Sears Will Wash Its Hands of Lands’ End on April 4
It’s only a matter of weeks until Lands’ End is officially on its own. Sears Holding (NASDAQ:SHLD) amended its filing with the Securities and Exchange Commission last week, revealing that it will spin off the outdoor clothing retailer on April 4. Sears initially admitted its consideration of the separation strategy back in October, and then officially announced the deal in December. Five months after it initially floated the idea, the Chicago, Illinois-based company Sears unveiled its timeline on March 14, confirming that Lands’ End will soon turn into a publicly traded company. Lands’ End will trade on the NASDAQ under the symbol LE, beginning on April 7, and the transaction will hopefully help Sears raise cash and curb its revenue slide while allowing shareholders to benefit from the units’ separate significant values.
According to Fierce Retail, Lands’ End was first launched in 1963 as a sailboat hardware and equipment catalog, before becoming a clothing company in 1977. Sears has owned the brand since 2002 and most of its 253 retail outlets are located inside Sears stores. Now, starting April 4, Lands’ End will enter into a lease agreement with the company and initially pay Sears around $27 million in total annual rent for those locations. Later, according to the SEC filing, the lease obligation will drop to $10.9 million for 102 Sears locations by 2019.
Sears’s decision to spin off Lands’ End comes from its need to raise cash amid struggling sales. According to the company’s most recent earnings, it suffered a loss of $358 million in the fourth-quarter compared with $489 million last year, and total sales fell 13.6 percent to $10.59 billion, while U.S. same-store sales slid by 7.8 percent. Now, Sears is doing anything it can to offset the losses and inspire confidence in shareholders. The company has sold assets and spun off a number of businesses – including the company’s Sears Hometown and Outlet as well as Orchard Supply Hardware stores — to stem the bleeding, and this is Sears’s latest attempt to allow CEO Edward Lampert to concentrate on the Sears department store chains and Kmart, both competing for management time and capital within the holding company.