News Feature | December 6, 2013

Sears Files To Spin Off Land's End

By Sam Lewis, associate editor
Follow Me On Twitter @TheSJLewis

Sears Store

Struggling retailer will distribute stock to shareholders for clothing division’s value

Back in October, Sears announced plans to spin off its Land’s End brand in an effort to bolster its cash and even its balance sheet. The two-month-old plan has now become a reality as Sears’ CEO Edward Lampert announced on Friday, Dec 6 the struggling retailer has filed to distribute its shares of Land’s End to investors.

The announcement comes just days after Lampert’s hedge fund, ESL Investments, announced its reduced stake in Sears. For the first time since 2008, Lampert’s investment is less than 50 percent of the company. Sears has been facing pressure from competitors like Walmart, Target, Lowe’s, and The Home Depot for years. Online retailers, like Amazon, add pressure to Sears, and other brick-and-mortar retailers, with reduced overheads and lower prices. Inevitably, brick-and-mortar retailers have been forced to reduce prices, and consequently, margins have also fallen.

The Land’s End spin off is the most recent occurrence of Sears trying to find ways to stabilize itself. In August, the company sold its Home and Outlet Stores in addition to cutting costs and reducing inventory. Those moves allowed Sears to reduce debt by almost $400 million, while generating $1.8 billion. The company has also been weighing the possibility of selling its Auto Centers. If the liquidation process were to continue, some analysts believe its Kenmore and Craftsman brands, along with some of Sears’ real estate could be at stake. “As we continue with our evolution, we are moving to a more nimble, less asset intensive business model,” reads a Sears' statement.  “As we move through this process we are continuously evaluating our asset structure and whether specific assets and/or businesses are better managed within the current Sears Holdings asset configuration or outside it.”

Land’s End was founded in 1963 as a sailboat hardware and equipment company in 1963, becoming a clothing and home goods catalog retailer in 1977. Sears acquired Land’s End in 2002 for just under $2 billion, with many analysts seeing the acquisition as a bad fit for both companies. Just over 10 years later, those speculations have nearly become reality. The distribution of Land’s End shares is subject to the approval of the board and other conditions. As of writing, the filing with the SEC didn’t state how many shares of Land’s End that Sears’ investors would receive.

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