September 28, 2005, 12:00 AM

At Sears Holdings, it`s Kmart`s turn to direct the online show

With both Sears Holdings and Lands` End languishing in their overall performance, former Kmart CEO Aylwin Lewis took over as the new top executive of Sears Holdings and Sears Holdings Chairman Edward S. Lampert, the largest shareholder, assumed direct overall control of the online and Lands` End businesses.

Since Kmart Corp. acquired Sears, Roebuck and Co. in March, forming Sears Holdings Corp., there have been several changes in senior management of the direct-to-consumer business. Bill Bass, the former head of Sears Customer Direct and senior vice president of Lands` End, left in April, followed in August by Lands` End CEO Mindy Meads. They were each replaced by underlings, Chris Shimojima as vice president and general manager of Customer Direct and David McCreight at Lands` End.

But with both Sears Holdings and Lands` End languishing in their performance, veteran Kmart executives are getting more directly involved with operations. Last month, former Kmart CEO Aylwin Lewis took over as the new top executive of Sears Holdings, replacing Sears, Roebuck veteran Alan Lacy, and Sears Holdings Chairman Edward S. Lampert, the largest shareholder, assumed direct control of the online and Lands` End businesses. Shimojima and McCreight now work under Lampert.

"The Kmart people are now asserting control of the company," says Neil Stern, senior partner of retail consultants McMillan/Doolittle.

Analysts say it`s unclear, however, what impact the change in top management is likely to have on the company`s ability to grow and improve as a multi-channel retailer. "It will take a long time to turn Sears around," says Ulysses Yannas, stock analyst with New York investment research firm Buckman Buckman & Reid. "Even Lands` End is in worse shape than when Sears bought it."

Lampert, known for his financial management expertise, will now direct overall marketing and merchandising in addition to online operations and Lands` End. "As brilliant as Ed Lampert is, he doesn`t have experience in merchandising and marketing," Yannas says.

Sears Holdings needs to do more to improve its stores, including its merchandise and the way it displays products, to improve its performance, Yannas says. But Lampert is not known for being bullish on store investments, he adds.

Lampert, however, says he`s getting more directly involved in operations to help make Sears a more customer-oriented organization. "My decision to become more deeply involved in certain aspects of Sears Holdings` business reflects the board`s and my desire to make the company more responsive to our customers," he said in a letter to shareholders.

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