«Breaking News» Sears CEO complains that billions given to former employees through pension plan is to blame

CEO and primary shareholder Eddie Lampert says the company's pension plan is to blame for its current financial problems with more retirees now 'on the books' than employees

Sears has been closing stores, cutting costings and selling brands as it burns through money and sees more customers abandon its often-neglected locations.

But now the CEO and primary shareholder Eddie Lampert has another idea as to why the company is losing money and blaming its former employees. 

Sears turned in another bleak quarterly earnings report on Thursday and Lampert didn't waste any time in complaining about the billions of dollars Sears owes its former employees through its pension plans.

He claimed that Sears has paid almost $2 billion into pension plans over the past five years and a total of $4.5 billion since Sears and Kmart merged in 2005.

It means the company is left paying 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 retail companies, many of which don't have large pension plans,' Lampert wrote in a blog post.

Sears is struggling to compete with online retailers like Amazon and Walmart. Its retirees' pensions also face their own funding shortfall of $1.5 billion

Lampert didn't stop there. He went on to speak of the 'very difficult' environment for retailers, but said Sears had been 'significantly impacted' by its pension obligations.

Other analysts have blamed Lampert himself for Sears' misfortunes and say he made bad decisions about marketing and didn't invest enough in the stores. The company also failed to commit to selling its products online. 

It has meant that as more and more Americans' have preferred to shop online rather than in malls, Sears has gradually lost more and more money each year.

Sears has lost $11.7 billion since its last profitable year in 2012.

According to CNN Money, Lampert is correct in his assertion that the the company's traditional pension plans are a drain on today's profits. 

The pension plans were generous - offering to pay a fixed monthly benefit to retirees as long as they live. That is different to what most businesses today offer. 

Although Sears ended its pension plans in 2006, its longtime employees and retirees are still entitled to benefits they accrued while the plans were in effect.

It means that the company, which at one time was one of the nation's largest employers, has an estimated 100,000 retirees still eligible for benefits, yet only has 89,000 workers on its books. 

Now that the company appears to be on shaky ground profits-wise, the rules in which Sears must make contributions to its pension plans becomes even stricter.

Rules set by the Pension Benefit Guaranty Corp. dictate that when a company is at risk of bankruptcy or its plans are underfunded, the rules as to where it can invest its money becomes limited.   

For example, Sears is getting about $900 million by selling its Craftsman tool brand to Stanley Black & Decker.

However, under the sale, Sears must contribute about $250 million of that into its pension plans.

The company is also trying to sell off its Kenmore appliance brand too but a deal has not been worked out as to how much of the proceeds from the sale would tgo towards topping up its pension pot. 

Link hienalouca.com

https://hienalouca.com/2018/09/15/sears-ceo-complains-that-billions-given-to-former-employees-through-pension-plan-is-to-blame/
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CEO and primary shareholder Eddie Lampert says the company’s pension plan is to blame for its current financial problems with more retirees now ‘on the books’ than employees

Sears has been closing stores, cutting costings and selling brands as it burns through money and ...

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Dianne Reeves US News HienaLouca





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