Investors call for Sears chief executive to quit

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The Independent Online
The troubled Sears retail empire, which spans the Selfridges department store and Freemans mail order businesses, was heading for break-up yesterday after the group delivered the latest in a series of profit warnings.

Institutions were left fuming by a disastrous trading update which said that Sears' pre-tax profits for the full year would be "significantly below" last year's pounds 100m. The group said its Christmas sales had been poor, with particularly weak performances from its Freemans and footwear businesses.

Institutional investors immediately called for the dismissal of Liam Strong, the group's chief executive. Sears' Christmas trading statement was seen as his last chance to repair City confidence after a five-year tenure characterised by poor trading and false dawns.

One shareholder said: "It's yet another disappointment. Other retailers seem to be able to get their act together when they have the right man at the helm. Five years is conventionally considered long enough for a chief executive to put a strategic plan together."

Though Sears chairman Sir Bob Reid said he and the board still supported Mr Strong, the vote of confidence failed to convince the City. One shareholder said: "We would like to meet the chairman to hear exactly why he is so supportive of the management."

Another commented: "The institutions will demand blood and they will probably get it." However, he added that Sears was in such a poor state that it seemed "beyond repair".

Sears is now considered a break-up target, with analysts such as Nick Bubb at Mees Pierson predicting a property buyer. "I think it goes without saying that Liam Strong will go. The question is whether anyone new will come in before the inevitable bid happens."

Mr Bubb predicts a break-up value of 120p a share. Sears shares closed down 4p to 87.5p. It is likely to announce the sale of the Freemans mail order business to Littlewoods early next week though this last-ditch attempt at releasing shareholder value will be seen as too little too late. The sale price, thought to be around pounds 375m, will also disappoint analysts.

Yesterday's profits warning came in stark contrast to other retailers, which are reporting strong sales increases boosted by rising consumer spending. The group said that like-for-like sales in the second half to 6 January increased by just 1 per cent. Trading in the Christmas period was worse, with comparative sales down 0.5 per cent.

Selfridges and the clothing division both did well with 8 per cent sales gains. But like-for-like sales were down 4 per cent at Adams childrenswear, 2.8 per cent in the footwear division and 6.5 per cent at Freemans.

The break-up of the Sears empire would mark the end of the rambling conglomerate built up by the late Sir Charles Clore in the 1950s. At one stage its interests included Galliford house-building as well as motor and engineering interests. Mr Strong himself has taken the axe to a host of familiar high street names such as Olympus Sports and Millets.