But Wall Street’s response was mixed, and Sears stock, which began the day up 4 percent, closed down nearly 4 percent.
Sears, the Hoffman Estates, Ill., company that has owned Lands’ End since 2002, said it will give Lands’ End shares to current Sears stockholders, and Lands’ End will become a separate, publicly traded company. No date was set for the change to occur.
Sears said in late October it was “evaluating” spinning off Lands’ End and Sears Auto Centers. On Friday, Sears said, it was applying to have Lands’ End shares listed on the Nasdaq market under the symbol LE, the same symbol the company traded under on the New York Stock Exchange from 1986 to 2002. No mention was made Friday of the auto centers.
Dodgeville residents were happily buzzing about the move, said Bob Berglin, Dodgeville Area Chamber of Commerce executive director. “There’s a lot of excitement,” Berglin said. “We see this, at the Chamber and in the business community, as a real positive thing.”
Dodgeville Mayor Todd Novak echoed the sentiment. “What I’m hearing on the street is that everybody is very happy with the spinoff,” he said. “My main concern is the employees, and I think this will be beneficial in keeping Dodgeville’s employment base.” Three of the city’s eight city council members work at Lands’ End.
Sears said it hopes to simplify and focus both Lands’ End and the rest of Sears Holdings by splitting off Lands’ End. But it is only the latest in a series of spinoffs for the struggling corporation.
Sears sold off its Hometown and Outlet Stores a year ago and has closed scores of stores over the past several years.
“Sears is in a liquidation in my mind and they’re selling off things of value, and that’s what will keep them afloat for some period of time. I think, in the end, Sears will cease to exist,” said Howard Davidowitz, chairman of Davidowitz & Associates, New York, a national retail consulting and investment banking firm.
Credit Suisse retail analyst Gary Balter was equally sharp-tongued in his assessment. “This spinoff is another wooden block being pulled out in our Jenga scenario, with Lands’ End likely the most profitable piece that was left in the company,” Balter wrote in a research note Friday.
Both Balter and Davidowitz speculated that Sears was not able to find a buyer willing to pay enough for Lands’ End. Sears Holdings’ predecessor, Sears, Roebuck and Co., paid $1.9 billion for Lands’ End.
“I don’t think they could get that today,” Davidowitz said.
Lands’ End pro
It’s no secret that Sears’ finances have been shaky — the company reported a $534 million loss for the quarter that ended Nov. 2 — but for the past decade, Sears has revealed little about Lands’ End finances, until now.
In documents filed Friday with the Securities and Exchange Commission, Sears disclosed that Lands’ End revenues in the 2012 fiscal year were $1.59 billion, down from $1.73 billion the previous year, and the company earned $49.8 million, down from $76.2 million in fiscal 2011.
In the most recent quarter, 82 percent of the sales were from online and phone orders while 18 percent came from Sears and Lands’ End stores.
Sales of the fall/winter products were lower than expected “as a result of changes to our merchandising strategy,” Sears said. The decrease was partially offset by growth in Lands’ End’s business and school uniform divisions.
“Lands’ End numbers are surprisingly weak,” analyst Balter wrote, with earnings before taxes and special items down 50 percent in a two-year period. It was a time when J.C. Penney was “donating apparel share and one would have expected stronger results from Lands’ End,” Balter said.
Davidowitz said he thinks Lands’ End will have better success as a separate business.
“Sears did nothing for Lands’ End except to diminish Lands’ End,” he said.
Sears said Lands’ End plans to expand its footwear, handbag and leather products, and to extend its reach into the Scandinavian countries, Switzerland, Russia and China.
Lands’ End has 5,800 employees, including 4,600 in the U.S., with distribution centers in Dodgeville, Reedsburg and Stevens Point, and in the United Kingdom and Japan. It is the largest employer in southwest Wisconsin, the Chamber’s Berglin said.
Dodgeville area residents are hoping when the company regains its independence, it will resume its philanthropy, he said.
Lands’ End founder Gary Comer, who created the company in 1963 in Chicago to sell sailboat gear, paid for a public swimming pool to be built in Dodgeville 25 years ago, Mayor Novak said. “Gary Comer was very vested in this area so he was very supportive financially,” Novak said. “Sears has not continued with that practice.”
Employee volunteer activities continued but contributions to organizations such as United Fund of Iowa County “completely went away,” Berglin said.
Shares of Sears stock traded for as much as $52 Friday morning but ended the day at $48.09, down $1.89. Nearly 3 million shares traded hands, up from the three-month average daily volume of 1.2 million shares.
— The Associated Press
contributed to this report.