Sears to Sell Off Lands’ End?

Dodgeville, WI—Does Edward Lampert, chairman at Sears Holdings Inc., plan to sell off Land’s’ End as part of the company’s efforts to raise cash at its struggling Sears and Kmart chains?

That’s what some analysts and The New York Post report, and Goldman Sachs has supposedly been chosen to assist in the sale.

Although a spokesperson for Sears Holdings declined comment on “speculation and rumor,” Lands’ End may be up for sale: asking price about $2 billion.

Lands’ End, which markets itself as a “family destination” mostly through mail order and e-commerce, has gotten the short shrift in a company that’s been struggling with 19 straight quarters of sales declines and a $2.4 billion loss in the most recent fourth quarter alone.

While Lands’End had grown during the 1990s, the brand’s sales have been estimated to be flat in recent years, generating between $150 million and $200 million in gross earnings.

At one time, Sears attempted to sell Lands’ End merchandise in its stores as a means to attract a younger, more affluent consumer, but the effort failed.

License Land’s End Internationally Like Tommy Hilfiger?

Since Land’s End is such a different retail type than Sears Holdings’ other divisions, it seems the most likely to be sold. According to the Post, Lampert would like to find a buyer who would then license Land’s End to search while expanding the brand internationally, such as in Europe.

“The idea is that Lands’ End would become something like Tommy Hilfiger,” a source told the Post.

Sears originally acquired Lands’ End in May 2002 for $1.86 billion in cash, a price that many observers said was too high at the time. Lampert inherited it when he merged Sears with Kmart in 2005. Lampert now controls about 61% of Sears Holdings through his ESL Investments, a private equity fund.

Speculation among retail analysts is that Sears may only be able to get between $1.2 billion and $1.6 billion for Lands’End.

In recent weeks, Sears Holdings has been looking for ways to turnaround its business, which posted a $3.1 billion loss last year. Last month, the company said it planned to increase liquidity by about $1 billion and improve operating performance, including reduction in expenses, lowering inventories, as well as sale and spin-off stores.

Sears Holdings then agreed to sell 11 Sears full-line store locations to mall operator General Growth Properties, Inc. (GGP) for $270 million. The company also planed to spin-off about 1,250 of its smaller-format stores to enable it to focus on its core business, and raise nearly $400 million to $500 million in proceeds.

Sears has since cut a deal to sell three of its top stores in Canada for $170 million.

 

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