Sears finds a good fit with Lands’ End, the company reports

Early anecdotal evidence supports Sears Roebuck and Co.’s belief that its customers and the customers of its newest subsidiary Lands’ End overlap, Don Hughes, Lands’ End senior vice president, told the eTail 2003 conference in Palm Springs, CA, today. Hughes, who reported a high correlation between Sears and Lands’ End customers in income, education level and attitudes, cited the case of a shopper in Boston who visited a Sears store to check out the new Lands’ End merchandise. She brought along a reluctant husband, who browsed elsewhere in the store and ended up spending more than $3,000 on a big screen TV that day. “This merger is not about back office synergy. It’s about growth,” Hughes said.

Hughes reported that web sales grew more than 25% last year over the prior year--“Growth in the fourth quarter web business was phenomenal. It exceeded our expectations,” he said. But he also noted that Lands’ End has long desired a store presence. With the Sears deal, it now has one--although at a much faster pace than Lands’ End executives had expected. Sears installed Lands’ End merchandise in 143 stores ahead of the Christmas shopping season last year. It will roll out Lands’ End products into another 400 stores next week. “We’ve always wanted to build a presence in stores but we hadn’t planned on rolling into 870 stores in one year,” Hughes said. “It’s been like drinking from a fire hose.”

Sears is promoting Lands’ End merchandise with whimsical store signs that build off of Sears’ strength in tools, appliance and auto accessories. A sign in the appliance section, for instance, contains the word Dryer, then shows a picture of a Lands’ End raincoat. Another in appliances says Toaster with a picture of a mock turtleneck. In the auto section is a sign that says Snow tires and shows a picture of Lands’ End winter boots. “Lands’ End brings a soft line brand into Sears that is on a par with Kenmore, Diehard and Craftsman,” all high-quality Sears’ brands, Hughes says.

Since the acquisition last year, Lands’ End has eliminated seven investor relations jobs and added 50 jobs to manage the integration, Hughes said.

He also reported that later this year, Lands’ End merchandise will become available at Sears.com. Sears will also add its own Covington brand to the web site. Hughes says Sears has no plans to consolidate into a single Sears.com. “I don’t think we’ll do away with any of the independent sites, but I do see a day where there will be more linkage and integration between those sites,” he said. “We are working on that now.”

Hughes also said that Lands’ End will start charging sales tax on all sales as a result of the Sears acquisition. “Sales tax is a big deal,” he said. “Our policy has always been to collect taxes where we have nexus. Now because of our integration with Sears, we will be collecting taxes for every taxing district in the US.”