Remarks by Edward S. Lampert at the The Third Avenue Management Investor Conference and Luncheon
Remarks by Edward S. Lampert at the The Third Avenue Management Investor Conference and Luncheon
(via www.ridgewoodgrp.com)
Question: There seems to be a pattern of ESL making investments in retail given positions in companies like KMART, AUTOZONE, and SEARS. This seems surprising since Buffett would consider retail to be one of the not so great businesses. What do you see that Buffett does not and why do you like retail so much?
Answer: Actually, investing in retail for ESL has been an opportunistic thing and a relatively recent phenomenon. I would agree with you about the general characteristics of retail not being that attractive. ESL was started in 1988, but their first retail investment (probably AUTOZONE) was made in 1997 and a few other opportunities since then.
People like winners and they
People like winners and they give winners the benefit of the doubt. The same people who will wait in line at WALMART because WALMART is perceived as successful would get really pissed off if they go to a KMART and have to wait. However, expectations were so low that improvement was possible.