Sears Spinning Off Lands’ End

Funny thing, but last May when Sears Holdings CEO Edward Lampert was telling WWD that he was looking to grow Lands’ End from a $3 billion business to a $5 billion global brand, he didn’t say the plan to accomplish that included spinning the company off. Yesterday, Sears Holdings made known that a spin-off was in fact in the works.

A press release, which included news that Sears is also looking to offload Sears Auto Centers, said the two companies would now be able "to pursue their own strategic opportunities, optimize their capital structures, attract talent, and allocate capital in a more focused manner while bringing our business unit structure to life outside of the Sears Holdings portfolio."

(Interpretation: Mr. Lampert has failed and is looking for ways to raise cash.)

ISI analyst Matt McGinley told Reuters he believes the value of Sears Holdings is "significantly overstated." He added, "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."

Morningstar analyst Paul Swinand told Bloomberg News, "They have cut the fat. Now they are cutting in the muscle."

BrainTrust

Discussion Questions

Will Lands’ End have a real chance to succeed now that Sears Holdings plans to spin it off? What will it take to undo the damage done to the company under Sears Holdings’ ownership?

Poll

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Dr. Stephen Needel
Dr. Stephen Needel
10 years ago

Assuming it was successful before the acquisition, they should be able to regain that success. Use the spin-off to go back to what its customers loved about Lands’ End and make it known that this is the game plan.

Paula Rosenblum
Paula Rosenblum
10 years ago

I think shedding valuable assets (and Lands’ End was definitely a valuable asset) makes a lot of sense. As a stand-alone company, Lands’ End is worth more than just a private label subsumed into a dying business.

Honestly, I never thought buying it made sense in the first place. Sears’ endless forays into apparel have been like a black hole.

The only outstanding question is “Has its association with Sears tarnished Lands’ End’s value?” I’m not sure about that one. If there are stores that carry it, and those stores are not Sears, then it has a chance. But to just plunk it online with no way to showcase the product physically will likely not make a great story.

What if they put it in JC Penney stores? Yikes!

Ryan Mathews
Ryan Mathews
10 years ago

Any brand – and fashion brands in particular – can under the right circumstances reinvent themselves.

The Lacoste alligator is once again boldly emblazoned on the chests of young people whose grandparents (or perhaps even great-grandparents) once saw it as a status symbol and whose parents would not have been caught dead wearing it. Ditto for Izod.

So, yes, Lands’ End could come back, but not without an almost complete brand relaunch and repositioning and – in all likelihood – some mega-hot new designers who could keep the essence of the brand while updating it for a more contemporary audience.

Once thing is for sure, its odds of survival are greater as a standalone or part of another portfolio than they would have been staying with Sears Holding.

Max Goldberg
Max Goldberg
10 years ago

Lands’ End can succeed as an entity separate from Sears. In fact it has a better chance than it had being a part of Sears. Many people who don’t shop Sears shop Lands’ End. The brand has not radically changed its core story, products or look since being acquired in 2002.

Being away from Sears, the company can build on its core catalogue/Internet business, possibly partner with other retailers, and attract talent who largely avoided the company due to its affiliation with Sears.

Bob Phibbs
Bob Phibbs
10 years ago

Why are we still talking about this guy? Like Glen Close at the end of “Fatal Attraction” he keeps popping up with a knife; carving out brands, locations and the heart of the most iconic brand in many American’s memories.

At least Ackman had the grace to leave JCP after he inflicted the Ron Johnson debacle.

Gene Hoffman
Gene Hoffman
10 years ago

Lands’ End will be successful if spun off provided the Sears Saga hasn’t left undesirable Sears Scars.

Sometimes Top Dogs promise things in the retail world (and in Washington) that aren’t promise-able or initiated with integrity.

Ed Rosenbaum
Ed Rosenbaum
10 years ago

Lands’ End now has their best chance for success with Sears ready to unload them. Now maybe the company that picks them up will be ready to market them successfully. Sears owning them was never a win/win for Lands’ End. Maybe for Sears, but not the other way. As Paula alluded, let’s hope Penney’s stays out of the race.

Lee Peterson
Lee Peterson
10 years ago

Reminds me of what happened to Eddie Bauer with Spiegel a decade or so back. Seems good at first, but after a while, both brands realize it’s not a fit. And to revive an authentic outdoor brand once it’s been downgraded to Sears’ or Spiegel level is a really, really hard thing to do. Maybe not possible.

With the competition from the likes of brands that haven’t sold out, like Patagonia or even REI, it’s going to take a very generous and brand-righteous VC to pull this one out. Low odds, IMO.

Dick Seesel
Dick Seesel
10 years ago

If Lands’ End wants to grow its brick-and-mortar footprint, and has the resources to do so, getting out of the Sears stores (and their lengthening shadow) is the best thing that could happen. The brand has managed to maintain its own brand integrity even in the middle of the slow-motion Sears train wreck.

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.
10 years ago

I am not sure a lot of consumers knew that Lands’ End was part of Sears so there is a good chance of success on their own. Since the brand has languished for awhile it will take a lot of effort, but the company stands a better chance on its own.

Jeff Hall
Jeff Hall
10 years ago

Prior to its acquisition by Sears, Lands’ End was a solid, well-respected brand offering merchandise at a value price point, and enjoyed a loyal customer base… a bit like the Kohl’s or JCPenney of outdoor apparel.

