The CEO and main shareholder, Eddie Lampert, says that the company's pension plan is to blame for its current financial problems with more retirees now in the books & # 39; that the employees
Sears has been closing stores, reducing costs and selling brands as money is consumed and sees more customers leave their often neglected places.
But now CEO and main shareholder Eddie Lampert has another idea of why the company is losing money and blaming its former employees.
Sears delivered another sad quarterly earnings report on Thursday and Lampert wasted no time complaining about the billions of dollars Sears owes its former employees through its pension plans.
He stated that Sears has paid almost $ 2 billion in pension plans in the last five years and a total of $ 4.5 billion since Sears and Kmart merged in 2005.
It means that the company pays its retirees around $ 300 million a year.
If Sears could have put that money into operations, "we would have been in a better position to compete with other large retailers, many of which do not have large pension plans," Lampert wrote in a blog post.
Sears is struggling to compete with online retailers such as Amazon and Walmart. The pensions of their retirees also face their own funding shortfall of $ 1.5 billion
Lampert did not stop there. He went on to talk about the "very difficult" environment for retailers, but said that Sears had been "significantly affected" by their pension obligations.
Other analysts have blamed Lampert himself for the misfortunes of Sears and say he made poor decisions about marketing and did not invest enough in stores. The company also undertook to sell its products online.
This has meant that as more and more Americans have preferred to shop online instead of shopping centers, Sears has gradually lost more and more money every year.
Sears lost $ 11.7 billion since its last profitable year in 2012.
According to CNN Money, Lampert is right in his claim that the company's traditional pension plans are a drain on today's earnings.
The pension plans were generous, offering to pay a fixed monthly benefit to retirees as long as they live. That is different from what most companies offer today.
Although Sears finalized its pension plans in 2006, its employees and long-term retirees are still entitled to the benefits they accumulated while the plans were in effect.
It means that the company, which at one time was one of the largest employers in the country, has an estimated 100,000 retirees who are still eligible to receive benefits, but only 89,000 workers on their books.
Now that the company appears to be in dire profit conditions, the rules on which Sears must make contributions to its pension plans become even stricter.
The rules established by the Pension Benefit Guaranty Corp. dictate that when a company is at risk of bankruptcy or its plans lack sufficient funds, the rules on where you can invest your money become limited.
For example, Sears will get about $ 900 million selling its brand of Craftsman tools to Stanley Black & Decker.
However, by virtue of the sale, Sears must contribute about $ 250 million in its pension plans.
The company is also trying to sell its brand of Kenmore appliances, but has not yet reached an agreement on how much of the proceeds from the sale would be used to supplement its pension fund.