Sears to Spin Off Lands' End

Sears to spin off Lands' End
Tim Boyle/Getty Images
HOFFMAN ESTATES, Ill. -- Sears Holdings Corp. said Friday that it will spin off its Lands' End clothing business as a separate company by distributing stock to the retailer's shareholders.

It's the latest move by the struggling retailer to turn around its results as it faces wider losses and increasingly displeased investors. Sears shares rose more than 4 percent in premarket trading.

Sears (SHLD) had said in October that it was considering separating the Lands' End and Sears Auto Center businesses from the rest of the company. It didn't mention Sears Auto Center in Friday's announcement.

Belus Capital Advisors analyst Brian Sozzi said the move shows Sears was unable to get a buyer at the right price for Land's End and may raise questions about how much other well-known brand names Sears owns, like Craftsman, are worth.

"It makes you question the value of what Sears is sitting on," he said. "It may have to continue dismembering itself to stay alive today and shrink from inside out."

Sears has spun off other businesses over the past two years,
including its Hometown and Sears Outlet (SHOS) stores and its Orchard Supply Hardware Stores, to raise cash.

Sears Chairman and CEO Edward Lampert disclosed recently that his stake in the company has been reduced to less than 50 percent as investors pulled money out of his hedge fund.

The news underscores the intense pressure facing the billionaire hedge fund manager, who took over as CEO in February to turn around the business.

Sears and the company's Kmart chain have struggled as rivals have lured away customers over the years.

Last year, Sears announced plans to restore profitability by cutting costs, reducing inventory, selling off some assets and spinning off others. Those moves helped it reduce net debt by $400 million and generated $1.8 billion in cash from the asset sales in the latest fiscal year.

Sears also has been building a loyalty program called Shop Your Way, which accounts for 65 percent of its sales and has tens of millions of active customers.

Still, Sears continues to face losses. In November it reported a wider third quarter loss as revenue declined 7 percent to $8.27 as the company marked down goods heavily to move merchandise.

Lands' End, which sells clothing and home goods on the Internet and through catalogs, began in 1963 as a sailboat hardware and equipment catalog, but morphed into a clothing company by 1977. Sears bought the company in 2002.

Sears shares slipped 4 cents to $49.94 in morning trading. They are up almost 21 percent so far this year.


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16 Comments

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klugsw

Lands End is just about the only thing keeping customers going to Sears for clothing. When Lands End becomes a separate company, is there any guarantee that it will continue to stock Sears into the future? If not, this is a big mistake.

December 06 2013 at 2:37 PM Report abuse rate up rate down Reply
carpro33

"fuss...", trying doing a little research on-line. Some tools are still made in the USA. However, even SnapOn has become a traitorous sellout. Some of their tools are now made in China and sold in, among other places, COSTCO. These companies just cannot ever make enough money, so they will eventually kill their reputations by doing the "China Express" thing. UGH !

December 06 2013 at 2:23 PM Report abuse +1 rate up rate down Reply
betty_brock

Sears = Kmart

December 06 2013 at 2:09 PM Report abuse +1 rate up rate down Reply
hakuna95

Although Sears purchased Lands' End in 2002, and had their challenges with connection to the market beyond the millions of loyal Lands' End customers, they were "getting it" and would have been successful with the brand. Enter Mr. Lampert in 2005? Maybe a financial wizard, but certainly not a customer driven retailer. That's when the LE brand was headed on a journey to lose and alienate customers loyalty built over 42 years. I used to work for, and still value my tenure there, as one of the best experiences of my professional life. Frequently, Corporate America needs to take a step back, ... return to operating models, philosophies, and the tenets of doing business. Lands' End needs to go back to doing the things that earned them the respect of one of Americas most trusted brands. Gary Comer is no longer with us, but Dave Dyer and Jeff Jones are. Do the new owners want to revive this cash cow? Contact me and let's build the team with a sense of urgency never before captured. Remember Gary Comer's golden rule, "Take care of the customers, take care of the staff, and everything else WILL take care of itself.", "I will never criticize any staff member who will do the right thing for the customer" These tenets may be a bit misquoted, but you get it,...Mr. Lampert didn't. He does get that if you keep wringing the towel tighter, the water will drain out. Unfortunately, the best resource, and the best customers drain out also. R.I.P. Gary Comer, and God Bless America.

December 06 2013 at 1:05 PM Report abuse rate up rate down Reply
ectullis

I worked for Sears when it was the largesr retailer in the world. Management ran it into the ground.

December 06 2013 at 12:59 PM Report abuse rate up rate down Reply
raidrmik67

I wonder how many more assets they have to sell off? They sold of the Sears Tower, sold off Allstate, sold off the Discover card.

December 06 2013 at 12:09 PM Report abuse rate up rate down Reply
raidrmik67

I always liked Sears and it's unfortunate they have been mismanaged, they should have never acquired K-Mart! At one time Sears was the 800 lb gorilla in the marketplace, you could buy just about anything but food from them in their stores or catalogs. We lived in a very rural area so our "christmas shopping" generally meant going through the Sears and Penny's catalogs and marking stuff we liked and I remember one year going through it just before Christmas and noticed certain items circled....he he, I knew what I was getting!

December 06 2013 at 12:08 PM Report abuse rate up rate down Reply
1 reply to raidrmik67's comment
ectullis

At one time people wouldn't say "I'm Going shopping" they would say "I'm going to Sears".

December 06 2013 at 1:01 PM Report abuse rate up rate down Reply
marycarms

Agree totally with Lanny and Mary about quality. Read the reviews on the Lands End site and you will see over and over "this is not the same item I've bought in the past!". The quality has seriously deteriorated, while the prices have greatly increased. The only good thing about LE being part of Sears was the ability to return items to the local Sears store and avoid shipping charges. Wish someone would buy it and restore the Lands End of old - high quality merchandise, superb customer service, and prices appropriate for the quality being offered.

December 06 2013 at 11:54 AM Report abuse rate up rate down Reply
Lanny and Mary

Hopefully, Land's End will get back to selling quality clothing like they did pre-Sears days. I used to be a regular customer, but left them in recent years for low quality merchandise.

December 06 2013 at 11:33 AM Report abuse rate up rate down Reply
1 reply to Lanny and Mary's comment
ak841

Lands End is as good as its always been.

December 08 2013 at 11:35 AM Report abuse rate up rate down Reply
fussion55

no the real problem is that there corporate not in tune with what we want to purchase. I was in there store the other day a noticed that the world famous Craftmans hand tools are made in China, how sad is that! Well i will not be buying my tools there anymore. I can just go to my local Harbor Freight Tools! or just Ebay to find sockets and othere hand tools. I'll have to go to Home Depot is see where there tools are made. I'll have to check my butt maybe it says "MADE IN CHINA".!

December 06 2013 at 11:10 AM Report abuse +1 rate up rate down Reply
1 reply to fussion55's comment
ectullis

Craftsman tools made in China is the last nail in Sears coffin.

December 06 2013 at 1:02 PM Report abuse +1 rate up rate down Reply