Chairman of Sears to Take On Chief\'s Role

Edward S. Lampert will now have the chance to be even more hands on at Sears.

Mr. Lampert, the hedge-fund manager and Sears Holdings chairman who engineered the 2005 merger of Sears and Kmart, is taking over as chief executive of Sears Holdings because the current head, Louis J. D'Ambrosio, is departing.

Sears said Monday that Mr. D'Ambrosio would leave in February because of family health matters. Mr. D'Ambrosio was appointed chief executive in February 2011.

Mr. Lampert faces a tough job. When he brought Sears and Kmart under one roof, he vowed to shake up the retail world. But the company's financial performan ce has been weak.

Mr. Lampert became Kmart's majority owner in 2003, after it went into bankruptcy. In 2005, he combined Sears and Kmart in an $11.9 billion deal. Many analysts saw it as a real-estate investment - the company owned in-demand urban locations. Its private-label brands like Craftsman and Kenmore were also appealing.

But the recession put a kink in big real-estate deals. As consumers cut spending, retail stores shuttered, and the list of empty locations grew longer. Today, the Sears realty site lists 88 properties for sale and lease in closed buildings nationwide.

Meanwhile, Sears Holdings spent less on capital expenditures than its rivals, which resulted in stores that were often run-down or poorly lighted.

Comparable-store sales have fallen for six consecutive years at Sears. On Monday, it said that year-to-date and quarter-to-date same-store sales were still down at the company as a whole. However, the Sears unit had same-store sales i ncrease of 0.5 percent so far this quarter.

The financial hit has been significant. In the third quarter, the company lost $498 million, up from $410 million a year earlier. Sales in the quarter fell $548 million to $8.9 billion, mostly because of declining sales and shuttered stores.

Sears brought on Mr. D'Ambrosio after three years of having an interim chief executive; Mr. Lampert has always been a highly involved chairman. Mr. D'Ambrosio, formerly at I.B.M. and Avaya, bet on technology as the future of Sears. He gave clerks tablets so they could advise customers on products, and emphasized a loyalty program that collected shopping history and other data from customers. Sears has also been emphasizing online-offline convergence, like allowing customers to order online and pick up in store. Those so-called multichannel transactions make up half of the company's online business.

Sears also started to spruce up some stores, after years of letting many languish. In a December note, the Gimme Credit analyst Evan Mann gave Sears points for merchandising efforts, like a renewed focus on its Kenmore and Craftsman brands and other private labels, along with “improved in-store presentations and layouts.” Still, he wrote, the company “has a lot of work to do righting the ship.”

In a memo to employees, Mr. Lampert thanked Mr. D'Ambrosio for his work, and wrote that “Sears Holdings is now a more focused company with a strong vision.”

Mr. D'Ambrosio said in a note to the staff that “there is simply no one in the world that cares more about Sears Holdings” than Mr. Lampert.