UPDATE 2-Sears weighs hiving off Lands' End and auto center units

Tue Oct 29, 2013 4:52pm EDT
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By Dhanya Skariachan

Oct 29 (Reuters) - Struggling U.S. retailer Sears Holdings Corp, led by hedge fund manager Edward Lampert, sold some Canadian real estate assets for $383 million and said it is considering separating its Lands' End clothing and auto center businesses to raise cash.

The news overshadowed weak preliminary results for the third quarter and boosted shares of the operator of Sears department stores and the Kmart discount chain by more than 12 percent as some investors bet that the retailer's individual assets are undervalued and could be valuable if the company is dismantled.

But many on Wall Street consider Tuesday's move an act of desperation by the retailer as it tries to cover its operating losses and inability to generate cash.

Struggling Sears Canada said it would close its flagship Toronto store and four other locations in a deal worth $383 million.

"Anytime that they sell their best assets off, it is not done from a position of strength or from the position of a retailer that will endure or be around for a long period of time," said ISI analyst Matt McGinley, who believes the retailer's overall value is "significantly overstated."

McGinley pegs the value of the Lands' End clothing and home goods unit along with the auto center assets at $2 billion to $2.5 billion.

The operator of Sears department stores and the Kmart discount chain is trying to engineer a turnaround after suffering from declining sales since 2005, when Lampert merged the two U.S. retail chains in an $11 billion deal.   Continued...