Sears 'doctor' to net pounds 700,000

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The Independent Online
David James, the company "doctor" brought in by Sears to stem increasing losses in its high-street shoes business, is likely to earn far more than the pounds 500,000 reportedly being paid to departing Sears chief executive Liam Strong.

"I have arranged a fixed fee for one year with Sears," said Mr James, who discloses his daily rate is pounds 5,500 a day. "My Sears fee is consistent with that." He has been charged with stemming the losses - through reorganising, selling or closing all or part of the shoe operation.

The division has sales of over pounds 400m but the losses are worsening. "If you include interest on the money lent by the Sears parent, the loss is pounds 20m to pounds 25m - not the pounds 9m normally mentioned," said Mr James.

Neither Mr James, who cheerfully calls himself a "one-man hit squad", nor Sears will elaborate on his payment. "We might disclose it later, but not now," said David Defty, Sears' finance director.

But Mr James said he had agreed with Sears chairman Sir Robert Reid to "devote about half my week to Sears" in return for the fixed payment. "If I have to work longer than that then it's my loss," he said.

If Mr James, an opera lover, works a two-and-a-half day week for 52 weeks and receives his normal daily rate the total would exceed pounds 700,000.

Mr James disclosed that Sears had "a call option on his services" if one year did not prove long enough for the job. "If Sears wants me to stay on, they have a right to retain me and I can't refuse."

Sears sells 60 million pairs of shoes a year. It has two upmarket outlets, the 125-shop Dolcis and the 24-shop Cable chains.

The bigger problems are at Shoe City and Shoe Express, into which Mr Strong poured tens of millions in the vain search for a profitable downmarket chain. The property portfolio is worth around pounds 80m, including a warehouse of 1 million square feet in Leicester that Mr James said was "more than half empty".

He said that Sears womenswear division would like Sears to keep Dolcis and Cable. "But I have complete autonomy in suggesting a strategy to the Sears board, and the best thing might be to include Dolcis and Cable as sweeteners to tempt somebody to buy the whole of the shoes business."

He is putting a three-month deadline on finding a buyer for the whole operation but he would consider selling a minority stake. "If another shoe company wants to buy in, we would consider that provided it keeps a minority interest only." Mr James has already hired Price Waterhouse. "And I'm hoping JP Morgan will accept my invitation to help as well."

He is giving managers only a few weeks to help prepare detailed business documents, which he plans to set out in "complete data rooms" open to potential purchasers. These rooms will be located not only in London and New York but in Hong Kong and Malaysia in the hope that local shoe-making companies might be interested in vertically integrating a UK retailing business.

Mr James reckons he will be lucky to find a buyer for the lot. If he does not, everything will be up for grabs - with or without the property element. "There are creative exit routes," he said. "Shoe City doesn't have to sell shoes. It has 80 sheds, and we could run them for cash, run off the stock and sell the properties as a valuable asset to somebody who wants to sell something else."

He added that Shoe Express might be viable with 150 shops, not 325. "Sears would have to carry the losses associated with the worst stores but might do better overall by getting a higher valuation on selling a smaller but better business."

He said that in the worst case - of no business disposals and total closure - Sears could face a write-down approaching pounds 300m.

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