Sears Holdings' second-largest investor to step down from board of directors
Sears Holdings said Monday that Bruce Berkowitz, the troubled retailer's second-largest investor, is leaving the company's board of directors, a departure that sent shares of the company's shares sharply lower.
Berkowitz is the chief investment officer of Fairholme Capital Management, which reported in an Aug. 14 regulatory filing that it held approximately 28.9 million shares of Sears Holdings, the parent of the Sears and Kmart retail chains. He will leave the board effective Oct. 31, less than two years after he joined it in Feb. 2016.
Along with departing the board, Berkowitz is closing his Fairholme Partnership hedge fund and distributing its holdings to investors, including a stake in Sears Holdings, Bloomberg News reported.
Shares of Hoffman Estates, Ill.-based Sears Holdings closed down 11.5%, at $5.99, in Monday trading.
Sears Holdings said it had not been told about any decisions regarding Fairholme Capital's shares of Sears Holdings. Berkowitz's departure "was not the result of any disagreement with the company on matters related to the company’s operations, policies or practices," the company said in a statement.
Berkowitz did not respond to an email sent to Fairholme Capital seeking comment about plans for changes in the Sears Holdings stock.
Company Chairman and CEO Edward Lampert thanked Berkowitz for his board service, characterizing the investor's leadership, guidance, and counsel as "invaluable." In a statement, Berkowitz said he wished the company the best as it "continues to execute on its strategic priorities."
More: Is Sears circling the drain? Not yet, Wall Street says
Latest numbers show Sears Holdings still floundering
Here's how far Sears Holdings has fallen in 5 years
Like many major U.S. retailers, Sears Holdings is trying to cope with a financial shift as consumers do more of their purchasing online and away from brick-and-mortar stores.
The company said in August it would close another 28 Kmart locations in a continuing cost-cutting campaign. The closures expand a list of 330 Sears or Kmart stores shuttered or set to be closed this year as the retailer seeks financial stability.
Sears Holdings will continue to operate more than 1,200 stores after the closures. The company said in a regulatory filing earlier this year it believed it had at least another 12 months of cash to continue its operations.
Sears Holdings' quarterly earnings report in August said sales at Sears and Kmart stores open at least a year, a key metric for the retail industry, fell 11.5% for the three-month period that ended in late July. The decline was broader than Wall Street analysts had forecast.
Follow Paste BN reporter Kevin McCoy on Twitter: @kmccoynyc