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Sears plans to spin off Lands’ End into a new public company.
It’s been part of Sears since it was first acquired in 2002 but now Sears is letting go of apparel retailer Lands’ End.
This morning, Sears Holdings Corp., No. 6 in the 2013 Internet Retailer Top 500, filed a registration statement with the U.S. Securities and Exchange Commission to spin off Lands’ End into a separate company in a move to shore up Sears’ remaining financial base. The registration documents reveal that direct sales and total revenue for Lands’ End are declining, and that the retailer is betting its future on e-commerce.
Today about 80% of direct business in the U.S. for Lands’ End is done online compared with only 20% in 2002, although the company didn’t break out more specific numbers in its public filing.
For the first six months ended July 2, Lands’ End reported:
- A decrease in direct sales, which includes catalog and web, of 1.0% to $531.5 million from $536.6 million.
- A decrease in total sales of 3.3% to $648.6 million from $669.7 million.
- A decline in retail store sales of 14.3% to $96.2 million from $112.2 million
- An increase in net income of 22.4% to $18.6 million from $15.2 million.
For the year ended Dec. 31, 2012, Lands’ End also reported:
- A decrease in direct sales, which includes catalog and web, of 10.0% to $1.17 billion from $1.30 billion.
- A decrease in total sales of 8.8% to $1.46 billion from $1.60 billion.
- A decline in retail store sales of 5.6% to $266.1 million from $281.8 million
- A decrease in net income of 34.6% to $49.8 million from $76.2 million.
Despite the recent drop in direct sales, Lands’ End is committing to building a future grounded in e-commerce in which printed catalogs and conventional mail play a smaller role. In its registration, Lands’ End provides some detail on an initiative the company calls “Paper to Digital.” “One of our strategic goals is to optimize the digital shopping experience for our customers and develop new ways to engage consumers through our e-commerce platforms,” Lands’ End says in its filing. “To this end, we have launched our Paper to Digital initiative, which is dedicated to delivering the catalog experience through digital channels.”
Over the past year Lands’ End has redesigned its e-commerce site for personal and computer tablets using responsive web site design, which enables retailers to design a single site that adapts to the size of the screen the consumer is using. A responsive design for its mobile commerce site is expected next year.
Other recent developments include the launch of Apostrophe, a quarterly digital catalog, and a Shop Your Way program on Facebook that allows members to receive personalized coupons, participate in sweepstakes, and build custom catalogs and share with friends. “As one of the first apparel retailers to establish an online e-commerce presence, we believe that we have a strong track record as a leader of digital innovation in the apparel industry,” Lands’ End says in its filing. Shop Your Way is a Sears loyalty program.
Sears noted plans to spin off Lands’ End in October, but today’s public filing didn’t include details such as how many shares of stock will be listed, at what price and how much money Sear’s may gain from selling off Lands’ End. Sears says it’s divesting Lands’ End to concentrate more on its other brands, including Sears and K-Mart. “As we continue with our evolution, we are moving to a more nimble, less asset-intensive business model,” Sears says. “As we move through this process we are continuously evaluating our asset structure and whether specific assets and/or businesses are better managed within the current Sears Holdings asset configuration or outside it.”
For the first nine months ended Nov. 2, Sears Holdings reported:
- Total sales decreased 7.2% to $25.60 billion from $27.60 billion.
- Net loss was $966 million compared with a net loss of $437 million in the prior year.