Sears Holdings is considering spinning off its Lands’ End and Sears Auto Center brands as part of a wide-ranging strategic review of its business. The company’s Sears Canada subsidiary has also sold five Canadian store leases to Cadillac Fairview Corporation Limited for about $383.4 million.
In addition to reviewing expiring leases to see if those stores are profitable enough to make renewal worthwhile, Sears is evaluating separating both its Lands' End business and Sears Auto Center business. Sears believes separating the management of these two businesses from Sears Holdings would allow them to pursue their own strategic opportunities, optimize their capital structures, attract talent, and allocate capital in a more focused manner.
If pursued, Sears says a Lands’ End separation would not be structured as a sale but rather through a transaction that would allow existing shareholders to benefit from long-term value creation. Sears has begun the repositioning of the Sears Auto Center business around non-tire-related services as tire margins have been compressed industry-wide during the past several years, leveraging the store footprint, the number of service bays and auto technicians. The retailer is in the process of evaluating strategic alternatives for the business to maximize its value for our shareholders.
Sears also provided some updates on its financial performance for the third quarter of fiscal 2013, ending Nov. 2, 2013. For the 12 weeks ended Oct. 26, same-store sales declined 3.7%, with a decline of 4.8% for Sears domestic stores and 2.6% for Kmart stores. The retailer expects a quarterly net loss of between $250 million and $300 million, compared to $156 million in the same quarter in the prior year.