Sears Holdings Corp. (SHLD) has put up its Lands' End brand on the block, and Chairman Edward Lampert is in talks with a few potential private-equity firms on the sale, according to a New York Post report on Thursday. The company is said to be tapping Goldman Sachs to assist in the sale.
After taking a beating in the second half of 2011, Sears has seen its share prices more than double in 2012, since beginning the year at a price of $31.78. It has been among the best performers this year after falling sharply last year.
The broadline retailer is now in the process of liquidating some of its assets to raise cash amid heavy losses at the Sears and Kmart retail chains.
The Hoffman Estates, Illinois-based retailer is looking to raise as much as $2 billion through the sale, but bankers expect the sale to fetch between $1.2 billion and $1.6 billion, less than what Sears paid for it.
Sears acquired the brand in May 2002 for $1.86 billion in cash, and Lampert inherited it when he merged Sears with Kmart discount chain in 2005.
Lampert, who controls roughly 61 percent of Sears through his hedge fund ESL Investments Inc., saw the brand's decline when he tried to sell Lands' End clothing line along with Sears' unimpressive clothing collection.
Lands' End had quickly grown in the 1990s as a respected brand for its high-quality and classically American clothes. Sears was looking to attract younger and more-affluent shoppers to Sears with the Lands' End brand, but the plan failed miserably. Sears has mostly not revealed the financial performance of Lands' End brand individually in the past few years.
Lands' End, a family destination for khakis, cardigans and swimsuits, conducts majority of its business through mail order and Internet sales. Lampert is looking for a buyer who would agree to license Lands' End to Sears, while pursuing growth in the international market, maybe in Europe.
The move to sell Lands' End came after nineteen straight quarters of declining sales, and a huge $2.4 billion loss in the fourth quarter, hurt by significant tax expenses and impairment charges.
The company had announced some remedial action in order to turnaround its results in late February after reporting the big loss. Sears said actions are underway to further enhance liquidity by about $1 billion and improve operating performance, including reduction in expenses, lowering of peak inventory in 2012, as well as sale and spin-off of stores.
Sears Holdings then agreed to sell eleven Sears full-line store locations to mall operator General Growth Properties, Inc. (GGP) for $270 million. The company also planed to spin-off about 1,250 of its smaller-format stores to enable it to focus on its core business, and raise nearly $400 million to $500 million in proceeds. Further, it agreed to sell three of its best-performing stores in Canada for $170 million.
Sears had warned in late December on its fourth quarter results and announced certain cost reduction actions, which include the closure of 100 to 120 Kmart and Sears full-line stores, and reducing inventories by $580 million.
SHLD closed Thursday's regular trading session at $67.55, down $1.44 or 2.09% on a volume of 1.40 million shares. In the past 52-week period, the stock has been trading in a range of $28.89 to $87.66.
by RTT Staff Writer
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