Struggling Sears to spin off Lands' End clothing business

Fri Dec 6, 2013 2:18pm EST
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By Maria Ajit Thomas and Aditi Shrivastava

(Reuters) - Eddie Lampert-controlled Sears Holdings Corp (SHLD.O: Quote) said it would spin off its Lands' End clothing business, adding to the assets the company is shedding as it struggles with mounting operating losses and declining sales.

The company, operator of Sears department stores and the Kmart discount chain, has been selling or spinning off assets and closing stores for the past few years to try to turn around its business. Sales have been dropping since Lampert combined Sears and Kmart in an $11 billion deal in 2005.

The billionaire hedge fund manager, who took over as chief executive in February, has been criticized for not investing enough in the business, which has earned a reputation for dowdy merchandise and poor service compared to Wal-Mart Stores Inc (WMT.N: Quote) and Target Corp (TGT.N: Quote).

Sears shares were slightly down on Friday afternoon after rising as much as 4 percent in early trading.

"... The spinoff announcement essentially points to a number of negatives, including an inability to find a buyer, as previously Lands' End was listed as an asset that the company would monetize," Credit Suisse analyst Gary Balter wrote in a note to clients.

The New York Post reported in March 2012 that Lampert was exploring a sale of Lands' End. Lampert later told investors that while he was not actively looking for a buyer, there was always a possibility the business could be "separated."

When asked if the spinoff pointed to its inability to find a buyer for the business, a Sears spokesman referred to a company statement in late October.

The company said then that any separation, if pursued, would not be structured as a sale but rather through a transaction that would allow shareholders to benefit from the significant potential for value creation.   Continued...

A customer leaves the Sears store in Denver February 26, 2009. REUTERS/Rick Wilking