Unencumbered by Sears, and with the right leadership team focused on what made the brand successful in the past, Lands’ End has a shot at making a comeback, even if it were primarily an online presence, as L.L.Bean has done for decades.

Tom Redd
Tom Redd
10 years ago

Being a Craftsman tool fan and having spent most of my low-end years (childhood) at Sears, I am a fan. Yes, there are financial issues with Ed L. and all, but as a retailer they are a fave of mine. Does that matter? Yes. Lands’ End will succeed because of fans. They are a strong brand with a great merchandise selection. Operationally, do they have the gusto? Yep. They are great merchants that can operate on the basics.

Damage from the holding company? Great brands like Lands’ End are tough to knock down. Great time for Lands’ End and keep an eye on Sears – you might be surprised (still a Sears and Craftsman guy).

Tom…holder of a Sears card for 41 years….

Mel Kleiman
Mel Kleiman
10 years ago

Best move possible for the Lands’ End organization. Sears is a dying brand. The real question is how long will it take for it to actually be buried?

John Hyman
John Hyman
10 years ago

As the saying goes, stick a fork into them….

Mark Burr
Mark Burr
10 years ago

Prior to Lands’ End going over to Sears, there really wasn’t a retail outlet for them. Essentially, that would mean that their product had more accessibility. Right? Ironically, it drove me away from them rather than attract me more to them.

At that point for similar goods, I looked to L.L.Bean that at the time and still do consider them to be a tier above Lands’ End.

If there is anything that Lands’ End can do, it is try to match up to the service and experience that the customer has with L.L.Bean. That will be no easy task!

They do however have some niches that few are willing to fill. That is with the youth market that are more and more required to wear “uniform-like” clothing to school. Last holiday season there was no retailer that could fill the need in this area besides Lands’ End in our exhausting search. It is an opening for them to exploit.

I do not believe they are beyond the point of being a recognized and strong brand. In fact, with as little traffic as Sears gets, I’m not so sure many consumers actually realize that they aren’t a stand alone catalog company.

They have a good chance to re-introduce themselves if there is a buyer that will supply the resources necessary to launch the type of campaign that would be required.

Kai Clarke
Kai Clarke
10 years ago

Yes. The LE concept and success story is why it has continued despite the failings of other competitors in the arena. LE brings great customer service, products, and a strong presence both alone and under the failing Sears Holdings’ ownership. Now it has a real chance to succeed and grow!

Vahe Katros
Vahe Katros
10 years ago

Wow, that was a great read – a range of interesting commentary worthy of CNBC – when is RetailWire launching a video channel? Get that commerce wisdom out there – spread the wealth.

vic gallese
vic gallese
10 years ago

Land’s End should be fine. Great brand, needs to get back to basics with a dedicated leadership and all will be well.

A much bigger question is “What about Sears Holdings?” It is eating itself. I think it is becoming clear that we are heading for a much smaller, more manageable Sears with only the most profitable stores surviving.

During the transition time it appears Mr. Lampert will continue to look for a sustainable merchandise mix/strategy for those remaining few hundred stores to build upon.

Jerome Schindler
Jerome Schindler
10 years ago

Remember, Sears is just Kmart renamed. Kmart acquired Sears, not the other way around. Lands’ End would be better off with Macy’s or Kohl’s or even (God forbid) JCPenney.

Craig Sundstrom
Craig Sundstrom
10 years ago

Like Scanner, my mom used to choose between Lands’ End and L.L.Bean. Did she want to talk to folksy Mid-Westerners or quaint New Englanders? What drove her relentlessly toward the latter was that Sears’ ownership meant that LE had to charge sales tax…an immediate 8% price increase. Presumably, if nothing else, divestiture will help them on price.

As for Sears, I think this gives us the answer as to how death will come: as a thousand cuts of divestiture and sold leaseholds, rather than a Montgomery Wardesque collapse (of course Wards had few options, since it had few assets).

M. Jericho Banks PhD
M. Jericho Banks PhD
10 years ago

I’m a huuuuge Lands’ End fan, a loyal customer for decades. I wear something of theirs nearly every day. Yet, I never visited a Sears store for their stuff, and I’ll bet there are thousands of LE customers like me.

Max Goldberg hit the nail on the head. Once away from the drag of Sears, LE can prosper. Think of the cost of the large amounts of dead inventory languishing in Sears stores and their distribution system. Think of the costs created by the limited inventory control and management innovation LE suffered under. And consider the restriction of promotion and product development funds that came with the Sears deal. With proper new ownership, management can reclaim those “lost dollars” buried in the Sears system and apply them to efforts to build the brand and take advantage of the mobile shopping explosion we are now experiencing.

Brian Kelly
Brian Kelly
10 years ago

If all the pundits who claim LE will thrive separate and apart of Sears bought LE product, then I’d buy it. But like Eddie Bauer, GAP or Brooks Brothers, lifestyle merchandising/specialty retail is not what it once was. Just ask Les Wexner. LE as an online pureplay sitting in the long tail is its only chance. Or as we like to say, “retail ain’t for sissies.”

John Boccuzzi, Jr.
John Boccuzzi, Jr.
10 years ago

Yes, they have a very good chance. Should be easy to repair the damage as long as the new ownership allows them to be creative and almost entrepreneurial. What will the new Lands’ End stand for? What will their passion be and how will they let the world know.

Hopefully we will know the answer to these questions soon.