Focus is key to success

By DAVID MOON, Moon Capital Management, LLC
January 19, 2014

After announcing that sales at Sear and K-Mart had plunged from a year earlier, the price of the companies’ parent, Sears Holding Corp, stock dropped 14 percent in immediate after-hours trading.

Sears Holding blamed the results on weakness in its core customer base of economically challenged customers (the company's term) and strategic missteps in trying to reshape the company's core business.

They were half right. There is no shortage of economically challenged customers. But there have been no strategic missteps at Sears Holding. Because there has been no strategy.

Sears, the company whose catalogue business was the model for first generation Internet retailing, has no idea who or what it is today, except the remnant of financial engineering.

Hedge fund manager Eddie Lampert took control of Kmart in bankruptcy in 2003 and combined it with Sears in 2005. His attraction wasn’t their retail operations; it was each company’s vast real estate portfolio.

There was hidden or ignored value in that real estate, and it took some sophisticated financial engineering and some massive confidence to unlock that value.

Then came operating two massive, troubled retailers, something entirely different than financial engineering.

A casual stroll through a Sears or K-Mart can make a shopper feel like he's been locked in the store after-hours.

To combat those empty aisles, Sears is trying a couple of unique methods of enhancing the retail experience: the Sears Authorized Driving School and the Sears vacation layaway service.

The company that brought us the Christmas wish book, Craftsman tools and Kenmore washers now touts that it is the place “where parents turn for peace of mind” in teaching their teens how to drive.

The company also bills itself as the “Official Sponsor of Family Fun,” offering layaway vacation packages for as little as $49 per month.

What’s next? Auto insurance? Real estate brokerage and development? Stock brokerage? Online news and weather services?

Wait a minute; Sears already tried each of those.

As a youngster, I once asked one of the country’s most successful businessman the most predictable fresh college graduate question.

“What is the key to success?”


This once bankrupt billionaire told me that as a young man he tried to do too many things. He diluted his energy across a number of different projects, never able to fully give a single one needed attention.

His fortunes began to change when he decided what he wanted to be.

Like Sears, very few people ever determine what they want to be.

Massive success occurs when passion, skills and intentional effort all intersect. It works with businesses. And it works with people. We know that Peyton Manning is a talented athlete and hard worker.

Would he be a world class achiever if he had chosen music or abstract mathematics as a career?

Peyton Manning will never win a CMA Award. And Kenny Chesney will never win a Super Bowl.

Each has a natural skill set on which he chooses to focus.

And without focus, a natural advantage is no advantage.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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