negotiates on leases with landlords, seeks new store permits from local governments, recruits employees as buyers, merchandisers, store managers and clerks, and seeks customers who can shop on-line or at competitors to brandish the sword of intolerance on a specific issue which upsets the company owner?  And one where this owner is on the opposite side of public opinion?

Long ago a group of retired U.S. military Generals told me that in Vietnam America won every battle, but lost the war.  Through overwhelming firepower and manpower, there was no way we would not win any combat mission.  But that missed the point.  As a result of focusing on the combat, America’s leaders missed the opportunity win “the hearts and minds” of most Vietnamese.  In the end America left Vietnam in a rushed abandonment of Saigon, and the North Vietnamese took over all of South Vietnam.  Although we did what leaders believed was “right,” and fought each battle to a win, in the end America lost the objective of maintaining a free, independent and democratic Vietnam.

The leaders of Hobby Lobby won this battle.  But is this good for the customers, suppliers, communities where stores are located, and employees of Hobby Lobby?  Will these constituents continue to support Hobby Lobby, or will they possibly choose alternatives?  If in its actions, including legal arguing at the Supreme Court, Hobby Lobby may have preserved what its leaders think is an important legal precedent.  But, have their strengthened their business competitiveness so they will be a long-term success?

Perhaps Hobby Lobby might want to listen to the CEO of Chick-fil-A, which suffered a serious media firestorm when it became public their owners donated money to anti-gay organizations.  CEO Cathy decided it was best to “just shut up and go sell chicken.”  Business is tough enough, loaded with plenty of battles, without looking for fights that are against trends.

 

The Kindle Smartphone is a Game Changer – But Not As You Think

The Kindle Smartphone is a Game Changer – But Not As You Think

Yesterday Amazon launched its new Kindle Fire smartphone.

“Ho-hum” you, and a lot of other people, said.  “Why?”  “What’s so great about this phone?”

The market is dominated by Apple and Samsung, to the point we no longer care about Blackberry – and have pretty much forgotten about all the money spent by Microsoft to buy Nokia and launch Windows 8.  The world doesn’t much need a new smartphone maker – as we’ve seen with the lack of excitement around Google/Motorola’s product launches.  And, despite some gee-whiz 3D camera and screen effects, nobody thinks Amazon has any breakthrough technology here.

But that would be completely missing the point.  Amazon probably isn’t even thinking of competing heads-up with the 2 big guns in the smartphone market.  Instead, Amazon’s target is everyone in retail.  And they should be scared to death.  As well as a lot of consumer products companies.

Amazon's new Kindle Fire smartphone

Amazon’s new Kindle Fire smartphone

Apple’s iPod and iPhones have some 400,000 apps.  But most people don’t use over a dozen or so daily.  Think about what you do on your phone:

  • Talk, texting and email
  • Check the weather, road conditions, traffic
  • Listen to music, or watch videos
  • Shopping (look for products, prices, locations, specs, availability, buy)

Now, you may do several other things.  But (maybe not in priority,) these are probably the top 4 for 90% of people.

If you’re Amazon, you want people to have a great shopping experience.  A GREAT experience.  You’ve given folks terrific interfaces, across multiple platforms.  But everything you do with an app on iPhones or Samsung phones involves negotiating with Apple or Google to be in their store – and giving them revenue.  If you could bypass Apple and Google – a form of retail “middleman” in Amazon’s eyes – wouldn’t you?

Amazon has already changed retail markedly.  Twenty years ago a retailer would say success relied on 2 things:

  1. Store location and layout.  Be in the right place, and be easy to shop.
  2. Merchandise the goods well in the store, and have them available.

Amazon has killed both those tenets of retail.  With Amazon there is no store – there is no location.  There are no aisles to walk, and no shelves to stock.  There is no merchandising of products on end caps, within aisles or by tagging the product for better eye appeal.  And in 40%+ cases, Amazon doesn’t even stock the inventory.  Availability is based upon a supplier for whom Amazon provides the storefront and interface to the customer, sending the order to the supplier for a percentage of the sale.

And, on top of this, the database at Amazon can make your life even easier, and less time consuming, than a traditional store.  When you indicate you want item “A” Amazon is able to show you similar products, show you variations (such as color or size,) show you “what goes with” that product to make sure you buy everything you need, and give you different prices and delivery options.

Many retailers have spent considerably training employees to help customers in the store.  But it is rare that any retail employee can offer you the insight, advice and detail of Amazon.  For complex products, like electronics, Amazon can provide  detail on all competitive products that no traditional store could support. For home fix-ups Amazon can provide detailed information on installation, and the suite of necessary ancillary products, that surpasses what a trained Home Depot employee often can do.  And for simple products Amazon simply never runs out of stock – so no asking an aisle clerk “is there more in the back?”

And it is impossible for any brick-and-mortar retailer to match the cost structure of Amazon.  No stores, no store employees, no cashiers, 50% of the inventory, 5-10x the turns, no “obsolete inventory,” no inventory loss – there is no way any retailer can match this low cost structure. Thus we see the imminent failure of Radio Shack and Sears, and the chronic decline in mall rents as stores go empty.

Some retailers have tried to catch up with Amazon offering goods on-line.  But the inventory is less, and delivery is still often problematic.  Meanwhile, as they struggle to become more digital these retailers are competing on ground they know precious little about.  It is becoming commonplace to read about hackers stealing customer data and wreaking havoc at Michaels Stores and Target.  Thus on-line customers have far more faith in Amazon, which has 2 decades of offering secure transactions and even offers cloud services secure enough to support major corporations and parts of the U.S. government.

