Sears Holdings Corp. (Nasdaq: SHLD) announced today, Dec. 6, that it will spin off its Lands' End clothing business as a separate company by distributing shares to its investors. The retailer expects the transaction to be tax-free for shareholders in the United States, except for any cash received in lieu of fractional shares.
Sears said in October that it was considering separating the Lands' End and Sears Auto Center businesses from the rest of the company to raise cash amid dwindling sales. For the third quarter, the company reported comparable store sales of 3.7 percent, which includes a sales drop of 4.8 percent for Sears domestic stores and 2.6 percent decline for Kmart stores. Revenue for the company also declined 7 percent to $8.27 partly due to heavy markdowns that were taken in an effort to move merchandise.
Lands' End, which sells clothing and home goods, was launched in 1963 as a sailboat hardware and equipment catalog, but later emerged as a clothing company by 1977. Sears has owned the brand since 2002.
This is not the first time that Sears has spun off one of its businesses. The company's Hometown, Sears Outlet, and Orchard Supply Hardware stores were previously sold to raise cash. There was no mention of the Sears Auto Center business in today's announcement.
As news of the spinoff broke, Sears shares rose $1.52, or 3 percent, to $51.50 in premarket trading. They are up nearly 21 percent year to date.
For more see:
This New York Times article
This Sears Holdings Corp. press release
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