Dive Brief:
- Sears Holdings Corp. is planning to spin off its Lands' End clothing business, which it acquired in 2002.
- Billionaire hedge fund manager Eddie Lampert combined Sears and Kmart in 2005 and took over as chief executive this February, and has been the subject of criticism for not investing enough in the Lands' End business, leading it to pick up a reputation for poor service and unfashionable merchandise.
- The Lands' End spinoff won't raise cash for Sears and will be carried out through a pro rata distribution of shares to Sears shareholders, ultimately resulting in both companies having improved focus and flexibility.
Dive Insight:
Lands' End is the latest business to be spun off by Sears as it continues what several analysts characterize as a downward spiral. Its Orchard Supply Hardware Stores were spun off in 2011, followed by Sears Hometown and Outlet last year. Credit Suisse analyst Gary Balter noted that Sears had slowly been destroying Lands' End, which saw 2012 sales drop to $1.59 billion from $1.73 billion in 2011, and Belus Capital Advisors Chief Executive Brian Sozzi said Sears is "essentially selling their body parts" to stay alive. Could Sears be on the path to retail extinction?