And Amazon, so far, hasn’t even had to make a profit.  It’s lofty price/earnings multiple of 500 indicates just how little “e” there is in its p/e.  Amazon keeps pouring money into new ways to succeed, rather than returning money to shareholders via stock buybacks or dividends.  Or dumping it into chronic store remodels, or new store construction.

Today, you could shop at Amazon from your browser on any laptop, tablet or phone.  Or, if you really enjoy shopping on-line you can now obtain a new tablet or phone from Amazon which makes your experience even better.  You can simply take a picture of something you want, and your new Amazon smartphone will tell you how to buy it on-line, including price and delivery.  No need to leave the house.  Want to see the product in full 360 degrees? You have it on your 3D phone.  And all your buying experience, customer reviews, and shopping information is right at your fingertips.

Amazon is THE game changer in retail.  Kindle was a seminal product that has almost killed book publishers, who clung way too long to old print-based business models.  Kindle Fire took direct aim at traditional retailers, from Macy’s to Wal-Mart, in an effort to push the envelope of on-line shopping.  And now the Kindle Fire smartphone puts all that shopping power in your palm, convenient with your other most commonplace uses such as messaging, fact finding, listening or viewing.

This is not a game changing smartphone in comparison with iPhone 5 or Galaxy S 5.  But, as another salvo in the ongoing war for controlling the retail marketplace this is another game changer.  It continues to help everyone think about how they shop today, and in the future.  For anyone in retail, this may well be seen as another important step toward changing the industry forever, and making “every day low prices” an obsolete (and irrelevant) retail phrase.  And for consumer goods companies this means the need to distribute products on-line will forever change the way marketing and selling is done – including who makes how much profit.

 

Investors May Regret Target’s CEO Ouster – Look at Sears, JCP

Investors May Regret Target’s CEO Ouster – Look at Sears, JCP

Lots of press this week about Target’s CEO and Chairman, Gregg Steinhafel, apparently being forced outBlame reached the top job after the successful cyber attack on the company last year.  But investors, and customers, may regret this somewhat Board level over-reaction to a mounting global problem.

Richard Clark is probably America’s foremost authority on cyber attacks.  He was on America’s National Security Council, and headed the counter-terrorism section.  Since leaving government he has increasingly focused on cyber attacks, and advised corporations.

In early 2013 I met Mr. Clark after hearing him speak at a National Association of Corporate Directors meeting.  He was surprisingly candid in his comments at the meeting, and after.  He pointed out that EVERY company in America was being randomly targeted by cyber criminals, and that EVERY company would have an intrusion.  He said it was impossible to do business without working on-line, and simultaneously it was impossible to think any company – of any size – could stop an attack from successfully getting into the company.  The only questions one should focus on answering were “How fast can you discover the attack?  How well can you contain it? What can you learn to at least stop that from happening again?”

So, while the Target attack was large, and not discovered as early as anyone would like, to think that Target is in some way wildly poor at security or protecting its customers is simply naive.  Several other large retailers have also had attacks, include Nieman Marcus and Michael’s, and it was probably bad luck that Target was the first to have such a big problem happen, and at such a bad time, than anything particularly weak about Target.

We now know that all retailers are trying to learn from this, and every corporation is raising its awareness and actions to improve cyber security.  But someone will be next.  Target wasn’t the first, and won’t be the last.  Companies everywhere, working with law enforcement, are all reacting to this new form of crime.  So firing the CEO, 2 months after firing the CIO (Chief Information Officer), makes for good press, but it is more symbolic than meaningful.  It won’t stop the hackers.

Where this decision does have great importance is to shareholders and customers.  Target has been a decent company for its constituents under this CEO, and done far better than some of its competitors.  The share price has doubled in the last 5 years, and Target has proven a capable competitor to Wal-Mart while other retailers have been going out of business (Filene’s Basement, Circuit City, Linens & Things, Dots, etc.) or losing all relevancy (like Abercrombie and Fitch and Best Buy.)  And Target has been at least holding its own while some chains have been closing stores like crazy (Radio Shack 1,100 stores, Family Dollar 370 stores, Office Depot 400 stores, etc.)

Just compare Target’s performance to JCPenney, who’s CEO was fired after screwing up the business far worse than the cyber attack hurt Target.  Or, look at Sears Holdings.  CEO Ed Lampert was heralded as a hero 6 years ago, but since then the company he leads has had 28 straight quarters of declining sales, and closed 305 stores since 2010.  Kmart has become a complete non-competitor in discounting, and Sears has lost all relevancy as a chain as it has been outflanked on all sides.  CEO Lampert has constantly whittled away at the company’s value, and just this week told shareholders that they can simply plan on more store closings in the future.

And vaunted Wal-Mart is undergoing a federal investigation for bribing government officials in Mexico to prop up its business. Wal-Mart is constantly under attack by its employees for shady business practices, and even lost a National Labor Relations Board case regarding its hours and pay practices. And Wal-Mart remains a lightning rod for controversy as it fights with big cities like Chicago and Washington, DC about its ability to open stores, while Target has flourished in communities large and small with work practices considered acceptable.  And Target has avoided these sort of internally generated management scandals.

CEOs, and Boards of Directors, across the nation have been seriously addressing cyber security for the last couple of years.  Awareness, and protective measures, are up considerably.  But there will be future attacks, and some will succeed.  It is unclear blaming the CEO for these problems makes any sense – unless there is egregious incompetence.

On the other hand, finding a CEO that can grow a business like Target, in a tough retail market, is not easy.  Destroying KMart, while battling Wal-Mart, and still trying to figure out how to compete with Amazon.com is a remarkably difficult job.  Perhaps the toughest CEO job in the country.  Steinhafel had performed better than most.  Investors, and customers, may soon regret that he’s not still leading Target.