SEARS TO SPIN OFF LANDS' END
c.2013 New York Times News Service
Sears Holdings, the struggling retailer run by the hedge fund manager Edward S. Lampert, said Friday that it had filed to spin off its Lands’ End business by distributing shares to investors.
Faced with plummeting sales and other challenges, Sears first announced in October that it planned to spin off Lands’ End to raise cash. The company had long faced pressure from competitors including Wal-Mart, Target and Home Depot, while online shops like Amazon and others have forced brick-and-mortar stores to cut prices.
Sears acquired Lands’ End in 2002 for $1.9 billion. The spinoff of the company would follow Sears’ sale of another business, Sears Home and Outlet Stores. The company may still try to find a buyer for Sears Auto Centers. Some analysts have contended that the company would continue a liquidation process that could include Kenmore and Craftsman, two brands named as possible targets, as well as some of the company’s real estate holdings.
“Sears Holdings is an asset rich enterprise, with significant financial flexibility and multiple resources at our disposal,” the company said in an email statement. “As we continue with our evolution, we are moving to a more nimble, less asset intensive business model. 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.”
The announcement came during the same week that Lampert’s hedge fund, ESL Investments, announced that it had reduced its stake in the company to less than 50 percent for the first time since 2008.
The company said it expected the spinoff to be tax-free for U.S. shareholders, except for any cash received in lieu of fractional shares. The move is subject to approval by the board of Sears Holdings.
While the company’s stock has improved more than 20 percent over the past year, it’s down more than 70 percent since its peak in 2007.
“Over the last year, for the first time in seven or eight years, the company is actually doing something good for shareholders,” said Craig Sterling, the Global Head of Research at EVA Dimensions. “And this would be consistent with that.”