updated 5/4/2010 8:32:31 PM ET 2010-05-05T00:32:31

The financier who leads Sears Holdings Corp. said Tuesday that the retailer will both revamp the merchandise and services in its stores and boost its Internet business.

Sears hopes that two-pronged approach will continue the momentum it gained during the recession, when its profit rose as it cut expenses.

"Five years from now, I believe this company, to some people, will be unrecognizable compared to what the company was 20, 30 or 40 years ago," Chairman Edward Lampert told a crowded room of investors during an annual shareholder meeting.

Based in the Chicago suburb of Hoffman Estates, the retailer owns the Sears and Kmart chains, mail-order and online retailer Lands' End and popular brands like Craftsman, Diehard and Kenmore.

But Sears is increasingly focusing its efforts online, with a revamped website that now includes products from outside vendors, a new emphasis on social media and mobile applications that allow customers to shop from their cell phones.

Lampert spent much of his nearly three-hour presentation — typically the only time each year he speaks publicly to shareholders — talking about Sears' online efforts.

Standing behind his Apple Inc. laptop, he searched Sears' website for sunglasses, turning up more than 67,000 items — which he declared "probably more than enough" — and used an iPhone app to order Cheerios, Kleenex tissues and allergy medicine that could be delivered to his home.

"It's not just us broadcasting to customers any more, he said. "It has to be interactive, and it has to be relevant."

But he was careful to say won't grow at the expense of the company's 3,900 stores.

"People are getting their information online, and they're going to get more of their information from mobile devices," he said. "And if we're not there, the stores aren't going to matter. ... The paradigm that it's either online or in stores, I don't see that."

Sears will carefully tend to its long-struggling clothing business in hopes of attracting new and younger shoppers. Executives say clothing has been an "Achilles heel" for Sears.

The company will add a line of trendier clothing to Lands' End, which also has its own stores and is an increasing presence inside Sears stores, to draw younger customers as well as a line of store-brand products at Kmart. It plans to reinvent much of its Kenmore line of appliances, expand layaway at both Sears and Kmart and even add more high-end fitness equipment at Sears.

But most of Lampert's and shareholders' attention Tuesday went to the online efforts — like myGofer, which allows shoppers to use a website or mobile phone application to select groceries that they can have delivered or can pick up at a Kmart.

"My prediction is some time over the next five years, this how you will be shopping because it's so much easier," Lampert said after demonstrating myGofer. "Our company is adapting to the way the American consumer is shopping and the way we think the American consumer will be shopping."

Morningstar analyst Kim Picciola said Internet ventures like myGofer could let Sears attract shoppers who have shunned it.

"I think it's an opportunity for them to reach out to a customer who's not traditionally a Kmart customer," she said. "The focus on the customer and being relevant to the customer, I think that's the right place for them to be."

Lampert acquired Kmart in 2003 and later bought Sears, Roebuck & Co. in 2003 to form Sears Holdings.

Also Tuesday, Sears' shareholders elected the company's interim CEO and president, W. Bruce Johnson, to its seven-member board. Johnson took the post in February 2008 after Sears ousted then-CEO Aylwin Lewis.

Lampert said the company continues to search for a permanent executive but sees no rush.

"Bruce and I know each other, we've worked together for seven years in different capacities and Bruce was put in this capacity because I and the board have a lot of confidence in (him)," Lampert said.

Sears shares fell $4.55, or 3.7 percent, to $117.81 in Tuesday trading.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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